Google Apps, once a leader, faces growing cloud app rivals

Analysts say it needs to improve its unified communications and enterprise social efforts or risk being left behind

When Google Apps arrived in 2006, it stood on the cutting edge of Web-hosted email and collaboration suites for businesses, a bold pioneer clearing a path in the new, wild frontier of enterprise cloud computing.

Seven years later, complacency has diluted that innovative spirit, and Google Apps now trails competing suites from IBM, Cisco and Microsoft in areas like enterprise social networking (ESN) and unified communications (UC).

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Although Google improves Apps continually, the suite's main draw remains its Gmail component, as has been the case from the beginning. But is cloud email still enough to attract prospective customers and retain existing ones? Is Google leaving Apps vulnerable to rivals by taking its time boosting its ESN and UC capabilities?

One company eyes rival Office 365

At healthcare company Schumacher Group, Google Apps is at risk of losing its place to Microsoft's Office 365. The Lafayette, Louisiana, company uses Apps to provide email to about 3,000 independent contractor doctors and Microsoft Exchange on premises for its full-time employees.

After relying on Apps for about four years, Schumacher Group is taking a close look at Office 365, which comes with online versions of Exchange, SharePoint, Lync and Office, said Schumacher CIO Douglas Menefee.

"We're evaluating Office 365 and Google Apps, and discussing the strengths and weaknesses of both products," he said. "Microsoft has made great strides with Office 365. The sleeping giant awoke two years ago."

Menefee was referring to the launch of Office 365 in 2011, when Microsoft finally released a cloud email and collaboration suite that was comparable to Google Apps. "We have seen a major shift in the maturity of Microsoft's cloud-based products," he said. "They seem to be gaining a lot of traction."

Currently, Schumacher Group uses an on-premises Lync server for unified communications, and Salesforce.com's Chatter for ESN.

Customers want more

Even new customers adopting Apps with unbridled enthusiasm want Google to know they expect it to continue developing the suite in innovative ways.

That's the case at Whirlpool, the home appliances giant, which recently announced plans to migrate from an IBM Lotus Notes system to Google Apps. Getting cloud email and other basic productivity functions wasn't what tilted the scales in favor of Apps.

 Whirlpool CIO Mike Heim

Whirlpool CIO Mike Heim chose Google Apps for 30,000 employees globally

"Email and calendaring are commodity services," said Whirlpool CIO Michael Heim. "You don't do this kind of implementation just for email and calendaring."

In fact, Whirlpool, which will deploy Google Apps to about 30,000 employees worldwide, hopes to reduce its reliance on email. "If we could make email go away, we would, because there are better ways to work, and that's what's exciting for us," he said.

Whirlpool wants to push its employees to communicate with video conferencing, to share and co-edit documents in real time and to exchange ideas in internal online communities.

Thus, he's excited about the real-time collaboration capabilities in the suite's Docs office productivity apps, and he's interested in the new Hangouts UC tool in the Google+ consumer social networking app.

Hangouts, announced in May, will replace several Google audio, video and IM tools -- including Chat, Talk and Google+ Messenger -- consolidating and improving their functions.

Heim also expects Apps to gain a native, workplace-specific ESN element in the not-too-distant future. "Bringing these social collaboration tools to the enterprise is a big reason for moving to platforms like Google Apps," he said. "We expect to see that supported and its development continued in this product."

Google launched the consumer version of Google+ in 2011; shortly after, officials confirmed that the company had plans to make a workplace version of it for Apps.

While Google has taken steps in that direction, periodically adding features for IT administrators and users, it hasn't yet released a full-featured, supported, native version of Google+ for Apps. Companies can turn on the current version of Google+ in their Apps domains so their employees can use it.

ESN tools gain ground at work

In the meantime, ESN tools have become more popular and almost mainstream in the collaboration market, and are now essential in many organizations. Known popularly as "Facebook for the Enterprise," ESN suites let employees create profiles, publish blogs, do microblogging, share documents, participate in discussion forums, set up online groups and communities and post comments. ESN software is supposed to complement traditional forms of communications like email, phones and instant messaging.

The main players include pure-play ESN vendors like Jive Software and NewsGator, and tools from larger vendors like Tibco's Tibbr, Salesforce.com's Chatter, IBM's Connections and Microsoft's Yammer.

Of course, some Google Apps customers are happy with Gmail as their main communication tool and with the other apps in the suite. That's the case at Composites One, a distributor of plastics and glass products in North America.

"We're very heavy Gmail users," said Hal Greene, vice president of information systems at Composites One, where some employees have used up the 25GB allotted for their inboxes, and required extra storage.

"We have a lot of emails with a lot of attachments," he said.

Employees there also use Docs, Calendar, Drive, Talk and Sites, which serves as the company's intranet.

Having native, full-featured apps for ESN and UC isn't a priority for Composites One for now, although the company may want them in the future, Greene said, adding that some employees have started to use the Hangouts feature in Google+. "What third-party UC vendors are selling doesn't appeal to us as being high value right now," Greene said.

