News Corp® Australia recently announced that thousands of their employees are moving from Microsoft® Outlook® to Google Mail™ and Calendar™. News Corp® did not disclose the exact number of employees, but they did share that the licensing fees to Google® will be approximately $700,000 per year. A spokesperson for News Corp® said they are not currently planning to replace Microsoft® Office with Google® solutions, but the announcement is the latest in a series of notable customers who are considering Google® in the enterprise space and are at least partially migrating away from Microsoft®.
Google® claims to have more than five million business and government customers running Google Apps™. Perhaps the most notable win for Google® is the City of Los Angeles, although that didn’t come at the expense of Microsoft®. In 2009, Los Angeles began their migration from Novel® GroupWise™ to Google Apps™. Ironically, signing a city the size of L.A. isn’t what made the deal so significant. There were a myriad of highly publicized problems during the transition, the most notable of which involved the LAPD and the FBI. After the deal had been closed and during the migration it was discovered that the security in Google Apps™ failed to meet FBI standards and as a result, the LAPD would be denied access to critical databases they would otherwise use on a regular basis. After months of widely publicized negotiations and attempts to become compliant, the 13,000 LAPD users ended up remaining on the legacy GroupWise™ platform. This was viewed by most as a colossal failure for Google®, but they managed to salvage the deal and fixed many of the transition issues and became FBI compliant shortly thereafter.
The implementation challenges in Los Angeles generated a great deal of negative press for Google® but ironically, it also brought widespread attention to Google®’s entry into the enterprise and government markets. The fact that they were able to resolve the issues in L.A. captured the attention of many other potential customers and since that time Google® has been awarded contracts from such notables as The U.S. Department of the Interior, the states of Colorado and Utah, the City of Boston, Japan ANA, and more recently, News Corp® Australia. Google® also claims that their Apps are being used by agencies in 44 US states and the District of Columbia.
Of course there are many factors that contribute to decisions about changing tools and services that impact as many users as messaging and collaboration, and Google® is aggressively targeting Microsoft® Exchange and SharePoint®. Their strategy appears to be to capture e-mail and calendar markets and from there, expand to additional Office and productivity applications. Beyond messaging and collaboration, Google® has relatively few customers paying for Google® Apps™, but the market is moving to the cloud and that is where Google® dominates. Google® doesn’t appear to be trying to compete with the robust functionality of traditional MS Office or Office 365™. Instead, they are relying upon the simplicity and familiarity many consumers appreciate about Google Apps™. The company has the resources to address challenges they may encounter as they penetrate the enterprise and government markets and ironically, their ability to overcome the disastrous implementation in L.A. demonstrated their tenacity to earn and retain customers in spite of adversity.
Another factor favoring Google Apps™ over Microsoft Office 365™ is pricing. Not only are Google Apps™ priced well below their Microsoft® counterparts, the licensing structure in infinitely less complicated. In their simplest form, Google Apps for Business™ costs $5/user/month or $50/user/year. Google Apps for Business™ with Vault (advanced security) costs $10/user/month. Office 365™ pricing starts at $5/user/month for Small Business (up to 25 users), or $12.50/user/month for Small Business Premium (up to 25 users). The Midsize Business version costs $15/user/month for up to 300 users. Enterprise customers (greater than 300 users) have options ranging from $4/user/month (e-mail and doc viewing only) to $22/user/month (Enterprise E4). Microsoft® offers a number of functional combinations at varying price points such as the K1 Plan for Kiosk workers and offerings for just about every standalone application. If one were to ask Microsoft® about the wide range of offerings and combinations thereof, they would likely promote the flexibility to meet the unique needs of every customer. Many potential customers find the MS model too confusing and opt for the less expensive Google® model largely out of simplicity.
Google® offers a version of Apps for Government which is priced at $50/user/year. Additionally, they offer a version for Education and another for Nonprofit organizations, both of which are free to those who qualify.
The few reasons stated above have motivated many potential customers to consider abandoning even long term relationships with MS Office or other productivity products, and Google® has seen success in many cases. It’s important to research beyond the sales pitch or Google® Slides deck before making such a major decision, however. Google® is wise to try to persuade customers to move to their Gmail™ and Calendar offerings, and their pricing structure in which you ‘get it all’ will result in users with licenses to the other productivity apps, so they might as well use them. That said, there are countless reports on the internet of companies that made the jump from Office to Google Apps™ and have serious regrets and often switch back to Office 365™. A major complaint seems to be that Google Apps™ doesn’t treat documents or files which were created with MS Office quite as well as Google® would like to have us believe when trying to edit or collaborate within a browser. There are also many reports claiming that Google Apps Sync™ for Outlook® fails to work as advertised. These issues wouldn’t be as major if Microsoft® hadn’t been dominating the market with versions of Office throughout the years, but regardless of current market trends and evolving user habits, the overwhelming majority of professional and personal documents were created with Microsoft® Office.
There have also been a number of complaints about Lync® vs. Hangouts™. Even the product names seem to differentiate the two, but it’s not fair to judge them based upon their name alone. Maybe it’s a sign of Google®’s consumer based roots, but Hangouts™ has been referred to as a poorly blended consolidation of Google Talk™, Google Voice™, and GoToMeeting™, whereas Lync® is a standalone unified communications application that was designed for corporate environments.
It’s not the intent or purpose of this article to offer product reviews on either Office 365™ or Google Apps™, nor is it to recommend one over the other. Both have their advantages and disadvantages, just as they both have their dedicated fans and followers. The initial question we posed was “Why is MS Office losing its dominance in the Enterprise space?”. The short answer is that the market is rapidly moving from locally based software (where Microsoft® dominates) to the cloud (where Google® dominates). Microsoft® is justifiably concerned as they are now competing in an environment in which they are not the leader. Most would agree that Office 365™ is superior to Google Apps™ in most ways, but it remains to be seen how well Microsoft® can compete on Google®’s home court.