Google's Enterprise Charge Sets Stage For Epic Battle With Microsoft

Google's lightning charge into the enterprise market is intensifying an already-raging cloud war. And as the search engine giant attempts to redefine itself as a vendor of business products, it's increasingly poised to butt heads with more-established enterprise players, most notably longtime adversary Microsoft.

New business-oriented features, major partnerships and executive staffing moves at Google represent overtures to big business that President of Google Enterprise Amit Singh said "signal our second act."

"Enterprise is a big bet from the company," Singh told developers at the recent Google I/O conference.

[Related: Google Dumps 'Enterprise' Branding, Renames Business Products 'Google For Work]

The company's off to a strong start with 60 percent of the Fortune 500 paying it for at least some cloud-based enterprise solutions, according to Singh.

There's still plenty of room to grow, with Google's enterprise revenue accounting for less than five percent of its overall business. The company is still beholden to advertising as its main source of revenue and that's not likely to change anytime soon. Companies, including Apple, that have attempted to diversify their revenue streams have quickly discovered the tough consumer-to-enterprise transition can be a risky one, requiring more than technical talent.

Google's not shying away from the raging cloud war, which stands to put it in the path of more established players, including longtime adversary Microsoft.

But Google's successes in powering businesses could ultimately be decided in the channel.

Google signed more than 200 partners to its reseller program and hundreds more are coming through the pipeline, Brian Goldfarb, head of marketing for Google's cloud platform, told CRN.

"We're building up the partner ecosystem, and that's a huge focus on what we're doing," Goldfarb said. "Eighteen months ago it would have been a different conversation."

Goldfarb takes umbrage at the assertion that Google is new to the channel, pointing out that the company has thousands of existing enterprise partners spanning the globe for all its major businesses and strong relationships with global system integrators. Google, he said, is now "doubling down on the channel for Google Cloud Platform." This means ramping up investment in hiring channel-savvy employees, bringing breakthrough enterprise innovations to the market and working with partners to help them build successful enterprise practices.

In a SaaS market dominated by enterprise applications, Google doesn't crack the top five in 2013, according to International Data Corp.'s worldwide semiannual Public Cloud Services Tracker. Microsoft, meanwhile, sits in fifth place behind Salesforce.com, ADP, Intuit and Oracle. Even more vendors are introducing a slew of cloud offerings and slashing prices in order to compete, according to IDC.

For Google, success in siphoning market share from Microsoft will partly come down to partners and end users making nuts-and-bolts decisions, such as whether Google Apps offers a viable alternative to Office 365 for the enterprise.

But beyond basic product and technology choices, it comes down to a bigger question of philosophical alignment.

"Google is unique [because] we bring more than technology, we bring a structured view of transforming business culture," Goldfarb said, alluding to his company's famously divergent philosophy with its strong focus on innovation.

Opinions in the channel are particularly strong on both sides of the Google-Microsoft chasm.

NEXT: The Channel Weighs In

Google "will continue to double down and triple down on the Google Enterprise business because the market opportunity is huge, and will grow dramatically for the foreseeable future," Tony Safoian, president and CEO of Los Angeles-based Google partner SADA Systems, told CRN.

Safoian sees the market shifting so that Google's enterprise cloud products will comfortably coexist with Microsoft platforms and technologies.

Other successful cloud software vendors have strong relationships with Microsoft, Safoian said, citing Salesforce.com, Oracle, SAP and BMC, "and Google will be no different."

Allen Falcon, CEO of longtime Google partner Cumulus Global, told CRN that Microsoft's status "as a major incumbent" in the enterprise puts the Redmond, Wash.-based software giant at a disadvantage where "the best Microsoft can do is the status quo."

Microsoft will fight to avoid losing mind-share and market share as Google and other companies bring fresh, innovative solutions to the market, Falcon said.

