The Business Centre

When Google launched its web-based e-mail service (Gmail) on April 1, 2004, many people thought it was an April Fool's 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 US$50 per user per year, Google entered a competitive landscape inhabited for decades by the likes of Microsoft and IBM, both of whom 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 with the Yankee Group, Google has faced reluctant IT departments (and their CIOs) who 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 per cent of respondents would consider a hosted e-mail service like enterprise Gmail. More than 50 per cent 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 the exact location of it.

Analysts say it's a challenge Google has sought to address through the acquisition of a security vendor (Postini), which provides such services as archiving and message encryption. Google also offers its customers service level agreements (SLAs) and IT roadmaps (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 SaaS (software as a service) vendors, such as Salesforce.com, 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 which 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."