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July 08, 2006
Google's future lies in its enterprise play
It has almost become too predictable. Every few months the traditional media and the blogosphere fall all over themselves trying to analyze the impact of the newest Web service to stream out of the Googleplex. Arguments, conversations and rebuttals rage for weeks around what else might be under drapes inside the sleek technology execution machine that is Google. Google's present success and future potential are widely acclaimed because of its impressive track record, the caliber of its employees and the quality and speed of its execution. It is clear that Google has changed the rules of the game in Internet business. Right from the inception of a new toy by Google—sometimes when it has just barely been released into the Google Labs playpen—speculation abounds on how it will revolutionize the market. However, the facts don't always bear out all the speculation. Apart from its core business, search, Google has made little headway in getting users to adopt its other services. With the induction of each new service, typically free of charge, into Google's portfolio, investors worry about how it will actually make money for Google. There is plenty of money to be made for sure if Google would only reexamine its strategies and wipe the dust off one: its enterprise play.
Corporate intranets and internal messaging systems for easier collaboration are no longer a rarity among medium-sized to large enterprises. Having said that, not all business processes within a company are automated yet. Consider the finance industry. There are a number of process inefficiencies such as manual verification and other labor-intensive checks surrounding the sale of practically any financial instrument. Due to the diligent access hygiene imposed by a number of regulatory requirements, several of these labor intensive steps are now done using electronic means. What used to generate a paper trail now generates an electronic trail of documents. Whether or not industry regulations require them, complex workflows and document management systems are gaining traction in other industries as well, notably healthcare. As the number of electronic documents floating around increases, so does the need to find them and organize them. Google has had a search appliance that solves exactly this problem. As physical processes increasingly get converted to their electronic equivalents, the information associated with them, which has remained 'dark' and unsearchable before, becomes searchable—analogous to the 'light matter' that makes up the visible Universe. The so-called dark Webs inside corporate firewalls continue to lighten. Google can focus a bit more on its enterprise offerings to capitalize upon this wave of change. To their credit, they have shown signs of noticing this swath of uncharted intranet territory by partnering with a number of organizations over a set of tools dubbed Google OneBox for Enterprise.
Google must also seek to expand another crucial arm of its enterprise play: mobile. Information workers are increasingly expected to have access to information while on the go. Currently, Google's mobile offerings outside the consumer space have been minimal. Consumers may not always choose the most Internet-enabled mobile devices for their personal use, but would use a highly Internet-enabled mobile device, such as a BlackBerry, if required to do so by their employer. This captive audience of users with powerful mobile devices is more than just a fertile testing ground for new Google mobile products that will later be targeted at consumers. Providing a viable mobile search solution that integrates well with that organization's search appliance would make Google's value proposition a lot more compelling.
We have so far considered only Google's existing offerings in the enterprise space; consider what new plays Google could make in this area. Google has its fingers on the collective pulse of the search habits of millions of users around the world. Let us suppose that one day it decided to mine all submitted queries that return less than a hundred results. During the course of this analysis, it is discovered that the phrases [walmart] and [health insurance] keep occurring together, although WalMart is not in the insurance business. How much would Walmart be willing to pay Google for the knowledge that its customers expect it to enter the healthcare industry? The real-life story of how HP got into the projector business bears more than a passing resemblance to the above scenario. A market research survey found that even before HP got into the projector business, it was being named as one of the top 3 brands of projectors in America. How about using the mounds of data Google collects to provide market intelligence to enterprises in the form of 'Zeitgeist consultancy services'? Think of an enterprise-grade, competitive intelligence version of Google Trends. Another piece of speculation recently seen in the press has been around Google's formidable infrastructure, which has proven equal to the challenge of Google's increasing user base. Why not provide comprehensive application hosting solutions to enterprises that wish to outsource their infrastructure entirely to a Google server farm?
Google has always allied itself strongly with the end user, the average Joe who typically connects to its services from his personal computer or mobile device. Anecdotal accounts—too many to be just isolated complaints—seem to indicate that Google isn't making enterprise search as much of a priority as its consumer search. Perhaps Google wishes to make the point that putting out high-quality services for end users alone is sufficient to keep them coming back and sustain its core business. Or perhaps Google views a major enterprise push as described above as repudiating its essence—going from innovating constantly in a creative work environment (but being somewhat of a lone wolf about partnering with others) to entering high-maintenance relationships with other large enterprises. Most importantly though, it comes down to a question of control. An expanded suite of enterprise services means Google would have to run its software in environments that are not fully under its control. Google's software would have to play reasonably well with other enterprise systems and there will inevitably be problems, including security holes, even with Google software. Google would have to be very careful getting into the business of off-site software installation and support—perhaps the hundreds of former Microsoft employees now in its ranks can be some help there.
If Google continues to dominate search in the consumer segment and provides a compelling and integrated value proposition to enterprises at the same time, large enterprises would be amenable to signing support and consulting contracts around enterprise search that could prove quite lucrative for Google. Fixing the flaws in its current enterprise search offering and recognizing the money other strategies can bring in would enable Google to diversify its revenue streams and continue rolling out free services, whose only ostensible purpose seems to be to increase the 'stickiness' of Google's Web properties. While some might argue that this would go against Google's essential line of business so far, enterprise search may well prove to be its only reliable revenue stream except online advertising, because the need for organizing the world's enterprise information is immune to the vagaries of business cycles, click fraud allegations and increased competition that plague Google's core business.
Posted by Vishy at July 8, 2006 11:42 AM