Google: Your Next Enterprise Application Provider?

July, 2007

Google’s recent $625 million acquisition of Postini sends a signal that the company intends to be a major player in the on-demand enterprise application market. Postini, a leader in the on-demand messaging, security, and compliance market with enterprise-level credentials, boasts a customer base of approximately 35,000 companies including such notables as Circuit City Stores Inc., Dillard’s Inc., Sempra Energy, and Pulte Homes Inc. In April of this year, Google and Postini entered into a partnership that set the wheels in motion for the July 9th acquisition announcement.

This Research Byte is a summary of our full report, Google Enlarges Its Enterprise Applications Footprint.

Google Apps Today
To appreciate the significance of the Postini acquisition, it is helpful to understand Google’s progress to date in enterprise applications. In August 2006, Google introduced a low-cost suite of applications (known as Google Apps) that includes email, text and voice calling, calendaring, word processing, spreadsheets, and web page publishing, along with services to manage all of the applications. In February, Google rolled out an enterprise version of the suite known as Apps Premier Edition. The enterprise version promises 99.9% uptime, as well as new functionality for mobile access and an API (application programming interface) to integrate with a user’s existing infrastructure, third-party applications, and services. With the introduction of Apps Premier Edition, Google customers can now choose from several versions of the suite including offerings for home use, small businesses, schools, and the enterprise.

According to Dave Girouard, vice president and general manager of Google’s enterprise division, more than 1,000 small businesses download Google Apps on a daily basis. Additionally, he claims that hundreds of universities are also using Google Apps. However, he does concede that, among other issues, the lack of a robust security infrastructure has prevented large enterprises from implementing Google Apps.

The full version of this report provides a more complete description of Google’s enterprise application offerings and an analysis of the factors that made Postini the right choice for Google.  

Looking to the Future
Many users are switching to hand-held devices and it will not be long before they outnumber desktop PCs. As this trend accelerates, users will start demanding increased access to corporate information via these devices. Since hand-held devices are not powerful enough to run client/server applications, IT organizations will need to find creative ways to accommodate these needs or run the risk of users abandoning existing systems and finding their own online solutions. This shift will undoubtedly help Google in its fight against Microsoft for a share of the office productivity tools market.

In addition to its Apps Premier Edition, Google does have corporate versions of its search and mapping tools, with roughly 2,500 customers using these applications. However, from an enterprise perspective it has little else to offer corporate customers today.  

The full version of this report provides insight on where Google Apps may have an advantage over Microsoft Office. It also analyzes the possibility of a move by Google into more strategic enterprise applications, such as ERP and CRM.

Today, Google’s enterprise division accounts for less than one percent of the company’s annual revenues. However, as head of the enterprise division, Dave Girouard expects this to change significantly. “Over the next few years, we expect the enterprise division to account for a significant and growing part of our annual revenues,” he stated.

To gain insight into where Google intends to go, one need look no further than the recent change it made to its tagline. The new tagline is “Search, Ads and Apps,” clearly indicating that the company intends to grow its application portfolio–undoubtedly with a sharp focus on the enterprise.

July 2007

This Research Byte is a brief overview of our report on this subject, Google Enlarges Its Enterprise Applications Footprint. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website at (click for pricing).