The BoxWorks 2014 conference in San Francisco on 3rd September was Box’s fourth annual event and CIC’s first time in attendance. From the impression generated one would be forgiven for thinking that Box was older and more mature than the 10 year old business that it is. This impression is most likely a result of the highly experienced management team that the young co-founders have surrounded themselves with. It is that team that has generated a number of significant enterprise customers such as General Electrics with over 300,000 users, Schneider Electric with over 80,000 users, Bechtel, Eli Lilly and Company, Gap, Inc. and Proctor & Gamble.
So what did CIC learn from attending BoxWorks 2014?
BoxWorks provides an opportunity for Box to talk about recent and upcoming features of the product, its future direction and showcase new customers on stage. As one can imagine there was much to say about improvements made to the Box platform along with new upcoming features and capabilities. There was the typical score card to show strong delivery progress from the BoxWorks 2013 announcements. However, the biggest message push of BoxWorks 2014 was that developments made to the Box platform and the maturity of its offering meant that it should be viewed as more than just an “Enterprise File Sync and Share” provider and more as a content platform that enterprises can rely on to rethink business processes for how people want to work today. Moreover, its customer base is expanding their use of Box beyond basic sync and share to deliver a range of solutions such as mobile collaboration services with offline accessibility to complete a specific business tasks or enabling greater automation in their business processes with a higher degree of information sharing than was available previously. More of them are leveraging the Box platform APIs to extend it for custom features, offering the potential of providing additional value to the Box platform that could potentially be shared across the wider customer and partner base. It is a tried and tested model that has served the likes of Salesforce.com with its extensive ISV and partner community well.
The Enterprise File Sync and Share market is populated by the likes of Microsoft and Google and even consumer orientated Dropbox. Products like OneDrive and Google Drive are constantly offering more storage and lower prices. While Box offers a freemium product their target is the enterprise and to set themselves apart they have invested in features that particularly suit this market. At BoxWorks that meant a focus on managed collaboration, workflow, governance, and what the company labels as advanced security.
Moving beyond enterprise sync and share
With respect to security, the Box team discussed its Information Rights Management approach that provides both native capabilities for trusted viewing (e.g., no copy/paste, print, download or edit and controlled & audited sharing) as well as partner integrations with EMM/MDM and DRM providers to make documents available securely within and outside the Box environment. The announcement of Box Workflow, highlighted support for more intelligent application for automating rules and policies to route the data to where it should be stored, viewed, managed and retired. This is enabled through metadata or time-based policies. Over time, Box is planning to add additional triggers to automate content centric processes. Box Workflow helps companies to address governance concerns whereby documents must go through certain processes or be retained for a set period of time as specified by the industry compliance regulations. Then there were further integrations with other enterprise tools such as Salesforce.com and Office 365 integration. While Box works with the desktop Office 365 products today (Word, Excel and PowerPoint), the company also showed off how this integration will potentially extend into the Office 365 Online as well.
These product additions all help to move Box beyond their competitors in the enterprise space and you can see why they continue to land new accounts with these distinctly enterprise types of customers. The impression of Box created by the impressive customer conference cannot change the fact that they are still a small and relatively new company. Anything that they do with their product is not something that larger players could not catch-up with quickly given their far greater resources. In many cases Box is replacing incumbent file servers, shared drives, corporate file shares or Content Management System (CMS) products. The fact that customers are willing and able to replace existing systems demonstrates how such products can be swapped out, a fate that could befall any new supplier such as Box. This makes the vital piece for Box its platform.
The platform is the future
The Box platform opens up the product to developers via RESTful Web Services, commonly referred to as APIs (Application Programming Interfaces). This allows development teams to create custom Box experiences and content enabled web or mobile applications. An example might be an enterprise development team creating a line of business mobile app that utilises Box Workflows. Another example could be a Box partner or ISV creating an app that Box customers can use to enhance their Box experience through a company branded experience: An app with a customer front end is custom developed with content services being provided by the Box platform. What is important to Box is that this type of custom development, especially by customers (ISVs, partners and end user organisations), creates much greater stickiness. Once a customer has invested time and money in building on a vendor platform it becomes even harder to move away from that product. This is something that Microsoft learned early on with Office and that Salesforce has had success with.
For a young company like Box it has the opportunity to build out this API from the ground up and design for platform first from the very beginning. This offers an advantage over other organisations that have had to try and retrofit such capabilities onto a mature product that is based on legacy technologies that could make it difficult to implement. This often comes at a price such as increased financial costs or the need to overcome technical challenges such as performance or scalability issues.
