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e-Publication

08 July 2013

Google Apps vs. Office 365: Why Google Will Win the Enterprise

Since our founding, it’s been a core mission of BetterCloud’s to spread the word about Google Apps and evangelize for the platform. And after raising a Series A this past January, we’ve stepped up our hiring process, which has led candidates to ask why I’m betting my career and company on Google Apps. This was a question we encountered throughout the fundraising process and I’m sure it’s frequently asked of other ISVs and Google Apps resellers. While I’m obviously biased towards Google Apps, I do wholeheartedly believe the platform will win.

Just three years ago, I was a power Microsoft Exchange and Outlook user and frankly hadn’t considered Google Apps as a serious enterprise platform until I started working at a Google Apps reseller. It took me about a week to get up to speed with Apps and I very quickly realized the value in the platform. Since then, you could say I’ve gone a bit over the top – I use only Google products in both my personal and work lives including a Chromebook Pixel, Nexus 7, Android mobile device, obviously Gmail and Google Apps and hopefully Glass soon (#328 on the list).

While I may be biased, there’s no arguing that Google has made a serious play for the enterprise and in my opinion, is slated to win. Here’s why.

Generational Shift

When these kids graduate and found their own companies or go onto work for others, which email system do you think they’ll want to use? The one they’ve become familiar with over the last four years (and have likely used in their personal lives for even longer) or an entirely new beast. Microsoft Exchange is a virtual unknown to younger generations and Office 365 is barely making a dent in the EDU (or any other) market.

Google may be playing the long game, but I’ve already seen the effects of their strategy here at BetterCloud. Many of our youngest employees have quite literally grown up using Google products and others still have never used Microsoft Exchange or Outlook. Hypothetically, if we were to switch to Outlook / Exchange tomorrow it would take weeks to train my employees to use the platform. While user training is vital to any deployment of Google Apps, the process is likely to require significantly less time as the majority of employees will have some sort of experience with Gmail (it’s reported that more than 425 million people use Gmail today).

As younger generations enter the workforce, I truly believe employers will find it increasingly burdensome to support Microsoft Exchange and Outlook – from a cost, accessibility and training standpoint.

Differing Business Models

Even if Microsoft could replicate or nullify the inroads Google has made in the EDU market, Redmond still faces the dilemma of cannibalizing sales of existing products like Exchange, which could alienate channel partners that have built entire businesses on reselling and supporting these products.

While Google is “born of a digital environment” according to Jon Wiley, lead designer for Google Search, Microsoft has been building on-premise products for the enterprise for over 20 years. There’s no argument that Redmond has been wildly successful, but they’ve yet to prove they can shift 20 years of built up inertia and pivot their core business into cloud based offerings.

Microsoft relies heavily on channel partners who have been pushing on-premise legacy hardware and software services like Exchange and SharePoint for years. For Microsoft resellers and people inside the company who are compensated based on the success of the channel, these core products have been their bread and butter for decades. In my opinion, it’s going to be extremely difficult to convince the established channel to push Office 365 out to new and existing customers when there’s so much to lose.

For Microsoft resellers, successfully transitioning to promoting Office 365 requires not only a change in what they’re selling, but how they’re selling it and by what means they’re compensated. Where selling a legacy system enables resellers to somewhat “sell it and forget it” – they get their commission up front – cloud solutions are sold on a monthly or yearly basis, requiring channel partners to stay engaged and work towards building a consultative relationship. While cloud solutions provide less cash up front, the recurring revenue model leads to a more sustainable, predictable business.

Microsoft and their partners will have to restructure, retrain, recalibrate and relearn sales tactics, technologies, channels and more in order to successfully achieve broad adoption of Office 365.

Pricing

With Office 365 pricing, “Microsoft takes the tiered approach to another level, offering six main plans divided among small, midsize, and “enterprise” class businesses, combined with another half dozen plans and options ranging from kiosk-related plans to educational and single-feature options,” according to Patrick Gray, a managing consultant at IBM.

Gray goes onto explain that Microsoft’s subscription models vary depending on number of users and inclusion of downloadable Office software. There is also no simple way to switch between tiers should you expand or downsize your business – eliminating the scalability and simplicity of pricing associated with most all SaaS products.

Now contrast Redmond’s crazy pricing scheme to that of Google Apps. For businesses and government agencies, Apps will run you $5 per user per month (or $50 per user per year) with the option of adding archiving (known as Google Apps Vault) for an additional $5 per user per month. Google’s pricing is easy to understand and doesn’t scare off potential buyers. In fact, one customer we recently spoke with vetoed Office 365 in favor of Google Apps in part due to the former’s overly complicated pricing structure.

Timing

According to Wired’s Michael Copeland, enterprise technology goes through a revolution every ten to fifteen years. He argues that we’re currently in the early stages of a new cycle – and I believe that Google Apps is definitely both propelling and benefitting from this upheaval. While Microsoft is dealing with a 20 year legacy of providing on-premise software, Google came to market just as web apps were getting off the ground. For Google, building in and for the cloud is just business as usual.

Apps’ success is due in large part to good timing and the changing IT landscape. Enhanced internet speed and availability associated with cloud computing have enabled the adoption and scalability of web based services like Google Apps.

Moreover, BYOD has emerged in the last couple of years as the prevailing thinking in enterprise IT strategy and Google’s extensibility has enabled Apps to mold to BYOD policies – after all, Google’s new Apps slogan is “work the way you live,” which is exactly the thought behind BYOD. The Mountain View giant now offers mobile apps for Drive, Gmail, Chrome and Google+ on iOS and Android as well as Google Talk, Google Calendar and now Google Keep on Android.

While Google continues to churn out mobile apps that give users the ability to work from anywhere across devices and platforms, Microsoft has stubbornly refused to build Office products for iOS and Android, leaving Microsoft users to find third party alternatives or purchase a separate Windows device to receive full mobile access.

Final Thoughts

I do believe Google will ultimately win the war for the enterprise, but that doesn’t mean it will happen over night. Microsoft has built a great product that thousands of organizations and millions of people use on a daily basis. But the technology sector is constantly changing. Who would have thought ten years ago that Internet Explorer would no longer be the defacto web browser or Blackberry the go-to mobile device in the workplace?

Titans fall and Microsoft is no exception. While Google has Search to financially back its play for the enterprise, Exchange and Office are Redmond’s lifeblood. Until Office 365 is able to gain real adoption, Google continues to cut into Microsoft’s core business every day.

This is going to be a true battle for the enterprise and we’re excited to be in the middle of it.

http://blog.bettercloud.com/