Google hopes AI, collaboration will win G Suite customers

With messaging that focuses on innovation and teamwork, Google aims to woo more corporate customers for its cloud-based productivity suite. Is that enough to stop Microsoft's Office 365 juggernaut?

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With G Suite, Google faces an uphill battle against Microsoft’s widely used Office 365 productivity tools. At its Cloud Next conference in San Francisco earlier this month, Google unveiled a number of updates to G Suite, outlining its vision for a collaborative, AI-infused set of apps under the marketing banner “Make it fast. Make it smart. Make it together.”

Among the announcements: Google Assistant’s integration with G Suite Calendar; the expansion of Cloud Search to third-party business applications; and the addition of telephony features to create a unified communications as a service (UCaaS) offering within G Suite.

Following that raft of updates, is G Suite better positioned to truly threaten Microsoft’s Office 365 dominance?

G Suite has certainly built strong momentum of late, adding another million paying business customers in the past 12 months to reach 5 million. Among these are a range of big-name customers such as Colgate-Palmolive and market research giant Nielsen; however, Google doesn’t break out its customer numbers by organization size.

“G Suite continues to grow rapidly,” said Raúl Castañón-Martínez, a senior analyst at 451 Research, though he added that Google is likely to have benefitted from overall market growth, not necessarily by making a dent in Microsoft’s share.

As more businesses invest in digital workplace tools, Office 365 adoption continues to grow quickly, too. There are now 155 million individual Office 365 users, up from 135 million a year ago. (With Google counting business customers and Microsoft counting individual users, this is not an apples-to-apples comparison.)

At many large businesses, Microsoft benefits from well-established relationships with senior IT leaders that have been built up over many years. “The reason why Microsoft is as successful as it has been in the enterprise for two and a half decades — and they are a force of nature in that space — is that they have more feet on the street than Google,” said Tom Galizia, Alphabet Google Alliance Leader, Consulting and Commercial Partner at Deloitte.

However, there are signs that Google has made progress, no doubt helped in recent years by the appointment of former VMware CEO Diane Greene in 2015 and then Oracle veteran Thomas Kurian earlier this year to head up its cloud division.

“G Suite has scored major wins with large global brands, and some of its products — namely Gmail and Drive — are doing very well as standalone products,” said Castañón-Martínez. “This could translate into G Suite reaching a pivotal moment, with adoption rapidly accelerating in the next two years.”

A focus on innovation

Launched a decade ago as Google Apps, G Suite was aimed at early adopters of cloud software. Google placed a strong focus on teamwork, with real-time collaborative editing in Docs one of the suite’s key strengths.

In recent years, Microsoft has, in turn, deemphasized its traditional on-premises Office software in favor of its subscription Office 365 offering, building cloud-based collaboration and AI capabilities into the suite’s existing apps and introducing new services such as Teams.

So, as Office 365 continues to evolve as a SaaS productivity suite, how does Google plan to compete? According to Julie Black, a director of product management at Google who oversees a team that focuses on intelligence within G Suite, the aim is to play to what many perceive as the company’s core strength.

“For us, it's about innovation … and an innovation-focused suite of products,” she said. “This is a place where we see our experience in AI being extremely powerful, because we can bring that to bear in the products that we ship and launch, as well as bringing the best of Google into our product offerings.”

AI capabilities featured prominently among the numerous G Suite updates unveiled at Google’s Cloud Next event San Francisco last week.

The most eye-catching of these is the integration of the voice-activated Google Assistant with Google Calendar for G Suite customers. Although at first it will offer relatively simple functionality, there is huge potential for voice assistants in the context of enterprise productivity and collaboration, an area that Google is well-positioned to exploit with G Suite.

Another key announcement at Cloud Next was the general availability of Google Voice, said Castañón-Martínez, bringing telephony capabilities to G Suite. This helps to close the gap with Microsoft and Cisco — two rivals that already offer voice communications as central components of their productivity and collaboration portfolios.

The integration of AI into the user experience offers some advantages over its more established competitors. “A side-by-side comparison with UCaaS providers might result in Google Voice appearing as a solution that lacks features, but I think this would be an inaccurate assessment,” said Castañón-Martínez. “Google is approaching telephony in a different way; this includes incorporating AI to provide the end user with contextual and intelligent features such as voicemail transcriptions and call filtering, and using text-to-speech technology to automatically create call menus in up to nine languages.”

Google is also applying AI to the meeting room experience. Hangouts Meet, G Suite’s videoconferencing service, now taps Google’s speech recognition technology to show live closed captioning during meetings. This makes it easier for remote participants in noisy environments or with hearing difficulties to follow the conversations.

However, Google is not the only vendor to bring AI to the meeting room experience. Microsoft has introduced similar real-time captioning features for Microsoft Teams video meetings, while Cisco highlighted its own AI ambitions within Webex Teams recently, with updates to its voice-enabled Webex Assistant and the addition of facial recognition.

Appealing to enterprise customers — and beyond

Another announcement at Cloud Next likely to appeal to large businesses is the integration of Cloud Search with third-party tools. This essentially means bringing Google’s search expertise to a variety of data sources, including vendors such as Salesforce and SAP. Cloud Search, launched in 2017, was previously only applicable to data stored in G Suite.

“Cloud Search provides a singular place where they can go say, ‘Hey, give me all of the sales projections from the past, or give me all the sales figures,’ and pull from all the different data sources that might have that information. And so it's really search across all the content in the enterprise,” said Black. 

The announcement is an indication of Google’s desire to integrate G Suite with the business apps that are the lifeblood of many large organizations.

“You're starting to see the intersection of G Suite with enterprise software, in particular Salesforce,” said Deloitte's Galizia. “The counterpoint is Microsoft Dynamics is starting to take hold, but it's nowhere near as big or at a scale that Salesforce has today at enterprises. So you've got this interesting sort of Axis/Allies game happening where the footprint of Salesforce could help G Suite pretty significantly.”

Appealing to large businesses may be a priority, but Google has its work cut out in matching Microsoft’s presence in these environments. “I would still say that the majority of customers have a portfolio and historical connected lineage to Microsoft, because that's where they came from, and people like to go with what they know,” said Galizia.

That’s especially true for CIOs who have spent years of their career deploying Microsoft products, he added. “So there's an economic side of this argument where they may be sweating assets or contracts are sorted, and the idea of switching is an undertaking that they're not willing to embrace, because it's new technology and capability, and because they're worried about the journey and the stress that it would put on the organization,” he said.

Nevertheless, there are signs of progress for G Suite. “It's still in the minority of the conversation today, but you will be surprised when you look at the list of Fortune 500 companies that have made the move, and how big and sizable those organizations are.” Galizia said. “The feedback has been very positive about how quickly they were able to make the move, and how seamless the assimilation of the new product set was once it was launched.”

There are other reasons for optimism.

With its successful strategy of targeting the education sector with Chromebooks and G Suite, Google is playing the long game. “As students who grew up using G Suite join the workforce, its adoption in the workplace will further accelerate,” said Castañón-Martínez.

Google is also well positioned as software vendors, including Microsoft, turn their attention toward frontline workers such as healthcare or retail staff. Due to their ease of use and mobile friendliness, G Suite’s productivity and collaboration tools make for a compelling proposition for employees who don’t spend their day sitting at a desk.

Google Cloud CEO Thomas Kurian pointed to the company’s plans in this direction during his presentation at Cloud Next, said Galizia. “He gave a couple of examples in one of the keynotes where he foreshadows where they're going with that set of workers, and how big that market really is,” said Galizia. “Most ‘blue collar workers’ have supercomputers in their pockets, and the enterprise companies they work for have not optimized to that reality. Google's going to go after that in a mature way.”

Positioning G Suite

Part of the challenge for Google is how G Suite is sold to customers. “Google still has a lot of work to do to position G Suite against Microsoft — not least because it has a tendency to position against on-premises Exchange and Office deployments, rather than Office 365,” said Angela Ashenden, principal analyst at CCS Insight.

“The G Suite market proposition is still very much driven by Gmail and Drive, largely because these are the apps in the portfolio that have the greatest traction, and act as the gateway for engaging new customers,” she said. “However, the suite is much broader and richer than that, and much of its advantage comes in the way the apps work together. We’ve seen some of that coming through in their promotional videos, but these really just skirt the surface of what G Suite is and does, rather than fully telling the story.”

While she welcomed the updates to G Suite at Cloud Next last week, in particular the general availability of Google Voice, Ashenden said that Google could do more to make G Suite a cohesive collection of tools in order to compete with Office 365.

“I’d like to see Google treat G Suite as more of a platform, rather than a set of apps,” she said. “In particular, I think Google needs to reinforce the Hangouts Chat capabilities and look at the way it can compete with Microsoft Teams here. That’s Microsoft’s biggest differentiator for Office 365 at the moment, providing a center of gravity for all the pieces of Office 365. Google doesn’t have a great response to that right now.”

With Google’s Cloud division also selling infrastructure and platform as a service products that compete with Amazon Web Services and Microsoft Azure, the benefits of G Suite can be less visible.

“There are some great differentiating facets to the G Suite portfolio, not least its security and management capabilities and the infusion of AI across the suite, which helps the productivity tools in particular (Docs, Sheets and Slides) stand out compared to the Office apps,” said Ashenden.

“However, despite some high-profile large enterprise customers which demonstrate its potential for this audience, the G Suite positioning still gets lost in the broader Google Cloud story, with little to showcase how it can help large organizations transform the way they work,” she said.

G Suite could profit from Google “emphasizing the benefits of cloud-native collaboration,” Castañón-Martínez said. “While Microsoft has moved in this direction, together with AI, this remains a key differentiation for G Suite,” he said. “I think G Suite can step up its marketing efforts to highlight this differentiation and the benefits it provides for team collaboration, particularly for teams in distributed work environments.”

He added that Google’s ability to innovate is a key strength for G Suite, but it is not an easy story to tell. “The benefits of AI and cloud-native collaboration are not immediately obvious; they typically result from users understanding the benefits based on their day-to-day use of the tools,” he said. “This means adoption could be a matter of time — i.e., once Google passes a certain threshold, adoption will accelerate. I believe they are getting closer to this pivotal point.”

With reports from Valerie Potter.

Copyright © 2019 IDG Communications, Inc.

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