"Microsoft's strategy has been to grow the breadth of services through a closed ecosystem," Falcon said. "It all works because it's all Microsoft. As other vendors challenge parts of this ecosystem and companies begin to pick and choose, Microsoft's strategy will need to respond."

David Northington, CEO of Atlanta-based solution provider Cloud Sherpas, has plenty of experience selling Google's cloud to business customers.

"Cloud Sherpas built a business working with visionary CIOs to help them recognize the potential of bringing Google's consumer-grade applications to the enterprise," Northington told CRN. "As enterprises face complex Microsoft enterprise agreement renewals and hefty price increases, it's no surprise to us that they are choosing Google Enterprise solutions for their business. It's simply pragmatic."

Lane Campbell sits on the board of Chicago-based solution provider Durmic Consulting, which is a Google and Microsoft reseller, giving him unique insight into the rivalry.
The way Campbell sees it, Google's advantage is that it has built a platform from the ground up for the age of cloud computing.

"If they say it has a feature, then it's there and it works great," Campbell told CRN.

On the other hand, "Microsoft has forced their legacy platform forward from the days of in-house IT taking care of everything. It was built for legacy environments and, while it has been updated to be used in the Office 365 environment, it's still nowhere near as reliable nor as polished as Google's system," Campbell said.

Enterprises looking for compatibility with legacy apps and devices that worked with Exchange Server likely will migrate through to Office 365, but those looking for stability and reliability will find their way to Google Apps, Campbell said.

"The way the world looks today is going to be very different from the way the world looks in five years. Businesses are thinking about which software partner they want to bet on to take them to the future, [which is where] the innovation's going to be," Google's Goldfarb said.

"With all the work, you have a really compelling portfolio solution that enterprises can subscribe to and change the way they do business, and that's really different from the portfolio solutions you see from others," he said.

But Microsoft partners like Delcie Bean, CEO of Paragus IT, think Google "might have it backward."

NEXT: Being Enterprise-Strong

"For established enterprise consumers who have lived their professional lives on Microsoft products, the user experience of switching to Google is quite painful," Bean told CRN. "I think the UI of Google's apps will need a dramatic improvement if they truly are going to compete."

Google tapped an 11-year Microsoft veteran in Shahla Aly to help drive the enterprise transformation. Aly is a one-time Microsoft CIO and former vice president of information technology sales and marketing for the software giant.

"Bringing talent into the organization is something we're always doing from anywhere we can find it. Smart people influencing the work we're doing, that's a testament to the culture," Goldfarbsaid.

Goldfarb himself is an ex-Microsoft executive, having served as director of product marketing for Windows Azure up until May 2012.

"We've been heavily investing in our teams, across the board from sales to engineering. We have thousands of employees in enterprise, and we're growing fast and hiring the best in the industry with decades of combined enterprise experience," Goldfarb said.

Chris Hertz, CEO Washington, D.C.-based New Signature, a Microsoft partner with strong enterprise customer relationships, said he is skeptical that a few hires will make a difference in transforming Google into an enterprise-strong software organization.

"Google is a long way from being enterprise-ready," he told CRN.

And it's got a long road ahead if it seeks to match Microsoft's enterprise prowess, he added.

"Talk is cheap when it comes to being enterprise, and actions speak louder than words," Hertz said.

Google's "behavior doesn't strike me as enterprise-ready, or even in alignment with most enterprise expectations on core areas like cloud privacy," Hertz said, pointing out it's only been a few months since Google incurred the wrath of education officials for scanning student Gmail accounts.

Hertz compared that embarrassing episode "to the maturity of Microsoft's stance on cloud privacy."

"Plenty of companies have tried to move from consumer to enterprise and not made enough money quickly enough, only to abandon enterprise goals and refocus on the consumer," Hertz said. "On the other hand, Microsoft is a sure thing that has demonstrated continued relevance by successfully transitioning to a cloud services business model."

This article originally appeared as an exclusive on the CRN Tech News App for iOS and Windows 8.