Whether it’s simple daily updates or sharing complex, intricate projects with partners and suppliers, most businesses need to exchange files with other organizations.
Internally, your organization likely has well-defined security policies. And since the organization controls these policies, they have full control over what is let into certain directories/locations and what objects are not allowed.
This breaks once an external organization is involved.
A solution for these issues and more is Managed File Transfer (MFT). As the name suggests, file transfers are “managed” by an intermediary that can add security, transform file metadata, and automate file transfers.
In this article, we'll cover what Managed File Transfer is and typical MFT features so you can better understand these platforms and how they can be beneficial to your organization.
The problems with exchanging data with external parties
External parties have their own sets of rules and requirements, and in some cases, those processes won't change to accommodate others. When you need to receive files from large banks for instance, the banks aren't going to change how they transfer files to fit your requirements. You have to adapt to their way of doing things.
Working with external organizations introduces new unknowns and additional risk, like:
- No control over what's sent - External parties could send anything to you. While straight malware is unlikely (at least on purpose), they could be sending files you shouldn't have access to such as data that contains PII or other sensitive information.
- Protocol incompatibilities - If you need to send/receive files to an external organization that only accepts a specific protocol like SFTP or AS2, you need support to transfer data in that method or find a way to bridge the connection gaps.
- Data governance and retention - When third-party software is required to fix any of the above, it introduces another layer of complexity, as this unrelated party may store or retain critical or sensitive files on their own infrastructure temporarily or permanently.
Instead of adding an external party to your organization (which requires a license, access permissions, management, etc) a more robust and scalable approach is to use middleware to manage the transfer of files and make sure data entering and leaving the environment has been reviewed and processed properly.
This piece that sits at the edge of organizational boundaries is called Managed File Transfer.
What exactly is Managed File Transfer?
"Managed File Transfer" is a marketing term instead of a technical description, so there isn't a concrete definition of what unequivocally makes something a "managed file transfer platform".
The term "Managed File Transfer" was developed by Frank Kenney while a research director at Gartner. While there are multiple iterations of the initial definition, currently, Tech Target defines MFT as "sophisticated tools that enable organizations to centrally manage, monitor, secure, and schedule file transfers".
So what does this encompass specifically?
You can think of MFT as a type of software that provides a centralized platform for all of your file transfers, like a hub or a station that all files have to stop at before going to the final destination. During this temporary stop, the hub routes each file to a specific destination and potentially makes some changes at the same time, like making a copy, updating the name, or adding encryption.
Because Managed File Transfer has a broad definition, there is a lot of variation on what fits the definition. Unlike terms like AES-256 bit encryption and the SFTP protocol, which are unambiguous and specific, "MFTs" can be anything from simple software to an interconnected collection of servers on dedicated infrastructure using AI-powered optimization and integration capabilities.
However, since this is a marketing term, we won't focus too much on the semantics and instead focus on the reason these platforms exist and some features they should have, like:
- Support transfers with external parties. MFTs revolve around secure transfers with external parties with different requirements.
- Have a centralized management. Jobs, organization settings, and scheduling need to be managed in one place.
- Support multiple transfer protocols. It should be able to connect to multiple different types of systems and bridge connection gaps between them.
- Emphasize security. The platform should have security features, such as end-to-end encryption, in place.
- Automate and/or schedule jobs. There should be the option to schedule or automate transfer workflows.
- Have logging and reporting capabilities. Transfers and system events should be tracked and easily audited.
- Data governance controls. The software should provide options or controls over data processing and retention policies.
We'll break down each of these benefits in detail and explain why they are important for organizations.
Support transfers with external parties
This is the entire reason to have a secure managed file transfer platform, so it's a must-have. If the software can't do this, it can't reasonably be called a managed file transfer platform.
For purely internal data transfers, something like an iPaaS is a better fit, and the same organization has full control over what and how data is transferred at all stages.
Centralized management
As mentioned above, MFTs are a centralized hub where file transfers and job settings are managed. So why bother stopping at this hub? Why not go straight to the destination instead?
The main reason is that a managed file transfer platform can work as a unified platform that handles all aspects of the transfer process. Usually, different components would be piecemeal solutions that you would have to combine together. For example, you could have an SFTP server for storing files, use Power Automate to create an SFTP automation to pull files regularly, then a secure file sharing application to create secure links to share files with the end user.
An MFT platform combines all of these aspects into a single, dedicated solution that is managed in the same interface. Bringing all this information and control in one place gives an overarching view and helps you quickly modify specific aspects without having to delve into dozens of separate systems.
Another important reason is that an MFT helps bridge the gap by supporting multiple protocols.
Support multiple transfer protocols
One of the main obstacles to transferring files is when different systems don't support the same protocol. This means they simply can't transfer files between each other without something in the middle to facilitate the transfer.
If you simply need to accept files from one party with a shared protocol, you can get a server that handles that instead. SFTP transfers, for instance, can easily be handled by SFTP servers, at least when both endpoints support SFTP, the transfer is straightforward, and features like automation and scheduling aren't needed. The difference between these is something we cover in more detail in MFT vs SFTP.
A major benefit of MFT software is that it supports multiple protocols like SFTP, FTP, SCP, and AS2. Suppose that you have a piece of industry-specialized software that generates important reports for an external analyst who’s working in Google Workspace. If the software only supports FTP connections, how do you get that information to them?
Since MFT platforms use multiple protocols, this isn’t an issue–even when a direct connection would normally be impossible–because the hub makes sure files can transfer successfully and securely.
