Dropbox IPO – a $10bn floatation by circumventing the CTO

A cloud that's sending out a WiFi signal

Posted on Thursday, January 19, 2017

When Cloud file sharing outfit Dropbox attracted a valuation of $10bn, industry analysts were shocked. Not only was the business giving its service away for free, but they had next to no revenue either. Investors announced that Dropbox would be the harbinger of the next DotCom bubble burst.

But rumours emerging from Silicon Valley suggest that 2017 may be the year that Dropbox finally floats on the stock market. More importantly still, the business is now turning a modest $750 million annual profit. This is still far short of the 2014 valuation, but the signs are good for early investors.

Not such great news for CTOs

The success of Dropbox has relied on tapping into the consumer market. Home users have found Cloud storage incredibly simple to use, and it has helped them circumvent common IT security controls, like a ban on the use of USB drives. Or going through the paperwork required to request an official in-house FTP file sharing solution.

The any time, any place, any device availability of key files has seen Dropbox integrated into the workflows of many individuals. Dropbox has snuck its way into the corporate network via unofficial channels.

Having seen the benefits of Cloud storage, many business unit leaders have begun adopting the paid Dropbox for Business service, simplifying collaboration with their team. Unfortunately the IT department is often left out of this buying decision. And it is this circumvention of IT purchasing protocol that has helped tipped Dropbox into profit.

Could Dropbox be storing up problems for the future?

It is impossible to argue against the productivity and collaboration boost provided by Dropbox. But the CIO has a responsibility to manage every corporate data store – and Dropbox makes that role almost impossible to fulfil. Especially if the CIO/CTO is not involved in the purchasing decision.

The Dropbox IPO is great news for the venture capitalists who have invested so much in the business’ genesis. But for CTOs it be the start of increased pressure on their data strategy as Dropbox pushes ever harder to attract enterprise-class customers to their service – often by the back door.

Instead IT management need to act now to identify a suitable Cloud file storage platform for the whole organisation to use, or to simplify their on-site FTP provisioning. Perhaps even building a cloud like file hosting solution that doesn’t require complex FTP set-ups.

Allowing IT to take care of external file access will be the only way to maintain the control of corporate data required to meet compliance obligations. And it also provides the opportunity to make use of existing hardware assets, generating additional return on investment in the process.

Next steps

To learn more about building Dropbox-like storage platforms using your post-warranty hardware, please get in touch.