GlobalSCAPE Bets on Cloud for Managed File Transfer

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Managed file transfer (MFT) specialist GlobalSCAPE (NYSE AMEX:GSB) made a big bet on the future of cloud computing this month. The San Antonio-based firm has announced a partnership with Rackspace Hosting (NYSE:RAX) that will allow its customers to outsource all or part of their information exchange needs on a subscription basis.

The new Software as a Service (SaaS) solution is scheduled to go live in July.

"We are obviously excited about this," GlobalSCAPE Chief Operating Officer Craig Robinson told eSecurityPlanet.com. "We definitely view this as a game-changer for us."

GlobalSCAPE provides solutions that allow secure exchange of sensitive business-to-business information over the Internet and internal networks, including corporate and financial data, medical records and customer information. GlobalSCAPE's solutions also help businesses comply with data privacy regulations, including the Sarbanes-Oxley Act, HIPAA, PCI DSS, internal corporate security policies and others. Rackspace, also based in San Antonio, is a leading provider of hosting services, boasting data centers in Texas, Illinois, Virginia, the UK and Hong Kong.

Through the agreement, GlobalSCAPE will deploy its file transfer solutions to the cloud on Rackspace's infrastructure. The new hosted solutions will allow customers to automate manual or inefficient processes, consolidate automated transactions and eliminate inefficiencies, all provided on a lower-cost, secure platform, according to Robinson.

"Our new relationship with Rackspace allows us to offer cost-effective, cloud-based solutions on a global basis," said Jim Morris, president and chief executive officer of GlobalSCAPE. "This is a significant milestone for GlobalSCAPE because we can better meet the needs of existing customers while also expanding our reach to new ones. Moving into the cloud with Rackspace positions us well today and provides us with an ideal platform and partner for expanding our family of solutions to accommodate changing customer needs going forward. We expect hosted services will be a significantly increasing part of our business in the second half of the year and in the coming years."

"One of the things we all recognize here is that the cloud really is in everyone's future," Robinson added. "The growth rate for cloud-based services is greater than for on-premises-based products. Our clients have been asking for a means of procuring a market-leading managed file transfer product in a subscription model."

Robinson explained that the cloud-based subscription model gives clients a predictable cost structure and allows them to greatly drop their capital cost. Currently, GlobalSCAPE's on-premises product, Enhanced File Transfer (EFT) Server—a solution used by the US Army and 95 of the Fortune 100 companies—accounts for about 75 percent of the company's revenue, according to Robinson.

To get the on-premises EFT Server, clients must first procure it and then deploy it at their site. Personnel have to receive training on how to use it, including provisioning administrative accounts, permissions and event rules for how to handle traffic through the server. With the cloud-based version, the server is deployed at a Rackspace center, and GlobalSCAPE takes responsibility for account setup and account management.

"The client gets to focus on its core business while GlobalSCAPE and Rackspace operate the server," Robinson said.

Robinson expects the cloud-based offering to appeal to a variety of firms, from small and mid-sized businesses (SMBs) for which the cost of an on-premises solution might be prohibitive, to large enterprises. Robinson said SMBs may be particularly interested in the offering.

"This will be extremely attractive to them," he said. "To them, very often the cap-ex is a key item. Rather than making a capital expense outlay, they can procure this service and the price point is going to be a very compelling one."

While Robinson declined to discuss pricing until the service goes live in July, he did note that GlobalSCAPE will offer multiple subscription tiers, including a "proof-of-concept, short-term service," or Tier 0, to allow companies to trial the service with relatively little risk.

"The essential model is a one-, two- or three-year service," Robinson said. "Obviously there are some economies of scale there also."

Like its customers, Robinson said a move toward a cloud-based model would give GlobalSCAPE a more predictable financial model. He noted that GlobalSCAPE expects its cloud-based, managed services revenue to become an increasing part of its revenue mix, and that it will become a significant part of the revenue mix by 2011 or 2012.

"We're going to be able to see an increasing amount of our revenue early in future quarters," he explained. "That is a very powerful financial model for us. You can build your business with a lot of little bricks that you have to find every quarter, or you can build it with larger bricks that actually last."

GlobalSCAPE will initially make its EFT Server offering available through the cloud, but its roadmap does include additional product offerings in the future, especially add-ons that support specialized compliance issues.

Thor Olavsrud is a former senior editor of InternetNews.com and has covered operating systems, standards, and security, among other things.