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Evolution of the Google Apps Ecosystem: A Look at Usage, Resellers and the Impact on Microsoft

Two weeks ago we surveyed our entire customer base – 18,361 Google Apps administrators to be exact. The purpose of the survey was to determine a fair price for our product, FlashPanel. For those of you who are unfamiliar with the product, FlashPanel is a cloud management and security application built specifically for Google Apps that’s been free to our customers since we launched in the Google Apps Marketplace last July.

Part of establishing a fair pricing model requires an in depth understanding of:

  • The value our product brings to Google Apps administrators
  • Our customers’ other IT expenditures

To assess product value, we needed to take a look at usage patterns, trends and needs as they relate to Google Apps. And to determine IT expenses, we wanted to evaluate how or if customer budgets were changing due to a decreased dependence on non-Google software, like Microsoft Office.

While we are still working on pricing, we’ve uncovered some very interesting data we feel is reflective of the trends currently happening in the enterprise IT space.

Of the 18,361 Google Apps administrators surveyed, we received responses from 2,719 representing 2,413 Google Apps domains that run the full spectrum of Google Apps customers. Similar to the last survey we conducted, we believe that sharing this data serves every member of the Google Apps community, from customers to resellers, Googlers to ISVs and the market as a whole.

Disclaimer: The data and opinions discussed herein are entirely our own. They do not reflect information or feedback from Google or any other entity.

To help navigate this post, here are shortcuts to the three main sections:

Google Apps vs. Microsoft Office

Broadening Adoption of the Google Apps Suite

Question: Which of the following Google products does more than 50% of your organization use? Please select all that apply.

Usage of Google Apps vs Time on Google Apps

*Data is shown according to the length of time our customers have been using Google Apps (less than 1 year, 1-2 years, or 2+ years).

Key Takeaway – Gmail serves as the gateway to the Google Enterprise cloud

While broad adoption of Gmail and even Calendars is expected, we also observed growing usage of other areas of Google Apps, particularly as customers spend more time with the platform.

Why does this happen? We believe there are two potential reasons. First, as expected, companies usually plan to expand their usage of Google Apps over time. Second, and less expected, users are simply exploring what’s in front of them. While they may have been pushed by their organization to use Gmail in the beginning, it’s often the end user who decides to try out Chat, Docs and Groups. When a coworker shares a Google Doc, are you going to open it as a Google Doc or download that same document and open it in MS Word? Convenience is winning out in these cases.

Google has also done a tremendous job of creating viral, well integrated products. Gmail’s new compose gives users the ability to attach items directly from Drive, you can view Google Docs in Hangouts, start a Hangout from Chat, add a Hangout to a Calendar event and more. These integrations make it extremely easy to adopt more and more of the suite, without making a real effort to do so.

Microsoft Office Faces a Threat for the First Time in More Than 20 Years

While we’ve assumed for some time that investment in Microsoft products is waning, in recent months prominent journalists and VCs have covered the trend. And now, for the very first time, we have concrete evidence to back up this assumption.

Question: How would you characterize your organization’s strategy towards using and supporting Microsoft Office products?

MS Office Strategy vs Time on Google Apps

Key Takeaway – Microsoft Office is being threatened for the first time

Microsoft Office has dominated the office productivity market since releasing version 1.0 in 1990. But for the first time, they’re seeing a real threat from a competitor: Google Apps.

According to our survey results, 60% of Google Apps customers are minimizing further investment in MS Office, signifying real competition for Microsoft. And it seems that the longer customers have been with Google Apps, the less likely they are to continue investing in MS Office licenses – 64% of customers who have been on Google Apps for 2+ years said that they are minimizing further investment in MS Office.

Based on Google Apps users’ diminishing investment in MS Office products and the rapid growth of Google Apps, it’s pretty clear that it’s only a matter of time before MS Office loses significant ground in the enterprise.

In my opinion, there are several factors contributing to the declining investment in and lack of reliance on MS Office:

  • Adoption – As discussed, broader adoption of the Google Apps suite is eliminating the need for similar software outside of Google.
  • Compatibility – Google continues to improve compatibility between MS Office products (Word, Excel and PowerPoint) and Google Docs, Sheets and Slides, meaning you can do business with an organization still operating on MS Office without you yourself having to use Office.
  • There is a generational shift occurring – as educational institutions continue to adopt Google Apps, the proportion of young people familiar with MS Office continues to decline. A new generation is “growing up Google” and will want to use software they’re familiar with when they enter the workforce.

How Company Size Impacts MS Office Investment

Many of our readers probably assume that diminishing investment in Office does not apply to organizations across the board. For larger organizations who invest thousands and thousands of dollars in Office licenses and spend hours training employees, it’s simply too cumbersome to make the move to Google, right? That’s what we expected, but our data shows otherwise.

MS Office Strategy vs. Company Size

Key Takeaway – Diminishing investment in MS Office persists across company size

While it’s easier to get a smaller group of employees to adopt new software, and these organizations are likely more cost conscious, we were surprised to see relatively similar lack of investment from organizations of all sizes.

For companies with more than 500 users, 62% of respondents are minimizing further investment in MS Office, proving that even large organizations are comfortable with Google Apps.

While we understand that there are certain people who rely heavily on the power provided by Excel (Google Sheets have yet to equal Microsoft in terms of functionality here) and others still who are unwilling to learn a new mail interface, the days when every company needs MS Office are behind us.

Final Thoughts on Google Apps vs. Microsoft Office

Gmail is the gateway app: While Gmail may have brought companies to the cloud, organizations are staying for the collaboration, productivity and cost savings gained by enabling and actively using the entire suite.

Email is where the battle for the enterprise is won or lost and as Google continues to infiltrate Microsoft’s customer base, Redmond will increase it’s already aggressive marketing efforts and focus on Microsoft 365. Google Apps is a ticking time bomb set to explode in the coming years.

Making the Move to Google Apps – A Look at the Reseller Community

The Google partner community, now 6,000 strong, is core to the growth and continued success of Google Apps. Our team has quite a bit of experience in this space given that we started in this ecosystem working at a Google Apps reseller and our primary channel for customer engagement now, as an ISV, is through our reseller partners.

For cloud service providers already reselling Google Apps, there is a huge first mover advantage, but resellers can do more to take advantage of this position. And for existing VARs with tremendous reach and marketing prowess, but who fear cannibalizing their existing legacy software business, there is a great risk of being left behind in the long term. For established VARs there is a huge opportunity to pivot their core business and promote the new generation of enterprise IT.

The following section relates specifically to Google Apps resellers. To give context to this data, our graphs only refer to customers who use Google Apps for Business.

Finding a Google Apps Reseller

Disclaimer: We are engaged with the top 20 reseller partners in the world. Due to their prominent position in the community, these resellers work closely with Google and as such the numbers in the following graph may reflect a higher than average number of reseller referrals from Google.

Question: How did you find your Google Apps reseller?

How did you find your Google Apps reseller?

Key Takeaway – Resellers should invest in online sales and marketing expertise

While Google is clearly the best source of leads, it is not possible for every reseller to rely on Google as a source of business. I don’t think I’ve spoken with a single reseller who didn’t have the technical chops to conduct a migration to Google Apps, but I’ve spoken with many who do not have a sales and marketing engine in place. While the technical skillset will become a commodity as Google Apps and its ecosystem grow up, the true differentiator among resellers will be the strength of company’s sales and marketing efforts.

Our background in the reseller community and work with dozens of partners and thousands of customers on a daily basis has given us incredible insight into best practices for promotion in this channel. To give back to the reseller community as a whole, we’ll be hosting a webinar discussing online marketing tactics, and how to create a value proposition that makes you stand out from the competition.

Please join us:
Thursday, March 21 at 12 PM ET
Google Apps Reseller 201 – Online Marketing Best Practices
Register here

Migrating to Google Without a Reseller

The next graph shows that much work is needed to increase the visibility of resellers in this space.

Question: Why did you choose not to use a reseller or consultant when moving to Google Apps?

Reason for Not Using a Google Apps Reseller

Key Takeaway – There’s a lot of work to be done to increase visibility and awareness

While a large percent of organizations felt comfortable handling the migration to Google Apps themselves, we found it interesting that 35% of respondents were simply unaware that resellers existed. While channel partners are staples in the Microsoft world, resellers have yet to build a substantial presence as it relates to Google. This is not only the fault of the resellers, who have failed to invest in self-promotion, but a hazard of early entrance into a new industry. Google Apps itself is still a fairly unknown element and we’re just at the beginning of the adoption curve, which alludes not only to opportunity for Google, but for the reseller community as a whole.

There’s additional opportunity for resellers particularly in organizations with 500 users or more: 27% of businesses with 500 or more users who did not purchase Google licenses from a reseller actually engaged a reseller for migration services. When a customer purchases licenses from a reseller, the long term relationship is more secure. Yearly renewal contracts and additional license purchases keep customers engaged, making it easier for resellers to deliver product add ons, support and training services. Resellers are losing out here and need to find a way to create value added services that incent customers to purchase licenses through them.

Beyond Migrations

While some organizations feel comfortable handling the move to Google Apps, we’ve found that there still exists a need for additional reseller services post migration.

Question: Are you considering engaging a Google Apps reseller or consultant for any of the following services? Please select all that apply.

Interest in Engaging a Reseller for Projects vs. Org. Size

Key Takeaway – Companies are looking to engage with resellers for more than migrations

Many of the companies who did not purchase licenses from a reseller are still interested in leveraging resellers’ expertise for specific projects related to Google Apps. The top three projects are shown in the graph above.

Once companies recognize the power of Google Apps, adopt more of the suite and make a full commitment to Google, they quickly see the potential value of custom integrations, more in depth user training and even custom applications built using Google technology like App Engine and Apps Script. In large organizations particularly, there is a huge opportunity for resellers to expand their custom integrations business. It’s worth investing in a small team that has this expertise.

