Google Eyes the Enterprise Market

For the best part of the last 20 years, pundits have reported on challengers to Microsoft Office and Exchange, the hugely powerful and lucrative franchises that sit alongside Windows in the underpinnings of the world's biggest software company. Most have failed to survive, never mind prosper, but the latest web-based challenger from Google seems to have some legs.

Office has long had over 90 percent market share in desktop productivity suites and Exchange is the default option for firms setting up email, collaboration and calendaring systems, having sped ahead of the original groupware giant, Lotus Notes. These are the lynchpins of the modern enterprise and many of us spend more time looking at these programs than we do with our loved ones. We know their menus, options, shortcuts, shortcomings and occasional eccentricities and we choose to either delight at the usability resulting from millions of lines of programming code and man hours, or despair at bloated incompetence, vulnerability to security compromises and proprietary lock-in.

If users get to know Office and Exchange pretty well, so do CIOs and their teams. This is expensive software and each new version typically requires more expensive hardware. These programs might not be strategic in the sense that SAP is strategic to the operations of a business's back office but they are omnipresent and represent that awkward category of software that gets noticed by mouthy users and opinionated executives. As Robert Whiteside, Google Enterprise head of UK and Ireland, puts it, Office is "mission critical without adding a lot of difference to companies".

We should know better having seen the likes of Lotus Notes and SmartSuite, WordPerfect Office and GroupWise, Corel and Novell fail to topple Microsoft, but it's hard not to get excited by the latest challenge to the Microsoft hegemony, Google Apps.

Why? First, because Google is so well funded, with a market capitalization in excess of US$120bn. Second, because Google's brand currently has luster that even Microsoft cannot match. Third, because it would appear that business computing is edging towards a cloud-based model where more and more applications reside on the web and the user interface is the browser. Fourth, because web-based systems have intrinsic advantages such as spread cost, reduced admin and no need for corporate servers. Fifth and most interesting, because Google has started delivering evidence that sizeable businesses -- and UK businesses at that -- are willing to take its bait.

Two deals this summer have made the world sit up and take notice. First, construction and facilities management firm Taylor Woodrow said that it had deployed about 1800 seats for Google Apps after a pilot that ran from November 2007.

The deal will provide "a step change in how we use email in the organization", says Rob Ramsay, Taylor Woodrow IT director, by providing users with a Google-hosted service that replaces a legacy HP OpenMail system that was front-ended by Outlook.

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One of Google's key opportunities is to step in at times when legacy systems and processes have reached the end of the road and, as Ramsay describes it, this was the situation at Taylor Woodrow.

"We had major challenges in our email with limited mobility and limited scalability in terms of taking it forward to provide email to new staff appointments," he says.

Ramsay also points out the extra savings to be made because web-based systems have features such as antivirus, content filtering and archiving that would be paid-for services in the -client/server world.

Taylor Woodrow is using Google Apps primarily for email and calendaring but does not rule out the domain spreading as people get used to a new way of working.

"We found we were part of a behavioral change just as if you changed your car park," he says. "People could bring their personal calendar or email and sit it alongside their professional one. That clicked with people: I didn't have to put the school run on the professional calendar. When we bought Apps, our initial need was mail and calendar but what's interesting is that there's been a natural evolution to using Docs [Google's set of word processing, spreadsheet and other desktop tools] and Sites [Google's website creation tool]. They're not seen at this stage as a replacement for Office-based products, but if people want to use them, so be it."

Perhaps even more interesting was a subsequent Google Apps deal, this time with the Telegraph Media Group (TMG), publisher of the Daily Telegraph. Most strikingly, TMG is deliberately moving away from a Microsoft infrastructure in favor of Google.

"We've got Office 2003, Windows XP and Exchange 2003 and we started to look at the refresh cycle at the beginning of this year," says Paul Cheesbrough, TMG's CIO. "We had a decision to make as to whether to sign up for a three-year enterprise agreement with Microsoft or look at something else.

"[As a pilot] we took 10 percent of our 1400 user seats and let them use Google Apps alongside their Office and Exchange infrastructure. Overwhelmingly the feedback was positive and there would have been uproar if we had said we were turning it off. We were faced with the decision of whether we pursued the same [Microsoft] path and paid the price for that, or put more and more internal solutions in the cloud.

"We made a conscious decision not to refresh any of [the Microsoft infrastructure]. We're not going to remove it but we won't upgrade it. Some users might use Outlook as the client but we're moving to migrate people from Outlook onto Google by the end of the year. We're not going to rip and replace but we've decided not to refresh Office 2003 and we'll sweat that asset. Google Apps is good enough and rich enough for us to do what we need to do. Collaboration has been very powerful and as people use Google Mail and Calendar they'll naturally stray to use Google Docs.

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"When I started the trial in February I probably wouldn't have forecast this as the result but the user feedback meant that it was an easy decision to make. It fits quite well with other business apps like Salesforce.com. Also, it lets our staff spend less time on disk upgrades and password refreshes and more time being productive."

With Taylor Woodrow and TMG on board, it is possible that other Google Apps prospects could be persuaded to put their heads over the parapet, especially among companies going through strategic change and changing work patterns. This is the case with TMG, which was seeing its employee profile change and also wanted to alter perceptions of IT.

"We're getting much more dynamic internally," says TMG's Cheesbrough. "Daily messages that 'You're over your mailbox limit' were the only communication from IT to staff, so the department wasn't seen as very strategic. Journalists are very collaborative and we had about eight people covering Wimbledon [the tennis tournament] but sharing information was quite cumbersome and mostly done over a mobile. The CEO's challenge to IT was to stop being a beat-up group."

So what are the key reasons to consider Google Apps? Fitting the working patterns and expectations of users is critical.

"Nine out of 10 users said they could work better if they could bring their home computer into work," says TMG's Cheesbrough. "That was striking and getting louder as we changed the kinds of people we were hiring."

Barbara Colledge, dean of partnerships for students at Leeds Metropolitan University (LMU), another Google Apps user that has 30,000 students and 3500 staff, says that students were already big fans of online services.

"Students today are very different to students 10 years ago. Even my daughter's class at school use search engines to do their homework and students expect to use technology in their learning, so you have to think carefully about what you make available," she says.

"We had Microsoft Exchange but we found that it wasn't being used by students. They preferred Hotmail or Google Mail. We're trying to be very contemporary and that includes our IT strategy. We believe in working together with organizations that complement us and can add value. That was a big part of moving to Google."

Although many fight shy of mentioning it, cost is also an inducement to switch. TMG's Cheesbrough says that there could be up to a five-to-one price difference, "and the Microsoft licence piece doesn't get me hardware to run it".

LMU's Colledge also spies a saving. "Cost avoidance comes into it," she says. "If we were considering extending storage to 6GB per user [on an in-house system] we would have to look at it a lot."

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Rapid migration

Speed of change is also critical, with many adopters taking just a few months to move to the new system.

"We went through due diligence but we did it very fast," says Leeds Metropolitan's Colledge. "We started thinking about it in December 2007, made a decision in January to pilot Apps and in February we signed up volume numbers of students who wanted to take that forward. We had 3000 students signed up and students were very positive about the benefits."

Having flexibility is also attractive, with TMG's Cheesbrough saying that using Google's Postini online backup system means that, if necessary, another supplier could be swapped in.

Ubiquitous access is one of the most attractive reasons for using web-based systems of any kind. "We have embedded teams within clients, we sponsor over 100 students and we have major projects such as Heath-row and the Docklands Light Railway," says Taylor Woodrow's Ramsay. "Gone are the days where people work on a site nine to five, five days a week. The model of communicating has changed and we were keen to move into a situation where mail was accessible from anywhere."

LMU's Colledge stresses the global possibilities afforded by using an anytime, any place, anywhere service like Google Apps.

"It was important that we served students in Leeds but also provided access all over the world because we have students in Zambia, Hong Kong and even Alaska. We open up our library all day, every day, so students can come in any day, even Christmas Day, and we wanted the same from Google," she says.

"The other thing important to us was brand association. We felt this was a global brand used by students and we wanted to be associated with this. We can keep the Leeds brand [on Google Apps] and give our students email for life."

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Out and about

Nomad workers are also well served by the web. "About half the company is on the move," says TMG's Cheesbrough, adding that extras such as Google Sites can be useful for ad hoc collaboration.

The inherent collaboration and ability to share documents that is provided with web-based tools is also key.

