Google is the king of advertising, and it’s made moves toward productivity software, with Gmail and Google Docs. But what about enterprise software, the stuff that powers businesses, even large ones? Does Google harbor ambitions to be an enterprise software player? I’ve recently taken a look at Google’s strategy and Google’s supreme motivation to own the moment of purchase. Let’s look at how Google might step up to the plate in the big leagues of software.
Google has already taken some baby steps into enterprise software, licensing Gmail for businesses and selling the Google Search Appliance to power Web site search. But what if Google wanted to do something big?
Google is not considered a player in enterprise software—marketers will tell you that it doesn’t have “permission” to sell into most enterprises. What they mean is that Google’s brand reputation does not carry the kind of customer service that most businesses expect. Most companies don’t think Google understands how to keep their business running. They don’t think Google understands how to create a software package that can be easy to run in their environment. The Google Search Appliance, where you buy the hardware from Google to run the software, is seemingly evidence of this point.
But enterprise software competitors should not take much solace in this state of affairs, because the software business is changing.
Just a few years ago, it would be a hysterical claim that businesses would even consider buying an appliance. Or would be happy to use Gmail—a system that runs completely outside its corporate firewall. Even today, few businesses make those choices, but that number does increase each year.
Both appliances and Software as a Service (SaaS) are trends that are taking root because enterprise software is sometimes costly and hard to use. Every enterprise software vendor is developing its capabilities in these areas. My company, IBM, has unique strengths to pursue SaaS because it has experience in both software and services businesses, but some enterprise software vendors are understandably wary about their abilities to compete with companies like salesforce.com (who sells a sales force automation service) and Amazon (who sells an e-Commerce service).
So what about Google? Google would likely have the brand permission to sell a service to the enterprise. It has the chops to scale its services to any level without breakage. No customer would doubt Google’s ability to keep a service up and running. But enterprises might still wonder whether Google has the business perspective to provide support to make it work no matter what. Enterprises might still balk at paying Google each month for a service for which support is an unknown.
How could Google address those issues? Well, they could work to create an organization (either through acquisition or organically) that convinces customers that they will service what they sell and keep the business running. That might require a real culture change within Google and would likely take time.
There are two easier ways to win this brand permission, both of which fit far more easily into the Google culture:
- Make it easy. A lot of the support required for enterprise software have to do with how difficult it is to integrate software into existing environments, and how hard it is to customize software to unique needs of the very largest companies, and how difficult software can be to use sometimes. SaaS can eliminate most integration problems, and Google could decide to avoid the very high end customization market completely, while providing simple user interfaces for simple tasks. You can see them taking this approach with the Google Search Appliance—it does not match the capabilities of other enterprise search engines, but it is easier than many to install and use (in part because it does less).
- Make it free. A lot of resistance fades away if you sell something for everyone’s favorite price. You can see Google taking this approach with Google Analytics and Google Website Optimizer, powerful tools that are not at the top in functionality, but are at the bottom in price.
But how could Google afford to make it free? Its leadership in advertising could be the answer. We are used to accepting advertising in our Gmail accounts in return for free personal e-mail. Could businesses decide to make the same trade-off for enterprise software if presented the chance?
But it’s more than advertising that Google wants—they want access to information about people’s interests, so they can personalize the advertising. Google follows this model with Gmail, also. They promise not to divulge your private e-mail to anyone, but they regularly examine it (with their computers) so they can provide targeted advertising based on what your e-mail tells them you are interested in.
How powerful would that model be inside an enterprise? Perhaps the price for powerful, free, low-support (read: high productivity) software would be allowing Google a peek inside the firewall. Companies would allow Google to peek at the content (with computers) to detect what the interest areas are for each employee. Maybe Google would even want to tie into a company’s intranet ID system to learn about each individual user (gender, job role, etc.) so that Google can even better target its ads.
Google might offer businesses two versions of the software, a free one that peeks inside your enterprise and a paid one that does not look at such information.
I have no idea if Google is thinking about these things, but it is an opportunity staring them in the face if they are interested. Think about the powerful advertising they could unleash for B2B purchases if they had the access to companies that allowed them both to personalize and to present ads. Google might offer your company a discount on placing these valuable ads if you agree to open up your own company to receive them.
Google has many choices about how it can do this. Always, it must be careful of any privacy backlash, but I think many businesses (especially small-to-medium ones) would leap at the chance to run their business online. Intuit’s Quickbooks Online is not a fluke, it is the beginning of a trend. Google could ally with Intuit, salesforce,com, and other SaaS companies that would be willing to share in the advertising wealth in return for offering a free version of their service. They might work in concert with existing enterprise software vendors to convert their packaged software to SaaS. Possibly, these service offerings would not even need to be free—a deeply discounted price might be good enough for some.
I certainly don’t know if these ideas are part of Google’s plans—even their distant plans—but I do think that they have the intrinsic capabilities and the market position to try it. Maybe enterprise software is too varied and requires too much investment for such a model to work, but I am not sure. B2B purchases can be extremely lucrative and it is far harder for advertisers to reach the B2B buying team at the moment of truth. I wonder if free SaaS enterprise software is an idea whose moment is coming.