Box now builds “API First”, which means that they are building their own product on top of the same API that customers have access to. It also means that all features of the product are available to customers and to its partners. Some capabilities which are not available today is by choice and not because of any technical limitations. Ultimately, Box’s ambition is to make 100% of the product capabilities available via the platform. Using its own APIs to advance both the platform and the Box application gives the API portfolio the advantage of being battle tested, since the company’s own developers can identify early potential problems that might cause issues for customers. Essentially it makes for a better platform than when companies often add API capabilities to their underlying product after the fact.
Exploring the boundaries
Some of the new features being planned for the Box platform, such as Box Workflow, bring it closer to the Business Process Management (BPM) fold. Here the company must tread carefully. Although Box is clear that it has no intention, certainly for the foreseeable future, of going deeper into the realms of delivering BPM or highly structured use cases of Enterprise Content Management (ECM) with all that it entails, the company does believe that it can offer higher levels of functionality and a viable light touch alternative. Crucially for Box, the product makes this much more widely applicable and accessible for everyday workers managing wide array of enterprise content and processes specific to their jobs. Go-to market messaging along with a solid range of customer journeys and well-structured and articulated guidance strategies will be crucial in minimising any confusion that might arise from their approach and offering. Without it they could be vulnerable to competitors seeking to exploit any inability for supporting more sophisticated and heavy duty BPM and ECM capabilities. It would be a distraction that could present multiple fronts to fight.
All the right moves
Crucially, from a product and platform perspective the Box leadership team is making all of the right moves. The focus on enterprise features such as information rights management security and workflow and the API first development approach are all good for Box and its customers, ISVs, SIs and partners. The platform especially provides both added value and encourages customer loyalty. At the same time it gives partners and ISVs ways to engage with Box customers that adds value over the core Box application proposition.
What they will need to balance moving forward is the demands of larger accounts with developing features that are best for the overall product and customer base.
The platform is a solution to this as it allows more demanding customers a way to build out what they need, but Box needs to have the strength of will to push such customers down this path and perhaps the right integration partners to help customers achieve it. On the latter, Box has made good strides including signing up Accenture as a partner. As big customers place big demands on new technology companies they come to understand why their older competitors have legions of consultants and support people. If Box is to avoid that then it will need to make smart and sometimes tough decisions now.
BoxWorks 2014 certainly showcased the company’s vision for growing its footprint in the wider enterprise market. Past wins expose the different points of engagement with their customer base – e.g. mobility, security risk – and the different roles within organisations that have contracted them – CIOs, CTOs, CISOs, Heads of architecture, innovation and desktop all feature highly. This presents a good indication as to the range of enterprise opportunities open for both the Box platform and the application.
Clearly, questions are still being asked around the company’s decision to pull back from its 2014 IPO aims and there will undoubtedly be even greater scrutiny of its business over the next financial year. However, Box’s leadership team is bullish about their ability to cement their market position and grow their revenue stream. Certainly the strength of the leadership team’s collective industry and market experience would suggest a level of confidence in their claim. On the whole, good reasons for significant investments made in sales and marketing were put forward although nothing that most other SaaS providers do not also experience when they make upfront investments to gain customers today at a loss in order to realise gains further down the road through renewals.. The next six to twelve months will indicate whether the marketing and sales investment can be considered a successful spend. More comfort to the economics of their business model, however, can be taken from the fact that many existing customers are expanding their licenses and giving credence to the company’s ability to land and expand their footprint over time.
Like many other players in the market, there is good recognition for the value of the partner ecosystem along with the importance for a strong API culture for extending the Box platform.
The last word
One final takeaway was how the face of Box, co-founder Aaron Levie, put on a charismatic but also confidence inspiring show. The Marc Benioff routine on stage may not have gone down so well with many, more staid enterprise types, but I guess when you started the band you can call the tune. While CIC is generally more focused on the strength of the technology and product offering rather than the intricacies of its financial leverage, it is worth noting that Aaron’s answer to analysts regarding issues surrounding the IPO that never happened was more re-assuring than much of what the company has put out officially. Unlike some young entrepreneurs in the valley over the last 10 years, he at least appears to be both in charge and clear about the company’s vision. A good thing when you consider that Box has a long and challenging road ahead to commercialise on its opportunity and potential as a cloud content platform.