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Salesforce.com has quietly snapped up an Israeli cloud security encryption firm and is expected to announce the acquisition at its Dreamforce conference next week in San Francisco, Dark Reading has learned. The move by Salesforce to add encryption to its portfolio goes to the heart of reservations about trusting cloud providers to protect their customers' data.

"The number one reason organizations don't adopt cloud computing more broadly is the lack of ability to protect information in the cloud," says Bob West, CEO of EchelonOne. "Salesforce itself doesn't encrypt information, but it does a pretty good job at protecting data [in general]."

One of the key elements to Navajo Systems' technology, a virtual private cloud encryption gateway that encrypts all data before it goes to the cloud, including Salesforce.com, is that the customer controls the encryption keys. "The enterprise should be holding onto the encryption keys so if someone gains access to their information, they don't also have access to the keys," West says.

Salesforce isn't saying just yet how it will incorporate Navajo Systems' technology into its services, nor would a spokesperson for the SaaS firm reveal any details about the acquisition. Navajo Systems did not respond to press inquiries, and its website appears to have been taken down. A message on the site reads: "Navajo Systems has decided to pursue a different strategy," and it includes a contact name.

Security analysts say the acquisition of Navajo Systems by Salesforce could help reassure skeptical organizations looking for providers to offer encryption solutions for locking down their data in the cloud. "It's going to help for some medium-sized enterprises who can now check the box and say my data is encrypted at Salesforce," says John Pescatore, VP and distinguished analyst at Gartner.

But large enterprises don't typically trust their cloud provider to both store their data and encrypt it, he says. "Larger companies don't want their data to ever be decrypted at Salesforce" or other cloud providers, he says. "They want to keep encryption separate from their SaaS."

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The vendors, contractors, and other outside parties with which you do business can create a serious security risk. Here's how to keep this threat in check. Also in the new, all-digital issue of Dark Reading: Why focusing solely on your own company's security ignores the bigger picture. Download it now. (Free registration required.)