Encrypted File Sharing Solutions: How to Pick the Right One for Your Business

Over 60% of organizations reported at least one data breach in 2023, making the selection of encrypted file sharing solutions a board-level priority for regulated enterprises. With global data generation reaching 147 zettabytes in 2024, IT leaders must implement secure file sharing solutions that protect intellectual property while enabling encrypted sharing across global teams through encryption at rest and in transit.

This guide offers a framework for evaluating and selecting a secure file sharing service for IP-sensitive data that meets compliance requirements.

Executive Summary

Main Idea: This guide provides a structured five-phase framework for selecting secure file sharing solutions that protect sensitive data while meeting regulatory compliance requirements—from defining security goals and auditing current systems to establishing encryption standards, evaluating vendors, and validating solutions through pilot testing.

Why You Should Care: With over 60% of organizations experiencing data breaches and 147 zettabytes of data generated globally, choosing the wrong file sharing solution exposes your organization to regulatory penalties, intellectual property theft, and operational disruptions. A systematic selection process ensures your solution delivers measurable security outcomes while enabling productive collaboration across global teams.

Key Takeaways

1. Data classification drives protection strategy. Organizations must categorize sensitive data—intellectual property, PHI, PII, and CUI—to apply appropriate encryption, access controls, and compliance measures aligned with regulatory frameworks like HIPAA, GDPR, and CMMC.
2. Current file sharing channels harbor critical security gaps. Shadow IT adoption, missing audit trails, and inadequate key management create vulnerabilities. A comprehensive audit of email, EFSS, MFT, and SFTP systems reveals where controls break down and risk accumulates.
3. Cryptographic standards are non-negotiable for enterprise security. AES-256 encryption at rest, TLS 1.2+ in transit, end-to-end encryption for external sharing, and customer-managed keys with FIPS 140-3 Level 1 validated encryption form the baseline for protecting sensitive data and meeting compliance requirements.
4. Zero-trust access controls reduce breach exposure. Least-privilege policies, multi-factor authentication, SSO integration, and granular permissions—including expiring links and time-bound access—limit attack surface while maintaining immutable audit trails for compliance reporting and chain-of-custody documentation.
5. Pilot testing validates real-world security and usability. A 30-60 day pilot with scenario-based exercises confirms encryption implementation, key management controls, audit trail completeness, and user experience under actual workloads before full deployment and investment commitment.

Five Phases of Secure File Sharing Selection

Encrypted file sharing refers to the secure transmission, storage, and controlled access of files using cryptography, identity controls, and audit logging.

The selection process involves five critical phases: defining security and compliance goals, auditing current file-sharing practices, establishing encryption and access control requirements, vendor evaluation, and pilot validation. Each phase contributes to a solution delivering measurable business outcomes, including regulatory compliance assurance and complete chain-of-custody.

The secure file sharing market continues to grow as enterprises prioritize control and compliance, with on-premises deployment still dominating the market due to governance considerations.

1. Define Security & Compliance Goals

Clear definitions of risk, compliance, and governance requirements drive vendor selection and ensure alignment with organizational objectives.

Identify Sensitive Data Categories

Organizations must classify data to apply appropriate protection levels:

• Intellectual Property (IP): Designs, source code, formulas, or trade secrets.
• Protected Health Information (PHI): Individually identifiable health data created or received by a covered entity.
• Personally Identifiable Information (PII): Information that can identify a specific individual.
• Controlled Unclassified Information (CUI): Sensitive information requiring safeguarding, as defined by the government.

Map Regulatory Obligations and Audit Expectations

Compliance frameworks vary by jurisdiction and industry:

• HIPAA: Healthcare data protection with encryption and access controls.
• GDPR: European data privacy with data residency and subject rights.
• CMMC: Defense contractor cybersecurity with validated encryption.
• NIST 800-171: Federal contractor requirements including FIPS 140-3 validated crypto.

Document data residency and localization requirements for cross-border operations, especially for European and government data.

