Your organization likely shares a variety of sensitive information with 3rd-parties in order to carry out critical processes.
To ensure your information is kept secure as it moves between your systems and theirs, you can use managed file transfer software.
We’ll explain how this software keeps your data protected, some of the ways you can use it, and the pros and cons of leveraging it. But to start, let’s clarify what a managed file transfer (MFT) solution is.
What is a managed file transfer solution?
Simply put, it’s an automation solution that’s designed to transfer files and take additional actions on those files.
Note: While this solution uses the file transfer protocol (FTP) or secure file transfer protocol (SFTP), MFT and these protocols aren’t one and the same. FTP and SFTP are communication protocols, not a platform, between an FTP or SFTP server and an FTP or SFTP client. Once connected, FTP or SFTP allows clients to either upload files to or download files from the server.
Related: What is citizen automation?
How does a managed file transfer solution work?
Generally speaking, it offers a server where external organizations can upload files via an FTP or SFTP endpoint. Once uploaded, the predefined rules you’ve built in the MFT solution determine what happens next (e.g. the file moves to a specific application in your internal network).
It’s worth clarifying that MFT solutions can offer different workflow capabilities. Depending on the vendor, you may be able to send email notifications once a file gets added to the MFT server, transform the file in some way (e.g. converting a CSV into an XML file), call specific APIs to process the files, etc.
Managed file transfer use cases
MFT solutions typically work best when a file contains a long list, whether that’s financial transactions, employee records, etc.
Here are a few specific ways to use an MFT solution:
Perform account reconciliation
To help your finance team carry out account reconciliation, you can set up a process that works as follows:
1. At the end of every month, your bank sends a downloaded file of all your activities that month in the MFT server.
2. The MFT server takes that file and uploads it to your accounting system’s server (e.g. Sage Intacct).
3. The accounting system loads the banking records from the file and performs reconciliation.
Share employees’ health plans with providers
Whether new employees enroll in benefits or a longer-tenured employee changes the plan they’re on, you’ll want the provider to be kept fully informed.
To ensure they are, you can use an MFT solution to perform the following:
1. Every day, a file, which contains a list of all your employees and their associated health plans, is extracted from your HRIS (e.g. Workday) and gets uploaded to the MFT server.
2. The benefits provider (e.g. Blue Cross Blue Shield) takes the file from the server, processes it, and then returns the appropriate claims information for each employee back to the server.
3. The HR system can then take that list from the server and upload it.
The advantages and disadvantages of using managed file transfer
To help you better understand whether and when to use an MFT solution, let’s break down the top reasons to use it—and avoid it.
Related: The pros and cons of an iPaaS
Advantages of MFT
- Strict access controls: The solution allows you to define each 3rd-party’s level of access to the MFT server, all but ensuring that you’re able to keep the data within your files secure.
- Maintain compliance: Since the solution offers strict access controls and uses security protocols like HTTPS and SFTP, it can help you keep compliant with stringent data protection and privacy measures, including HIPAA, PCI, and GDPR.
- Centralized management: Your employees can perform every step in setting up file transfers within the solution. Moreover, the platform provides all of the information needed to monitor activities and troubleshoot issues.
Disadvantages of MFT
- Technical expertise: An MFT solution typically requires a certain level of technical expertise to use. This leads to only a fraction of employees being able to use it, which, in turn, prevents the organization from implementing and maintaining file transfers at scale.
- Workflow functionality is limited: While an MFT solution lets you automate to a certain extent, it doesn’t offer end-to-end workflow automation capabilities. As a result, the platform can’t fully deliver on the benefits associated with automation.
- Narrow scope of integration capabilities: Files are only one method of connectivity. The proliferation of databases and application programming interfaces (APIs) allows your organization to embrace more modern approaches to integration that, in many cases, can better meet your requirements.
Address all your integration needs with Workato
Workato, the leader in enterprise automation, lets you connect applications in various ways—from files to database connectors to APIs. The platform also offers a low-code/no-code UX to help you integrate and automate at scale.