Emphasize security
Security in MFTs is a critical component, especially since external parties are involved. MFT adds an extra layer of security to file transfers, which helps safeguard files in a few ways.
One is by having files encrypted at all stages of the transfer process, both in transit and at rest. This is a huge benefit when pulling from a system that only supports FTP or less secure protocols, such as forcing FTPS (FTP over SSL) connections. Some can even add PGP encryption as part of the transfer process.
Another way that MFT enhances security is by being the one place to manage all things related to transferring files. A good MFT system will include user management and access controls, which can be quickly updated as needs change and new users need to be included or older ones removed. Bringing all this information and control in one place helps you quickly find security gaps to plug without having to delve deeply into dozens of separate systems.
As more and more file transfers are being done electronically, compliance standards have emerged to help make sure that files with sensitive information aren’t exposed to people who shouldn’t have access to them. Standards like GDPR and PCI have specific requirements that must be met to stop organizations from being in breach. And more nebulous standards like HIPAA have strict conditions that must be met that aren’t as straightforward as ticking off checkboxes.
Some MFT platforms can help meet these compliance standards and also automate the entire transfer process.
Automate and/or schedule jobs
Standard file transfers are straightforward; you move a file from one location to another as needed, and that's it. For some organizations that rarely need to move data, this method works fine.
But when doing dozens, hundreds, or thousands of transfers a day, ad-hoc transfers are infeasible, as they reduce efficiency and run the risk of human error. This is where automation comes in. Transfer parameters can be set up to connect different platforms, route files between them (sometimes with the option of conditional filtering), and run processing rules at the same time, such as renaming a file to fit the naming conventions of a SharePoint site.
Imagine that you have a simple process where a piece of software creates reports, and you need to distribute those reports to three different external companies every day and rename them to fit your naming conventions, a process that takes 15 minutes every day. It might only take a quarter of an hour to manually do the process, but that time adds up fast, resulting in over 90 hours a year of wasted time–if everything goes right every time.
Start scaling that process with more reports and companies, and you can see how MFT can be a massive time saver. Once the automations are built, they can run in the background until the parameters change, in which case the workflow can be edited once to update to the new requirements.
Logging and reporting capabilities
When transferring files, it's essential to have a way to keep track of files, make sure they’re protected during the transfer process, and have a way to know that they actually arrived.
Good platforms can give a bird's eye view of file transfers for the organization as a whole, then zoom in on specific points of interest. Alerts and notifications can also go out to relevant parties when files transfer/fail to transfer so that everyone can stay informed.
They can be especially useful for the audit process as well. The audit process becomes much simpler and straightforward when there are clear, detailed logs of actions and events. At any point, you should be able to view who has logged into the platform, what actions they took, which files were transferred, and whether or not there were any failures at any point.
What managed file transfer platforms DON'T need
MFTs should definitely include the several pieces of core functionality mentioned above. But because they can do so much, there is a growing sentiment of other things that an MFT is and must have, and these are closer to stereotypes than the truth.
While common, these are things an MFT doesn't need and can actually be detrimental:
- Strictly on-premises. While MFTs were originally on-premise—and many platforms still are—all of their functions can now be handled on the cloud, which can be even more secure than typical on-prem with the right setup. If you already have the infrastructure, on-prem might be the better option, but you don't have to invest in file transfer infrastructure you don't need.
- Downtime for updates. One of the biggest flaws of traditional MFTs is the update process. Because they often require taking servers offline and can break core processes, many businesses take the risk and avoid updating as often as they should, which can lead to massive breaches. Modern software can update automatically in the background without any change in performance.
- Custom scripting and job scheduling. Automations are crucial, but that doesn't mean you need to write scripts to handle workflows and scheduled transfers. Modern MFTs can handle multistep scheduled and event-driven workflows without needing a line of code.
- Scaling through licenses. Many MFTs scale by adding additional machines, which is also another thing that needs to be updated and maintained. But secure cloud MFTs can easily scale automatically without the limitations of how many machines are physically nearby and available at any given moment.
- Storage component. Files need to pass through the platform, but there's no reason that they need to be stored there. In fact, this passthrough architecture is a major benefit of Couchdrop and lets you use your existing cloud storage as the storage endpoint without ever taking custody of the files at any point of the process.
- Complex with advanced settings. More complexity doesn't mean better, or even more functionality. Legacy setups can require weeks or even months of onboarding and training to learn to use to their full potential. Limiting complexity and auto-optimizing can provide both a simpler and better experience for many organizations.
- Multi-year lock-in. Many MFT providers lock clients into expensive contracts across multiple years, and simple updates may not even be included in that price. Some companies avoid this entirely with month-to-month pricing with no lock-in, and organizations are free to change at any time if the solution doesn't fit their needs.
For modern businesses, many of these so-called "fundamentals" are harmful, and the better option is a platform that is simple, secure, and built for the cloud.
Try the simple and modern file transfer platform
Couchdrop is an alternative to traditional managed file transfer platforms — simple, secure, and built for the cloud. A major advantage is that Couchcrop offers the same level of power, control, and security while being fully cloud native and incredibly easy to use.
Since Couchdrop is entirely in the cloud, there’s no infrastructure setup or management. This also enables organizations to transfer files without taking custody of user files at any point–Couchdrop simply works as an intermediary to shift files between existing storage like Azure Blob, Google Workspace, and Dropbox.
Couchdrop deploys instantly and is ready to use right away. You can also try it for yourself with an instant-access 14-day free trial with no credit card required. To start your free trial, sign up for an account now, or you can learn more by booking a personalized demo.