For resellers, now is the time to revisit lost opportunities and re-engage with those customers. Just because a company did not migrate to Google with you, it does not mean they didn’t move to Google Apps. And these kind of post-migration opportunities will only increase as companies spend more time on Google Apps.

Customers Want More From Their Resellers

Question: What would you like most from your reseller that you’re not getting today?

What would you like most from your reseller?

*This graph only shows respondents who purchased Google Apps licenses from a reseller.

Key Takeaway – Customers still have needs post-migration

For those of you unfamiliar with this space, customers who purchase licenses from resellers must communicate with their reseller every time they wish to add additional licenses to their domain. Resellers then add these new licenses manually. Because of this back and forth process, we weren’t surprised to see that 28% of all respondents said they are looking for the ability to add Google Apps licenses to their account without having to directly contact their reseller. Another 20% of all respondents would like their reseller to provide recommendations for third-party software that integrates with Google Apps.

This information is consistent with what we’ve heard from customers and resellers and now based on these requests and the availability of the Reseller API, we are officially announcing a new reseller management console for Google Apps (we weren’t planning on announcing this so early, so we apologize for the sparse site). Resellers who are interested in the tool can register here to participate in our beta group. Our new reseller console will not only help resellers deliver better service to their customers, but will help us further deliver on our promise of making the Google Apps administrator’s life easier.

Final Thoughts on Making the Move to Google Apps – A Look at the Reseller Community

For some companies (like our own and most people reading this post), Google Apps already serves as the focal point around which an organization’s IT infrastructure is built. And as adoption of the suite and the partner community expand, this will be the reality for more and more businesses.

Just as Gmail is the gateway for customers into Google Apps, Google Apps can be the gateway for VARs into cloud services consulting. And for those organizations who continue to rely on pushing legacy software, they run the risk of being left behind.

Delivering a Better Experience for FlashPanel Users

Changing the Way We Communicate with Our Customers

While improving FlashPanel’s functionality is extremely important to us, we’re also working hard every single day to improve our customer communications. While some users feel that we’re over communicating, others are taken aback when a new feature appears in FlashPanel they haven’t been previously made aware of. As our product and company mature, we’re beginning to realize a hard truth about the way enterprise software as a service is delivered – it’s extremely difficult to effectively communicate all product changes to all customers in the same way.

Since we develop FlashPanel in month long sprints, there are constantly new features, updates and UI changes to make customers aware of. While sending an email to communicate these changes may be an obvious answer, 18,000+ Google Apps administrators simply do not have the time to read every single email we send. Over the coming weeks and months, we’ll be adding in-app alerts and exploring new methods of communication to keep our customers abreast of all application changes.

In the meantime, we would love to hear recommendations from customers, fellow ISVs and Google Apps community members. Please feel free to share your suggestions with us by emailing me at Dave@bettercloud.com. And if you’d like to get a sneak peek at what we’re working on or want to be involved in the feature design process, sign up to participate in a wireframe review with our CTO here.

Evaluating Google Drive Concerns

While we work to improve our customer communications, we’re always adding features and improving FlashPanel. The Google Drive management and security features included in FlashPanel are the most used areas of the tool. As such, we’ll be increasing the functionality around Drive in the coming months. To gain a better understanding of our users’ needs and wants as they relate specifically to Drive, we asked the following question.

Question: Which of the following is your biggest challenge when managing Google Drive?

What's your biggest challenge managing Google Drive?

Key Takeaway – Drive concerns center around security, control and user error

We’ve found that, for large organizations in particular, the inability to restore Docs and Folders when a user reorganizes or permanently deletes them is the primary downfall of the Drive application. We recognize that improving our Drive management and security is key to our long term success and we’ll continue to focus on these aspects to improve FlashPanel for its users around the world.

Final Thoughts on Delivering a Better Experience for FlashPanel Users

We know that we need to continue to improve, innovate and keep listening to our customers (which will now include both Google Apps administrators and Google Apps resellers). And as tools like Google Drive gain even broader adoption, and a whole new set of management and security challenges arise, we’re committed to doing our best to deliver solutions to overcome these challenges.

Conclusion

In the three years that I’ve been involved in this space, I’ve seen Google Apps mature into a serious force in enterprise IT, and our data confirms it. But the Google Enterprise cloud still only represents a small percentage of the entire enterprise IT ecosystem and there’s much work to be done. It will take not only Google, but the entire community – resellers, ISVs, and even customers – working in tandem to continue Google’s rapid growth and propel major change in how companies around the world operate. We’re big believers in what Google is doing and we’re looking forward to supporting the platform and our customers as adoption of the suite grows.

I’d love to get feedback from the community on the data and trends we discussed in this post. Have you seen similar trends in your organization or with your customers? Do you think Google will be able to continue its rise in the enterprise? Let us know in the comments below.