Microsoft sees off the Google threat

With their Office365 success, Microsoft have shown they are far from a spent force in the software industry.

Earlier this decade it looked like Microsoft’s most profitable business line was doomed as Google Docs threatened to disrupt the Office franchise.

Yesterday Microsoft showed how they had seen off that threat when reporting their second-quarter results that beat Wall Street analysts’ estimates and saw the company’s stock market capitalisation topped $500bn, the first time since the year 2000.

Microsoft’s results were mainly due to its  cloud computing products with Azure growing at 93% year on year, Office 365 commercial at 47% and Office Consumer Products and Cloud Services at 22%.

Earlier in the week, cloud security company Okta released its Business at Work study that looked at trends in the commercial use of online services which showed how Microsoft’s products are dominating the market.

Microsoft’s advantage was underscored in a Gartner paper late last year. The Current State of Cloud Office and What to Do About It report found 10.7 percent of public listed companies surveyed were using Office 365 as opposed to 5.2% using Google. The rest had deployed hybrid or on-premise productivity suites.
So Microsoft seemed to have seen off the biggest threat to one of their most important products which for Alphabet/Google should be a worrying development as G-Suite (as it’s now called) has failed to become a meaningful revenue centre – advertising profits still made up 22 billion of the company’s $25 billion revenues in their last results.
Google’s failure to diversify should worry Alphabet investors, particularly given the headstart the company had over Microsoft Office in the early days of G-suite as then Microsoft CEO Steve Ballmer struggled to shift the company’s key product lines onto the cloud.
How much the initiatives of G-Suite’s new leader Diane Green can go in making Google’s product more attractive is a big question as Microsoft have shown they can match or beat their competitors’ offerings in areas like collaboration and artificial intelligence.

Despite Microsoft’s success in seeing off Google in the office productivity market the company still lags Alphabet market capitalisation of $570 billion but Microsoft have show they are far from a spent force in the software industry.

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Collaboration and buzzwords

Collaboration tools are changing business but the progress is slower than some of us expected

Today in Technology Spectator, I have a piece on collaboration based around the Google and Deloitte paper released last week.

At the moment Google are on a marketing campaign promoting Apps for Business, for a previous campaign I prepared The Future of Teamwork which examined the benefits of cloud computing for industry.

It’s interesting how the message hasn’t changed a great deal in the last five year, despite it being valid.

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Google’s lost Docs mojo

Has Microsoft seen off Google’s threat to their office suite dominance?

Last week I spent the day at Xero’s Australian convention speaking to various cloud service companies, bookkeepers and accountants.

One of the notable organisations missing in the conversations was Google – two or three years ago, Google Apps would have been at the front and centre of conversations about cloud services and integration. Yesterday the company was barely mentioned.

Part of the reduced buzz around Google Apps at XeroCon is due to Xero’s closer relationship with Microsoft, but it also betrays how Google Docs is no longer the smartest, newest product on the block.

“We tried to eat their dog food, but our staff rebelled,” one manager of a marketing agency who worked with Google told me. “We thought we’d go Google Apps for all the work we were doing with them but we just found the products lacked the functions we needed.”

The main problem for business users are Google Docs’ slimmed down feature. While most people don’t use 95% of the tools included in Microsoft Word or Excel, each person uses a different 5% and find something critical missing from the cloud based challenger.

For writers, Google Docs’ lack of a word count function is a deal breaker. Speakers find the Presentation function far too basic concerned to the Microsoft Powerpoint or Apple Keynote packages.

In the cloud computing industry, Application Program Interfaces (APIs) are all important as these allow other services to plug into data and enhance value for users. Over the last two years, Microsoft have done a good job in cultivating their developer community while Google have taken theirs for granted.

Most importantly though is that Google seems to have lost focus on their productivity suite, it may be another example of the company’s corporate attention deficit disorder, or it may be be that Microsoft have seen off another challenge to their dominance in that sector.

If it is the latter, then Microsoft have done a good job with Office 365 in seeing off the threat that Google posed.

Despite the company’s challenges in the post-PC, post- Gates era it would be dangerous to write Microsoft off.

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Is the Paperless Office promise about to come true?

For twenty years abolishing paper has been promised. Is the promise about to be delivered?

For as long as personal computers have been around the paperless office one of the holy grails of the IT industry.

Paper is messy, difficult to file or store and cruel to the environment. So being able to move and save information electronically made sense.

Despite the promises of the last twenty years, the quest for the paperless office seemed lost.

While the networked PC gave us the ability to get rid of paper, its advanced word processing functions and graphic capabilities along with the data explosion of email tempted us into generating more paper.

To compound the problem, over the last thirty years paper manufacturers found cheaper ways to make their product which meant the price of paper dropped dramatically just as we found more ways to use it.

So rather than delivering on the promise of eliminating paper, computers generated more than ever before.

Just as it seemed all was lost in IT’s War On Paper, the tablet computer came along. Coupled with cloud computing services and accessible fast wireless Internet, suddenly it appears we might just be on the verge on delivering on those promises of the last twenty years.

At a suburban football game I saw this first hand as I watched the ground officials electronically filing match information with their league.

“This used to be a pile of paperwork that used to take until Tuesday to be filed and collated” the ground manager told me, “today it’s done within half an hour of the game ending with almost no paper involved.”

For amateur sports clubs, money isn’t so much the problem as time. There simply are never enough volunteers to meet the workload of getting a team on field.

This is true with almost any community based organisation – from volunteer firefighters to community kindergartens organisers struggle with rosters and finding helpers.

In business the same resource constraints exist except we know we can fix these problems by paying a worker to do it. The problem there is few businesses have unlimited funds to employ filing clerks and form fillers to handle the paperwork.

By killing paper in the office, we’re making business and the economy more efficient. We’re about to deliver on that promise.

Bill Gates once wrote that in the short term we overpromise what technology can deliver while in the long term we underestimate its effects.

This is true of the paperless office – now that promise is being delivered the effects on business and government will be profound.

Is your business prepared for these changes?

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Tightening the screws

Cloud computing changes business IT economics, but it isn’t a magic pill.

Google had a big boost this week with Spanish bank BBVA announcing its 110,000 staff will switch to use the cloud based productivity software.

This wouldn’t be good news for Microsoft as their struggle to retain their almost monopoly position in corporate desktop applications and will undoubtedly mean reducing licensing fees and accepting tighter margins on their products.

BBVA’s move is interesting on a number of fronts although there’s a few myths among the trend towards cloud computing services and office productivity.

Cost saving myth

Part of the focus of selling these products is on cost and the head of Google Enterprise apps in Europe, Sebastien Marotte, said that his corporate customers on average achieved cost savings of between 50% and 70%.

The cost aspect is interesting, I’ve posted before about exaggerated claims for cloud computing savings, and Marotte’s statement deserves a closer look.

It’s highly likely the claimed cost savings are based on licensing – the standard Google Apps cost of $50 per user per year is substantially less than even the discounted rates large corporations receive on Microsoft licenses.

While the licensing cost is a serious line item, particularly when you have 110,000 employees, it isn’t the whole story; there’s training, maintenance, disaster recovery, security and a whole range of other issues.

Cloud computing services address a lot of those costs, but nothing like the order of 50 to 70%. In fact, it would be hard to find an enterprise that had the sort of slack in its IT operations to achieve those sort of savings.

In one respect, this is where its disappointing that cloud computing vendors tout those sort of savings – not only does it commoditise their industry but it perpetuates the myth amongst executives that IT staff spend the bulk of their time playing video games.

While there are real savings to be made for businesses switching to cloud computing, any sales person claiming a 50% or greater saving should be asked to justify their claims or shown the door.

Clean slate

Another interesting point with BBVA switching to Google is how the bank wants employees to leave all their old email and data in their old systems. Carmen Herranz, BBVA’s director of innovation, says we “want to start from scratch… don’t want to carry across old behaviours”.

Not migrating data is an interesting move and how BBVA’s users deal with retrieving their contact lists, dealing with existing email conversations and how staff will deal with feature differences like document revision tracking – an area where Microsoft Office outdoes Google Docs.

Internal use only

BBVA are only applying the Google services to internal documents as well which means the bank will be using other software – probably Microsoft Office – for corresponding externally.

This makes it even more unlikely the touted cost savings of 50 to 70% are achievable, and may actually increase support costs while reducing productivity as many customer facing staff will have to deal with two systems.

Having one system for use inside the business and another for external communications seems to be a European trend – before Christmas French company Atos announced it was abolishing email within the company but still using it for outside messages.

Both abolishing email and moving to cloud based office packages are really about improving productivity in a business while cost savings are nice, the main focus on adopting cloud computing – or any other new technology – should be on freeing your staff to do more productive work.

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