When Google Inc. launched its Web-based e-mail service (Gmail) on April 1, 2004, many people thought it was an April Fools' Day joke, and perhaps with good reason. That same day, the company had posted plans to open a research facility on the moon.
The moon project was a joke. But people quickly realized that Gmail was for real, and the service would serve as the foundation for the company's launching of Google Apps, a free set of messaging and collaboration applications, including e-mail (Gmail), calendar, documents & spreadsheets, presentations, instant messaging (Google Talk), a wiki (Google Sites) and a start page (iGoogle).
Since launching an enterprise version of Google Apps in February 2007 for $50 per user per year, Google entered a competitive landscape inhabited for decades by the likes of Microsoft Corp. and IBM, which both offer office productivity software and corporate e-mail systems.
But it hasn't been an easy road for Google Enterprise (the name given to the division of the company that oversees Google Apps). According to Jonathan Edwards, an analyst at the Yankee Group Research Inc., Google has faced reluctant IT departments (and their CIOs) that see Google Apps as a consumer product, out of touch with the realities of providing the proper security, support and reliability businesses require in enterprise software.
Google fights reputation as a consumer juggernaut as corporate IT resists adoption
This perception about Google's consumer orientation among corporate IT departments runs deep when it comes to e-mail. A recent decision survey by CIO of more than 300 IT decision-makers found that only 18% of respondents would consider a hosted e-mail service like enterprise Gmail. More than 50% said they wouldn't consider it at all, and cited "security reasons" as the main barrier.
For these prospective customers, the decision of whether to adopt Google Apps in the enterprise is as much philosophical as technical. According to Edwards, many companies balk at the idea of letting their data (especially e-mail messages) being stored outside their company's walls and in Google's data center because they worry it will put them at odds with compliance laws such as Sarbanes-Oxley, which requires companies be ready to have their data audited and know exactly where it's located.
Analysts say it's a challenge Google has sought to address through the acquisition of security vendor Postini, which provides such services as archiving and message encryption. Google also offers its customers service-level agreements (SLAs) and IT road maps (a projection of how the technology will progress over time), characteristics inherent in a typical contract between a software vendor and a company buying their product.
Google Apps makers believe time (and IT value) is on their side
Google officials acknowledge this challenge of convincing corporate IT departments that they can be a business software provider. But leaders at Google Enterprise and Google Apps believe they will win the good graces of large business over time for the same reasons other software-as-a-service (SaaS) vendors, such as Salesforce.com Inc., did years ago.
According to Dave Girouard, president of Google Enterprise, software delivered over the Web (or "the cloud") like Google Apps allows IT departments to realize substantial cost savings by having fewer servers to maintain and seamless upgrades to the applications that don't require IT or end users to ever hit a button.
"IT resources are scarce at any company, and with the people you have, they shouldn't be managing e-mail servers," Girouard says. "Those people ought to be working on things that are special and proprietary, things that help you win over competitors." In addition, Gmail's popularity among consumers could cause users to rise up and call for its adoption in large organizations, what the authors Charlene Li and Josh Bernoff of Forrester Research Inc. call a "groundswell."
Rebecca Wettemann, an analyst at Nucleus Research, sees the potential uprising, too. "Users begin to ask, 'Why is this easier at home than at work?' " says Wettemann. "Many software firms are trying to leverage what's going on in the consumer space and bring it to users at businesses. Google is very well positioned to do that."
Google Apps to Microsoft Office: We come as a friend, not a foe
The spread of Gmail and Google's overall popularity as the Web's top search engine made the launch of Google Apps an interesting alternative for businesses to consider: what if you could pay little or nothing for online software and get document and spreadsheet capabilities similar to what you used to pay Microsoft many dollars for with Office?
Microsoft CEO Steve Ballmer and Chairman Bill Gates have downplayed Google Apps' importance, dismissing it as not being a true competitor. Both have noted that Microsoft Office applications such as Word and Excel offer more features than Google Apps.
Girouard and other Google Apps leaders have two responses to such statements: First, in the context of large enterprises, Google views its productivity software as a supplement, not a replacement, to Microsoft Office. Only in the case of Gmail and calendaring, he concedes, does Google Apps present enterprises and their users with a choice.
"It's around e-mail (and calendars) where you have co-existence issues with Google users and non-Google users," he says. "With docs, it tends to not really be an issue because people are just using both [Google Apps and Office], and they use what makes sense for a particular task."
Secondly, Google isn't focused on the quantity of features it can embed into the product. Instead, it's focused on letting users collaborate online in real time. In other words, it doesn't matter to Google whether a person composes content in the Google Apps interface or Microsoft Word.
"Google Apps is used alongside other applications, and we believe that will increasingly be the case," says Girouard. "In the cloud-based model, there will be more vendor choice and mixing and matching rather than standardizing on a single vendor."
With respect to features, the people designing and managing Google Apps say they focus on getting each feature right for the user rather than packing in new, or half-baked, functions into the software for the sake of it.
"It's not about the application with 503 features beating the app with 502 features," says Rajen Sheth, product lead for Google Apps. "I think it's more about the app with 15 really solid, really useful features."
