Can Google SaaS replace Enterprise IT?

Not in the foreseeable future, right? Specially when you consider 97% percent of Google's '09 revenues came out of advertising. The remaining 3% non-ad revenues ("Other" business including Enterprise) were predicted to stay below a paltry 6% through 2012 (Gartner Research). Add to that, the fact that this Gartner Symposium interview with Google's then CEO Eric Schmidt is about two years old. Now, do you think what follows might change your mind? Guess what - you may be in for a surprise. 

I took some time to break down the interview and look for supporting evidence in 2012:

In the 2009 video, Schmidt painted a compelling picture of his vision of a SaaS-led future of enterprise IT. Today, in 2012, much of that has become reality in the form of new Google products, platforms and partnerships. The "Other" business revenue being probed by Gartner has risen to ~4% based on Google's analyst presentation for Q3 '11. Of course, Schmidt argues that income statement based interpretations underestimate management priority since Google approaches the business in a consumer driven, holistic way. He claims the Enterprise as their next big "billion dollar business". It is evident from Google's focused marketing efforts in the various Enterprise segments that they are indeed serious. The growing enterprise customer base further reinforces the case, but more on that later. Let's dig deeper to see what has changed at Google, and in the external environment, that could make them the SaaS vendor of choice and a disruptive force for Enterprise IT. And before we proceed, note that the examples are illustrative only, I am not in any way affiliated with Google and am not pitching Google products.

Some of the key questions Schmidt addresses include: Can and should a CIO consider replacing the primary email system with enterprise Gmail? What about calendaring and document management via Google Calendar and Google Docs?  Schmidt discusses the simple $50/user/year price point that immediately simplifies a slew of licensing, contract and vendor management decisions. How do the total costs compare? A little research yields Google's nifty online calculator to help compare sample dollar savings for your company over an MS Exchange implementation. The projected savings are substantial on a per employee basis. What if you are already using a SaaS solution? You may be lucky. For instance Google Apps + Salesforce.com can be integrated! On the other hand, if you are a small business owner starting from scratch, is it possible to run your entire IT on Google? Not merely collaboration tools, but core business functions like finance and accounting, project management, sales and marketing? The answer is a firm yes. Google Apps for Business today offers a suite of core products supplemented by Google Apps Marketplace - a growing source with over 300 applications to choose from. As an entrepreneur, you could leapfrog directly into the future having enterprise grade software delivered over an internet connection. You do not have to deal with complexities of IT management such as capital expenses, licensing, maintenance and upgrades, disaster recovery, security and personnel. All this comes wrapped in enterprise grade SLAs and tiered tech support from Google. The icing on the cake is the built-in ability to deliver on mobile platforms such as Android and the comfort of knowing your IT can grow in scale and sophistication as your business grows. If you are a government agency, you might already have some early movers to learn from. NOAA recently moved 25,000 of its employees to Google Apps for Government, becoming the largest Federal Agency to go Google. Finally, the tide seems to be turning on nagging SaaS adoption roadblocks such as data lock-in being addressed by data liberation framework, cross enterprise integration and interoperability being guaranteed and technology pieces of regulatory compliance (HIPAA, SOX) such as data privacy and message security addressed by Google partners (Postini).

Some predictions were perhaps tad ahead of time even today in 2012: but think "iPad" instead of "netbook" and the prospect of cutting end user device and support costs "by factor of 5"with the browser based Chrome O/S appears in tune with the desktop virtualisation offerings by many providers today. While some ideas (such as Google Wave collaboration) are no longer relevant in the specific shape and form discussed, that is only to be expected of rational predictions of the future.

All in all, this interview lays out a credible blue-print of a growing role of SaaS in enterprise IT that has already started playing out. Not convinced yet? Google's four million business customers think otherwise.