Will Page back Google's enterprise unit?

A source familiar with the strategy said the incoming CEO has always been a strong advocate for enterprise

After Google's ground-shaking decision to change CEOs, the company should explain soon to customers and partners how its plans for the enterprise will evolve after Larry Page takes over in April from Eric Schmidt.

Google's enterprise unit caters to an audience of CIOs, IT directors, business managers, resellers and consultants, all of whom demand clarity, consistency and long-term product road maps from their vendors and partners.

While shifts in the top management at any tech firm can be a worry for enterprise customers, the issue could be seen as a bigger one at Google, whose enterprise business contributes a tiny piece of its overall revenue.

In addition, this year Google's main enterprise product, the Google Apps suite, will face much tougher competition from various players, including Microsoft with its upcoming release of Office 365.

The enterprise unit may well rank below other priorities for Page, such as boosting Google's shaky social-networking position, pushing ahead with Android in the cutthroat mobile market, doubling-down on the upcoming Chrome OS and growing display ad revenue, not to mention retaining Google's dominance in search advertising.

"If push comes to shove and management decides to jettison less-strategic initiatives, Google Apps could be in trouble," Gartner analyst Tom Austin said via e-mail.

It doesn't help that Schmidt, a former CEO at Novell and CTO at Sun Microsystems, has much more experience and, arguably, knowledge of enterprise software than Page. Schmidt once described the enterprise unit as Google's backup plan if the bottom ever fell out of the online ad market.

"Page has less enterprise business experience. Schmidt has deeper enterprise roots. Does that mean they will back off on their enterprise investment on Google Apps? We don't know but we would be surprised if they don't raise -- or re-raise -- that question," Austin said.

Google declined to comment at this early stage about Page's plans for the enterprise unit. However, a source familiar with the strategy said Page has always been a strong advocate for the business and expects it to remain a focus for the company and a continued area of investment.

Douglas Menefee, CIO of healthcare company The Schumacher Group, is optimistic about Page's appointment but hopes he articulates his vision for the enterprise unit quickly.

"With any senior change in an organization I have concerns on the products and service. I will be monitoring our service delivery throughout the transition," he said via e-mail.

The Schumacher Group has 2,500 users of Google Apps for Business, the paid version of the suite, as well as 3,500 users of Google's Postini message security and archiving service. In addition, the Lafayette, Louisiana-based company plans to start using Google's enterprise Search Appliance.

It gives him confidence that Google Enterprise products are in enough demand and generating enough revenue for Google that freezing investment in them would be illogical. "My hope and anticipation is that Google will continue to commit resources towards enterprise solutions," Menefee said.

That said, it wouldn't surprise him if Google Apps sales slow until Page explains his plans for the enterprise. "However, I don't anticipate a knee-jerk reaction from the CIO community to exit out of existing contracts. After all, we continue to get value from the solutions," Menefee said.

Industry analyst Michael Osterman from Osterman Research believes that when Schmidt assumes his new role as executive chairman, which will focus on external relations with customers, partners and government agencies, he may have more time to spend advocating for Google Apps in the marketplace.

"Google definitely needs to focus on the enterprise market given Microsoft's strong push with Office 365," he said via e-mail. "Consequently, there is an important window of opportunity for Google now in the enterprise space in advance of Office 365."

Cloud Sherpas, a Google Apps reseller and service provider, has no concerns about the CEO switch, said founder and marketing vice president Michael Cohn.

"We're sad to see Eric step down. He was a strong supporter of Google Enterprise," Cohn said in a phone interview. "But we don't have any fear with regards to Larry."

However, Cohn also looks forward to hearing what enterprise strategy Page plans to pursue, especially his plans for the Google Apps channel partners.

For analyst Rebecca Wettemann at Nucleus Research, Page has a lot of work to do to prop up Google's enterprise business.

"While Eric was a good spokesperson, Google still struggled between enterprise aspirations and the smartest-kid-in-the-room mentality. It's not surprising that Eric was challenged in driving real enterprise success at Google. At Novell, his skill was in brilliant research & development, not necessarily in bringing compelling enterprise products to market," she said via e-mail.

Page needs to bring more execution to the enterprise unit beyond product innovation, including reliable product road maps, enterprise-class customer support and service, and a stronger commitment to business needs and data protection, she said. "I'm not sure Page is up to the challenge, but Eric didn't leave huge shoes to fill," Wettemann said.

IDC analyst Al Hilwa is also skeptical about Google's long-term commitment to the enterprise market. "It's not clear how much Google really wants to play there. They have talked the talk, but I'm not sure they are walking the walk," he said via e-mail.

Currently, Google Apps has more than 30 million users, including millions of its paid version Apps for Business. In 2010, more than 1 million businesses adopted Apps, raising the total to more than 3 million businesses, according to Google. Recent customer wins include the U.S. General Services Administration, Virgin America and large food retailer Ahold.

Chris Abraham, president of the Abraham Harrison digital marketing and social media agency, is also confident in his company's investment in Google Apps for Business. "If Google had brought in an outsider, there might be more of a concern, but the fact that it's a co-founder taking the reins is reassuring," he said in a phone interview.

Copyright © 2011 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon