| Google's
tough sell to Corporate America
Google
gets serious about online business software, but corporations
have yet to get serious about Google.
By
Yi-Wyn Yen
September 17, 2008
Steve Skinner, the head of information technology
for a big Bay Area real estate agency, recently got his umpteenth
call from Google. Would Skinner be interested in buying a
package of e-mail, word processing and other software known
as Google Apps for his company's 1,300 employees?
Skinner once again declined. He thinks that
Google Apps, while promising, has a ways to go before it can
crack the market for corporate software that Microsoft has
long dominated. In June, Skinner renewed a contract to run
Microsoft's desktop software for another three years.
"I don't know if [Google Apps] is ready
for primetime yet," said Skinner, the technology chief
at Saratoga, Calif.-based Alain Pinel Realtors.
 It's
a refrain that Google hears a lot these days from big companies.
Eighteen months after making a push into corporate software,
only a handful of Fortune 500 and mid-sized companies have
started using Google's programs—mostly anti-spam or
calendaring tools—and none have embraced Google Apps
in its entirety, preferring instead to stick with Microsoft
Office or its distant competitors.
Microsoft last year sold $12.2 billion worth
of Office software, according to research firm Gartner. Google
pulled in just $4 million from Google Apps.
One reason for Google's tough slog is simple
inertia. Switching from one set of corporate software to another
is hugely time-consuming. But Corporate America's reticence
also stems from Google's overarching goal: to replace packaged
store-bought software loaded on a desktop with programs that
reside remotely on Google's servers and are accessed via the
Internet.
A lot of companies, from IBM and Oracle to
Hewlett-Packard and Salesforce.com, are betting that Web-based,
or "cloud," computing is the future of software
(consumers already use it to access their Yahoo or AOL e-mail).
On Wednesday, Cisco bought e-mail software developer PostPath
for $215 million as part of its push into online business
applications, a market that Merrill Lynch estimates will be
worth $95 billion in five years. Even Microsoft, which has
a lock on 98% of the market for desktop office software, is
getting into the game.
The market for online office software is "wide
open," said Guy Creese, an IT analyst with the Burton
Group who predicts that the race will come down to Microsoft
Office and Google Apps. To win, he added, "Google has
to come up with something significantly cheaper and better
than Office."
The fact that no major corporation has switched
to Google Apps doesn't faze Matthew Glotzbach, management
director for Google Enterprise. Big businesses increasingly
are showing interest in the software. "This is the playbook
we expected," he said. "With any new technology
you're going to see smaller companies being the earlier adopters."
Weighing the pros...
On the face of it, Google has a winning proposition:
Google Apps, which includes e-mail, calendar, Web messaging,
word processing, spreadsheets, and slideshow presentations,
is much cheaper than Microsoft Office: $50 per user per year,
compared to the $350 per user that major corporations spend
on average each year to run Office and Microsoft Outlook e-mail.
With Google Apps, teams of workers can work on a single spreadsheet
or document in real-time. Also, there's no need to back-up
or transfer files from multiple computers.
According to Google, more than 500,000 companies
use at least one its programs and about half of those are
using a free version. Universities in particular like the
free Gmail service for students, although it offers less storage
and fewer security features than the fee-based version. Cash-strapped
startups are also turning to Google Apps.
So far, though, the largest Fortune 500 company
to use Google Apps is Sanmina-SCI, an electronics manufacturing
company that has 900 of its 45,000 employees using the full
package of applications. Another paying customer is Valeo,
a publicly traded French automotive supplier. And General
Electric is running Postini, an anti-spam technology that
Google acquired last year, for its 300,000 employees.
A year ago, Washington D.C. became the first
U.S. city to use Google Apps when it paid $1.9 million for
38,000 accounts. The Google services are optional, and employees
primarily use Microsoft Office and e-mail. For Vivek Kundra,
the city's chief information officer, the Sept. 11, 2001 terrorist
attacks highlighted the advantages of having sensitive data
on a virtual network. Google stores information seven times
on seven different servers across the country.
...and the cons
Even so, eight IT directors interviewed for
this story say they're reluctant to switch to Google Apps.
They cite a number of reasons common to all "cloud computing"
providers, including concerns about reliability and the risks
of storing employee records or trade secrets on another company's
servers.
Steve Skinner of Alain Pinel Realtors, for
instance, figured he could save $250,000 a year by switching
the company's e-mail server from Microsoft Exchange to Google's
Gmail. But a two-hour service outage a few weeks ago reminded
him that there's a price to giving up control over his company's
technology.
For Shoukry Tiab, the vice president of IT
at Jenny Craig, which uses Postini and Google Maps, the primary
concern is security and confidentiality. "Am I nervous
to host corporate information on someone else's server? Yes,
even if it's Google."
Jenny Craig instead is testing SharePoint,
Microsoft's answer to Google Apps but with a twist: SharePoint
is designed to work in conjunction with desktop software so
that, if there is an Internet outage, critical information
isn't inaccessible. Google is working on making its applications
available offline.
SharePoint points to another problem for Google.
According to Creese, the Burton Group analyst, Google Apps
doesn't yet have some advanced features that businesses demand,
like the ability to create footnotes.
Another reason for Google Apps' slow start:
It began in 2006 as a popular free package of programs for
consumers before Google last year rebranded it as a service
for businesses. Convincing companies to embrace Google Apps
isn't as easy, but Glotzbach, the Google Enterprise executive,
thinks the strategy will ultimately pay off.
"The way people work is shifting,"
said Glotzbach. "It's all about working in teams, sharing
information, and working across company boundaries. Google
Apps is designed around this new paradigm."
|
Print