"Productivity levels increase when staff use Google Sites. It's much more powerful than our intranet that we've spent a lot of time and money on," says Cheesbrough.

"Having one document in one place seems to be a very large advantage," says David Bradshaw of analyst IDC. "It's useful to be able to collaborate and share documents without them being everywhere."

LMU's Colledge has plans for shared calendaring. "We intend to use it for timetables, alerts for exams and to help manage the student life. The next big thing is to think about staff," she says.

Usability and familiarity are also attractions, especially when compared to some legacy systems. "Tools have been built on a business process rather than the way the human mind works," says Dave Armstrong, Google Enterprise head of marketing. "Most of us are not schizophrenic. We have a personality at home and we have the same one at work."

Despite all these advantages, there are risks involved in stepping out of the Microsoft umbrella, one of them being the fact that everybody will be watching to see any signs of failure among the new pioneers.

"Changing desktop platform is one of the highest-risk moves you can make as a CIO," says David Mitchell of research firm Ovum. "Changing ERP is a business risk but changing email directly affects the CEO and CFO. It's a bit like unplugging the telephone system."

But buyers appear sanguine. "We know we'll be watched but the question mark hanging over Windows Vista made this an easier decision," says TMG's Cheesbrough. "People in my position have some doubts as to when it's ready to run your business on. It's not something you would bet your business on just because of stability and the hardware you need. All CIOs probably agree that there are two main challenges in their jobs: cut costs and do more innovation, although these can be contradictory. Email touches everybody so it's a brave man who changes that but we're a company that's changing and it's an interesting point in time. We've eliminated most of the risk by having quite a long trial period."

Other potential snafus? Internet access is becoming ubiquitous and for those that need offline working, the Google Gears local caching system offers this. Service levels are frequently raised as a gotcha but, as TMG's Cheesbrough notes, this has to be compared against an honest assessment of downtime in in-house systems.

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Early gains

Just how important are these recent wins for Google Apps? Experts say it's worth keeping them in context.

"It's still pretty early," says Ovum's Mitchell. "These are two biggish deals but if we compare the number of enterprise deals Microsoft has, it's pretty small stuff. Taylor Woodrow was less of a surprise because it's for an industry dependent on collaboration but TMG is interesting because it's for a professional writing organization and I've been critical of Google Apps for being not particularly writing-friendly in terms of layout, formatting, outlining and grammar checking," he says.

"It's interesting because it's core to TMG's business, like ERP is to a bank. They've been convinced by the productivity and cost structure, and that the service levels have been strong enough."

Also, even though some firms seem happy to accept reduced functionality for lower cost and other bonuses, not everybody will feel the same.

"If you stopped most business users and said: 'We only use 10 percent of Office, can I give you Microsoft Works instead?', theoretically it's the way to go but most users will tell you where to go," suggests Mitchell.

For David Bradshaw of analyst IDC, Google's recent signs of progress suggest that they could well succeed. "They're a potentially serious challenge to Microsoft in the long term. With Google Mail you get an enormous inbox and search is good so you can find things and never have to delete them. I'm a little less enthused by the state of Google Docs but if you're filing a story or report from the field or doing a memo it's fine," he says.

Richard Payling, vice president of global outsourcing sales at Capgemini, which is working with Google on selling opportunities to large organizations, -believes there is much more to come.

"We've had a lot of companies wanting to explore and we've been qualifying hard," he says. "For companies with a Lotus Notes user base or Windows 2000, you can build a case."

Google's Robert Whiteside is predictably enthused. "These are exciting companies to be dealing with. Half a million companies already use Google Apps but people have been keen for us to demonstrate these larger organizations. Any companies looking for reference customers will be taking heart."

Google's chances of making more inroads could be helped by any further decline in economic conditions, believes Whiteside.

"If the economy gets tougher, decisions on any spend get more scrutiny. Finance directors would be well within their rights to question their IT departments' current spending. Google Apps has the potential to take cost out of the business. Even in customers that take a stricter attitude and rule cloud computing firms out, we'll see users vote with their feet," he says.

Even if this might currently appear a mere blip on the radar to Microsoft, it is likely that this is the most significant challenge to the company's desktop tools dominance for some time, according to Ovum's Mitchell.

"It's difficult sometimes to unpick the Office component from Microsoft infrastructure but the market is completely different to five years ago," he says.