Here’s how Page and his deputies explained it on their quarterly earnings call:

Page said his three main priorities as CEO are velocity, execution and focusing on the future with big bets. Major launches this quarter included Chrome for Android and Google Play.

Responding to criticism of Google+ usage numbers, Page called this “confusion over metrics” and acknowledged that Google+ actually has two parts. One, it is a “social spine” for all of Google; and two, it is a “social destination.” The social spine has 170 million users, and the social destination is “growing very fast … with very healthy growth,” Page said, with all the clarity in the world.

As for Google creating a new class of shares and awarding equivalent stakes to existing investors, Page read out the letter he’d already posted. “We don’t have an unusually big acquisition planned, in case you were wondering,” he said.

Chief Legal Officer David Drummond assured his listeners that despite the effective stock split, all existing Google stockholders will essentially be treated equally and everyone will retain same voting interests, including Page, Brin and Eric Schmidt, who will agree to a “transfer restriction agreement.”

Onto the quarter at hand. CFO Patrick Pichette repeated those three big goals, with a slight twist: “velocity, focus and optimism.” As for perceived dips in numbers, “The most important thing to understand is that our business is healthy,” he said.

It was up to Nikesh Arora to cover the various business units (Susan Wojcicki, who usually helps out, is on spring break with her kids). He talked up YouTube’s progress to become a “key buy” for advertisers, and bragged about new Google Apps customers like Roche and the State of Colorado, accelerated growth in Asia, an underwater Google Hangout from the Great Barrier Reef and Google Street View in Russia.

Onto the analyst questions:

• Headcount growth seemed slower (Google now has 33,000 employees) — why? Pichette said this is just “short term variability.”
• Page said it would be reasonable to expect coming Google+ integrations in products like Wallet, Offers and Maps.
• Success of YouTube advertising shows growth of brand advertising online, said Arora. Page expects that mobile cost per click will improve over time because of local transactions and communication.
• Most resources are still going to core businesses, said Page — still following a 70-20-10 split among core businesses and near-term and long-term bets. Android took six years to get to where it is today, much of that before the public saw anything, he noted.
• Pichette declined to break out U.S. and international cash balances.
• Arora wouldn’t break out traffic acquisition costs for mobile, but said it’s not any different of an arrangement than on the desktop, with OEMs and carriers sharing revenue from Google Play and search, etc.
• Page said social does improve search. He gave yet another shout-out to that Ben Smith guy, who is now highlighted when Larry searches for his name because he’s Larry’s friend.
• As for tablets, Page talked up their media capability. “We definitely believe there’s going to be a lot of success at the lower end of the market as well,” he said.
• Pichette talked again about how lumpy growth and spending is good, and investors shouldn’t be worried.
• How do you account for the value of Android, an analyst asked. Page asked him to think longer-term. “We don’t get very many new operating systems. Only a few in my lifetime, and they’re very important.” He continued that Android is in its early stages, but it’s about the pace of innovation and improvements in user experience, and money will be a part of it, too.
• Page didn’t want to say tablets will eventually be more important than any other device, as an analyst asks him to do.
• Advertisers are interested in ROI — they don’t care about platforms, said Pichette. Google is working toward “dynamically allocating” advertising across its products in order to maximize ROI.

Despite more than a couple repeat questions in there, I don’t think I heard a single analyst ask about the new class of stock. Either they don’t really care, or they were surprised by the announcement and hadn’t prepared for it.

Girouard had been responsible for Gmail, Google Calendar, Google Docs and other cloud applications.

After eight years at Google, Girouard plans to start his own company, though not in the enterprise space. Google Ventures will be investing in his start-up, alongside Kleiner Perkins and NEA.

(Update: Girouard’s new company is called Upstart, with the tagline “The Startup is You.” According to a splash page, “Upstart lets you raise capital in return for a small portion of your future income.”)

