This year has seen a boost into the encryption sector by a number of new start-ups and one of them, led by the former founder of ArcSight, arrived in London this week.

We focused on the technology technology offered by CipherCloud earlier this year, and this week it confirmed $30 million funding and an expansion into the European market. Meeting with founder and CEO Pravin Kothari, who was one of the founders of the SIEM giant, showed me the news about the funding appearing on financial websites, I responded by telling him what I usually find in my inbox after lunch.

Kothari said: “We have seen demand from the user to use the cloud but to do it securely as well, as data is going out and that is the number one problem, how do you control and protect it, so it does not go to the cyber criminal and other countries so that other governments cannot get to your data.

“We do client-side encryption, there is too many keys and a bigger nightmare. So we do a gateway to do all of your encryption. With this the user doesn't know what data is encrypted and there is no impact on their usability and there is no change in the cloud application as you use it as you own the data and you select what to encrypt.”

Now entering their third year of operation, CipherCloud have experienced a 500 per cent growth and it has now expanded into the UK and Europe. CipherCloud regional director Richard Olver, said: “CipherCloud has come a long way in just two years.

“The establishment of a dedicated European headquarters is recognition of the phenomenal growth we've achieved in a very short time. We look forward to helping organisations in Europe adopt cloud applications, while ensuring that their sensitive information is fully protected and all government guidelines from the EU Data Protection Reform and the UK Information Commissioner's Office (ICO) are complied with.”

Olver said that the company sees Europe as being 'two years behind' when it comes to cloud computing, yet the company is seeing ten-to-15 per cent of its revenue from European businesses. He referenced analyst statistics on the concerns around cloud computing, and he said Europe is an 'important frontier'.

“We found that 60 per cent of businesses are moving to the cloud so the demand is there, but there are concerns on the control of data,” he said.

Research conducted this week by CipherCloud of 300 senior IT professionals found that 41 per cent were unaware of the recently announced guidelines from the ICO on cloud computing. A quarter (27 per cent) said that they were aware and compliant, yet when it comes to protecting data in the cloud, 29 per cent rely on their cloud application provider, while 28 per cent implement their own internal controls.

Olver said: “UK IT professionals need to be aware of the fact that regulatory non-compliance penalties could be as much as half a million pounds. It's clear that businesses are confused or even complacent about regulation, legislation and compliance when storing data in the cloud and are largely unaware of their responsibilities.”

He said that as ICO guidelines are filtering down from the European Commission, it does suggest that there is a strong European stance on data security in the cloud. “How do we react to this? What people want to know is where are the solutions and the ICO does talk about using solutions, and it is explicit with access to keys,” he said.

“Europe is two years behind and there is pressure to reduce costs and we are engaging with local and national government and we feel that there is a big opportunity.”

Kothari said that CipherCloud had 'come along at the right time' as people want to do more and more with the cloud while many want to get rid of software as 'innovation is in the cloud'. I once asked if encryption ever changes, well truth is the concept does not really, if you excuse the rise in levels of coding, but the ways of doing encryption is what is interesting.

From the encrypted USB key vendors to those with a view on how to encrypt emails, this area is one that regulators love to reference but with little guidance on how to do it – sometimes the most straightforward answer is the best.