Set Measurable Security Objectives and Service Targets

Establish specific, testable requirements:

Encryption Objectives:

• AES-256 for data at rest and TLS 1.2+ for data in transit.
• End-to-end encryption (E2EE) for external sharing.

Key Management Objectives:

• Documented key rotation with segregation of duties.
• Tamper-evident logs and customer-managed key options.
• Poor key management contributes to 80% of encryption-related incidents.

User Experience Objectives:

• Minimize friction to reduce shadow IT adoption.
• Streamline workflows to prevent human error.

Sample Goal Statement

“Enforce AES 256 encryption at rest and TLS 1.3 in transit, with customer-managed keys and FIPS 140-3 Level 1 validated encryption, so that cross-border engineering teams can share IP securely and meet audit requirements while maintaining productivity.”

On-premises deployment continues to dominate 57% of the secure file transfer market due to control and compliance considerations.

2. Audit Your Current File-Sharing Landscape

Inventory where files move today and identify where controls break down to establish baseline security posture.

Catalog Every File Exchange Channel

Document all current file sharing methods:

• Email and Encrypted Email
• Enterprise File Sync and Share (EFSS)
• Managed File Transfer (secure MFT): Policy-driven automation of secure, large-scale file transfers.
• Secure File Transfer Protocol (Kiteworks SFTP)
• Secure web forms and APIs

Map Data Flows and Classify Information

Identify systems of record, including Office 365, Box, and OneDrive, along with identity providers and third-party endpoints. Flag cross-border transfers and document data residency constraints by jurisdiction.

Assess Current Encryption, Transport, and Identity Posture

Verify current security controls:

• Encryption at Rest: Confirm AES-256 standards and key ownership.
• Transport Security: Require TLS 1.2+ and phase out deprecated protocols.
• Identity Controls: Validate SSO/MFA coverage and least-privilege enforcement.

Identify Gaps That Create Risk and Cost

Common vulnerabilities include:

• Shadow IT: Unauthorized tools used to bypass friction.
• Auditability: Missing immutable logs and chain-of-custody.
• Key Management: Centralized visibility and rotation gaps.

Current State Assessment Table

3. Pinpoint Required Encryption & Access Controls

Standardize on proven cryptography, hardened key management, and zero-trust access controls to meet enterprise security requirements.

Establish Cryptographic Baselines

Set minimum encryption standards:

• AES-256: Baseline for data at rest.
• TLS 1.2 or higher: Secure data in transit; require strong ciphers.
• End-to-End Encryption (E2EE): Content remains encrypted from sender to recipient.
• Tokenization: Replace sensitive data with tokens while preserving workflows.

Specify Key Management Requirements

Choose appropriate key management models:

• Customer-Managed Keys (CMK): Keys controlled by your organization.
• Provider-Managed Keys (PMK): Keys managed by the vendor’s KMS with contractual controls.

Require auditable key lifecycle controls and separation of duties.

Define Access Control Expectations

Implement zero-trust access principles:

• Least-Privilege Access: Role-based (RBAC) and attribute-based (ABAC) policies.
• MFA and SSO: Enforce across users and administrators.
• Granular Policies: Expiring links, watermarking, view-only, download restrictions, and time-bound access.

Require Compliance-Grade Observability

Establish comprehensive monitoring and reporting:

• Immutable Audit Trails: End-to-end chain-of-custody and policy changes.
• Reporting: Automated compliance reports mapped to frameworks.
• FIPS 140-3 Level 1 Validated Encryption: For government workloads where required.

Business Impact of Controls

• Reduce breach exposure: E2EE and CMK lower blast radius.
• Accelerate audits: Centralized logs streamline evidence collection.
• Support sovereignty: Data residency controls honor localization rules.

4. Shortlist and Compare Vendors

Build a structured evaluation that balances security, compliance, integration, usability, and total cost of ownership.