The flavors of Google Apps
- Consumer: Any person who has a Gmail account has access to the consumer version of Google Apps. This includes the key functions (Gmail, Calendar, Docs & Spreadsheets, Talk and Google Sites). Ads run alongside many of the applications to subsidize the user's free experience. Each user gets 6.7 MB of storage.
- Standard: This is utilized by many small and midsize businesses and is also free (with ads). It has everything the consumer version has, but it enables companies to use their own e-mail address (instead of @gmail) and has mobile access, an administrator control panel, e-mail migration tools and online support.
- Premier: For $50 per user per year, it includes 25GB of storage per user and no ads. Aside from all the features of the standard version, it has e-mail security provided by Postini, and it comes with APIs that allow organizations to integrate Google Apps with enterprise single-sign on systems and e-mail. It also includes 24-hour phone support.
The security and compliance question: Getting comfortable with Google
Google's philosophy around information security is fairly simple: Your data is safer with Google than it is with you.
"That's sort of bold and right in the face of what people object to with SaaS, but to be honest, that's the truth," Girouard says. "We've had intelligence agencies of the United States government tell us that: 'We think our data would be safer with Google than it is on our own servers.'"
As Google offers prospective customers a deeper look at its security under nondisclosure agreement, it's impossible to know what those agencies found so appealing. On a more practical level, however, analysts say Google's acquisition of Postini has helped in its efforts to show that it is serious about keeping enterprise data safe. The Google Apps premier edition has a Postini console to manage messaging security.
"Postini has helped Google Apps a bit," says Edwards. "Postini has a proven security product that many businesses have trusted."
Google also received a Statement of Auditing (SAS 70) certification, which requires a close examination of the company's internal security controls. Such certification has been seen as an important step for SaaS companies showing customers they're in line with compliance standards, especially Sarbanes-Oxley, Edwards says.
Although Google officials like Girouard are bullish on the business value of their online applications, analysts say the company's high profile among consumers makes it more difficult to win over IT departments than other SaaS companies have faced in the past.
Nucleus Research's Wettemann says that people wonder if their enterprise data could somehow come up on a search by a regular consumer using the Google search bar. "A lot of it is perception," Wettemann says. "You look at what they do with Google Health, and people wonder 'will people be able to Google me and find my health records?' The answer is, of course, no, but it takes people [and businesses] some time to get over that idea."
Google's partnership with SaaS vendor Salesforce.com
To help win the enterprise hearts and minds, Google has tapped into the expertise of one company who has shown that SaaS is just as safe as on-premise software: Salesforce.com, which sells customer relationship management software and delivers it to business users over the Web.
Back in April, Google and Salesforce.com entered into a partnership that made a basic version of Google Apps available for free to any Salesforce.com customer who wanted it. The deal has opened up new sales channel for Google Apps to be sold to businesses.
"It's been great because Salesforce.com has been at this for a lot longer than we have," Girouard says. "The joint selling is great, and it'll be a nice symbiotic relationship."
The upside to Google Apps' open design
Google Apps has largely been designed based on Google's overall philosophy that the Web should be open to consumers and businesses to use as a platform for creating new applications. As a result, Google Apps utilizes a lot of open APIs that allow third-party developers to build on top of it.
The advantage to this strategy is that it helps Google add features to Google Apps that its developer and engineering teams, which focus on core functions of the software, might not otherwise have time to create. An example of this occurred recently with Google Spreadsheets.
Sheth and his Google Apps project team focus primarily on what he calls the 80% use case -- meaning, he wants to build the application so that for 80% of users at a company, it has all the features they would need. So when people complained that Spreadsheets didn't have a pivot table capability, he let the openness of the Google Apps platform do its work.
"Pivot tables is kind of a power-user functionality, so it's not something we'd go to as the first thing we'd build," Sheth says. "But now we have a pivot table that was actually built by a third party that extends the functionality of spreadsheets."
The third party was a vendor called Panorama Software Ltd., which focuses on business intelligence software. It used Google Gadgets, which allows people to build or place applications on top of Google Spreadsheets. By tapping the abilities of third-party developers, analysts say Google can keep the product innovative and less static.
According to Yankee's Edwards, Google's ability to build a developer community could help them like it did for Microsoft years ago in creating an ecosystem of developers around Windows. Last week, Google held a conference in San Francisco and outlined its plans for investing in third-party developers. "If you get a developer community behind you, you can get new and innovative stuff daily," Edwards says.
Part of this picture also includes, for Google, the fact that Google Apps makes no presumption that it is your only enterprise vendor, says Sheth.
They have built tight integration with existing e-mail and calendaring systems such as Outlook and Exchange and will continue to hook into more systems moving forward. Google Docs & Spreadsheets can import and export files to PDF, Office files, or OpenOffice.
"One of the core philosophies we want to push is that we don't assume we're the only thing out there," Sheth says. "These applications are built to assume that they'll work with apps customers already have, both in the cloud, and on premise."
It's social
Traditional e-mail and productivity tools for businesses have typically been antisocial. For instance, if a user composed a document on Microsoft Word, the ability to share it with colleagues in real time has been fairly limited. At most organizations, the tendency would be to e-mail it around to co-workers, or if the company used Microsoft SharePoint or Office Live, they could check it in and out of a central repository.