The same goes for ESN software providers. "We're not currently looking at the 'Facebook for the enterprise' use case," he said.

Greene is tracking developments in the UC and ESN market, and doesn't mind talking to vendors and systems integrators about them. But plugging in third-party tools would add IT complexity.

Now, Composites One handles its collaboration and communication tasks via Google Apps in a simple, standardized way, which is part of the motivation for going to the cloud in the first place, he said.

"That lets us spend more time on our customized enterprise systems that are specific to our wholesale distribution operations," he said. Those more complex systems automate e-commerce, logistics and other operations.

"We want to spend as little time as possible administering ... the day-to-day utility of communicating," Greene said.

Google has plans to push into the enterprise

In answers provided via email, a Google spokesman said that Google has concrete plans to release a version of Google+ for the workplace use that's fully integrated with Google Apps, fully manageable from the suite's IT console and included in its service-level agreement.

As for UC, the new Hangouts in Google+ will offer a marked improvement over what's available today in Google Apps with better, more unified capabilities across the board.

"One of our primary goals with Hangouts is to unify communications across devices, platforms and people. This is especially true for a business environment, where easier communication can help you be more productive," the spokesman said.

"You shouldn't have to think about what tool you need to communicate with someone, or what device or operating system the person you want to contact is using, or what happens when a text conversation needs to quickly evolve into a video call," he added.

Asked whether Google sees Gmail as still the main attraction in Apps, the spokesman called Gmail "certainly a strong draw" but added that the other suite components are also gaining ground among customers.

Google to speed up Apps improvements

That's all the more reason for Google to accelerate Apps' improvements in UC and ESN, analysts said.

"Google can provide some UC capabilities but not enough to offer full-featured UC," said analyst Zeus Kerravala from ZK Research. "For that, you need to use another vendor in addition to Google."

Specifically, Google Apps can't act as a PBX replacement like Microsoft Lync and similar wares from other vendors like Cisco, he said.

"The same is true for video conferencing in Apps. You can do video chat, and the quality is ok for short, ad hoc meetings, but not for longer, scheduled boardroom types of meetings," Kerravala said.

Google Apps also lacks a full-featured Web conferencing application like Cisco's WebEx Meetings and Citrix's Go To Meeting.

Overall in UC, Apps "has limited functionality in the things it has," he added. "They have the basics down, but now they need to add the advanced features."

"They could make Apps a UC competitor," Kerravala said. "They have the installed base, they have the confidence of the consumer, which is very important in the BYOD world. But I'm not sure what Google wants Apps to be in UC and what role they want it to play in that market."

The same holds true for the Docs office productivity applications, which still can't match the features offered by Microsoft Office's Word, Excel and PowerPoint. Docs is typically used as a lightweight, browser-based complement for Office, but in response to that Microsoft now has Office Web Apps.

Office still reigns

According to a recent Forrester Research study, the most popular productivity apps suite at work is Microsoft Office 2010 (used in 85 percent of surveyed companies), followed by Office 2007 (51 percent) and Office 2003 (28 percent).

The latest edition, Office 2013, is in 22 percent of surveyed companies, while Microsoft Office for Mac 2011 is in 17 percent, followed by Google Docs (13 percent), Microsoft Office Web Apps (9 percent), OpenOffice (3 percent), LibreOffice (2 percent) and Corel WordPerfect Office and IBM Docs, each with 1 perfect.

Kerravala is among those who aren't fully convinced that Google is committed in the long term to the enterprise communication and collaboration market. "If organizations want to use Apps, they need to exercise caution," he said.

Enterprises that need full-featured UC capabilities can't rely entirely on Google Apps. "You can augment your UC strategy with Apps, but don't make it the primary focus of your UC strategy," Kerravala advised.

Alan Lepofsky, a Constellation Research analyst, is less skeptical of Google's commitment to the enterprise market. "It's a clichA(c) to say Google doesn't know how to play in the enterprise market," he said. "It's not Microsoft, but Google knows how to do enterprise collaboration software."

Lepofsky predicts that, as it has done for Google's consumer applications and service, Google+ will become a unifying foundation for the Apps components, providing a stream of notifications and comments for actions in Docs, Gmail, Sites and other suite components.

Larry Cannell, a Gartner analyst, is confident a workplace version of Google+ is coming, and he doesn't believe that lacking one has hurt adoption of the suite so far. "But it's not creating new opportunities for sure, either," Cannell said.

He's encouraged in particular by Google's release in August of a new API (application programming interface) for Google+. Called the Domains API, it lets Apps customers integrate Google+ into "their existing tools and processes, and allows enterprise software vendors to access Google+ from their products," Google said at the time.

"Google+ isn't an ESN just yet, but this update indicates Google could be serious about this," Cannell said. "I hope Google takes the next step. They've laid a strong foundation, but they need to market and support Google+ for enterprises as they do Gmail.

"It's about a broader communications infrastructure that acts as a glue across all Google Apps," he said.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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