Use a Weighted Scorecard

Evaluate vendors across six critical categories:

1. Security and Encryption
2. Compliance and Certifications
3. Identity and Access
4. Integrations and APIs
5. Governance and Auditability
6. Operations and TCO

Market Context for Vendor Selection

Understanding market dynamics helps set realistic expectations:

• secure file sharing is concentrated, with seven vendors holding about 64% market share; emphasize compliance and integration depth.
• In MFT, large incumbents hold over 35% share; scrutinize automation and enterprise key management.
• Large enterprises represent most secure file transfer adoption, reinforcing the need for scalability and auditability.

Require Concrete Proof for Claims

Demand evidence-based validation:

• Encryption Evidence: Documentation confirming AES-256 at rest, TLS 1.2+ in transit, and E2EE options.
• Key Management: CMK/HSM support and documented rotation procedures.
• Compliance: Evidence of FIPS 140-3 Level 1 validated encryption modules when applicable.

Validate Enterprise Fit

Assess integration and governance capabilities:

• Integrations: Office 365, identity providers (SSO/MFA), secure file sharing
  /managed file transfer/SFTP, SIEM, and DLP.

• Governance: Rich audit trails, retention policies, legal hold, and chain of custody.
• User Experience: External sharing without account sprawl; mobile and desktop parity to mitigate human error risks.

Kiteworks Competitive Advantages

• Unified Private Data Network: Consolidates file sharing, MFT, encrypted email, and web forms with centralized governance.
• Zero-Trust Controls: Least privilege, granular policy enforcement, and detailed audit logs.
• Compliance Readiness: Purpose-built for regulated sectors requiring strict auditability and encryption controls.

5. Pilot, Validate, and Finalize the Solution

Design a 30–60 day pilot to validate security, governance, and usability under real workloads with measurable success criteria.

Define Success Criteria with Measurable Acceptance Tests

Establish clear validation requirements:

• Crypto Validation: Confirm AES 256 encryption at rest and TLS 1.2+ in transit; verify end-to-end encryption (E2EE) for external recipients.
• Key Ownership Tests: Prove CMK control, rotation, and revocation; observe behavior on key disable.
• Auditability: Generate immutable audit logs; export to SIEM; reconcile chain of custody for sample transactions.
• Compliance Reporting: Produce report artifacts mapped to required frameworks.
• Usability and Adoption: Time-to-send, external recipient friction, mobile parity, and admin overhead to reduce human error risk.

Run Scenario-Based Exercises

Test real-world use cases:

• Cross-Border Share: Validate data residency policy enforcement.
• Incident Drill: Simulate credential theft; observe MFA/SSO enforcement.
• Vendor Exchange: Test secure collaboration with a third-party supplier.

Score Results and Finalize

Use the weighted scorecard to capture gaps, compensating controls, and remediation dates. Structure commercial terms to include SLAs, support response, roadmap commitments, and exit provisions.

Secure file sharing remains a top CIO priority in hybrid work roadmaps, reinforcing the need to validate scale and governance during pilot design.

Kiteworks is Uniquely Qualified to Protect the Sensitive Data You Share

Kiteworks consolidates secure file sharing, secure email, secure virtual data rooms, secure MFT, secure web forms and other channels into a Private Data Network, ensuring all sensitive data is controlled, protected, and tracked as it enters and leaves an organization.

Unlike point solutions that create security gaps and operational complexity, Kiteworks provides end-to-end encryption, zero-trust access controls, and immutable audit logs within a single platform.

Purpose-built for regulated enterprises, Kiteworks accelerates compliance audits through automated reporting mapped to frameworks like HIPAA, GDPR, and CMMC 2.0 compliance. The platform’s customer-managed key options, FIPS 140-3 Level 1 validated encryption, and granular policy enforcement ensure that sensitive data remains protected while enabling seamless collaboration with trusted partners. With deep integrations to existing enterprise systems and proven scalability across global deployments, Kiteworks delivers measurable outcomes: reduced breach exposure, streamlined regulatory reporting, and accelerated time-to-compliance for organizations that can’t afford to compromise on security.

To learn more how Kiteworks can help you share files in adherence to your security, compliance, and business needs, schedule a custom demo today.