Meanwhile, back at the Goog, Girouard’s responsibilities will transfer to Sundar Pichai, leader of the Chrome and apps team. Pichai is one of Google CEO Larry Page’s septumvirate of product heads, who were established when he took over the company last April. Part of Pichai’s agenda has been to lessen the divide between enterprise apps and consumer apps.

Departures by long-time Googlers are surprisingly rare. Google’s first employee, Craig Silverstein, left to join Khan Academy last month.

The contract, however, requires Google to meet certain requirements before GM makes a final decision to deploy the software, these people added.

Read the rest of this post on the original site »

The Apps version of Google+, which admins can turn on now or wait to be activated on their accounts in the next few days, offers the same features as the consumer version, Google said.

People who are already using Google+ on a personal account can migrate to their Apps account. Apps users will see an automatic Google Circle for members of the organization on their accounts.

Google product manager Ronald Ho wrote today on the Google Enterprise Blog, “It took more technical work than we expected to bring Google+ to Google Apps, and we thank you for your patience. This integration is just the beginning.”

Also today, Google+ launched a number of new content features including a trending posts list called “What’s Hot on Google+,” information visualizations about how a public post is shared called “Ripples” (example here) and photo filters and editing tools with Picnik.

To promote those photo editing tools and itself, Google+ is seeding a viral campaign with the hashtag #gplushalloween where users make their profile pictures spooky for Halloween. (You can see mine at left, and some G+ public figures below.)

The larger context of these launches is that Google+ had some seriously major things missing at launch that it’s now gradually adding while asking for patience given the project is so new and its ambition is so large. The search company’s social network added search last month, and SVP Vic Gundotra recently promised that Apps support, brand support, a developer platform and pseudonym support are all coming soon.

On Wednesday, Los Angeles City Council member Dennis Zine filed a motion requesting a status report on Google’s contract with the city. Google and Computer Sciences Corp., its partner implementing Apps, have been unable to meet the security requirements of the city’s police department, Mr. Zine wrote in the motion.

Read the rest of this post on the original site »

The company is Zetta, and it will announce today that it has landed $9 million in a third round of funding from Foundation Capital and Sigma Partners.

So what does Zetta do? It offers small and medium-sized businesses offsite data protection.

“We’re not talking the huge guys, but the midsized guys,” CEO Ali Jenab told me. “Law firms with 10 to 200 employees, universities, all kinds of smaller health-care companies.”

Jenab says that companies are still creating 15 million tape backups a year. Zetta offers a replacement that instead backs up data to cloud-based infrastructure. Companies pay a monthly fee based on the amount of storage they use.

Large companies can usually handle this on their own, because they have their own data centers. “We’ve basically built the same kind of high-end infrastructure that the large companies use, and taken it to midmarkets,” he says.

Zetta built its own infrastructure that resides in data centers operated by Equinix; one in California, one in New Jersey. Customers have instant access to the backups and don’t have to operate any kind of gateway to get to it via a browser.

While this is the third round of funding that Zetta has taken, Jenab says it’s not a C round, but rather a continuation of an A round. The company has raised a total of $31.5 million in three installments, all from Foundation and Sigma. Zetta’s customers include a mixed bag of midsized organizations, including the town of Dedham, Mass.; Acupay, a tax management firm; and Plexus Management, a consulting firm.

Prior investors General Catalyst and Lowercase Capital also joined the round, which brings the company’s total funding to $10.4 million. Avalon’s Brady Bohrmann will join Backupify’s board.

I talked with CEO Rob May, who told me about his plan to accelerate marketing and adoption of Backupify by users of Google Apps, the search giant’s Web-based business suite of applications that is proving popular with businesses. So far, Backupify is being used to back up the files on 5,000 Google Apps domains. He says he would also like to offer Backupify for several other services that users have been requesting. In addition, May wants to boost Backupify’s visibility among the many third-party partners — like, say, Cloud Sherpas — who work with businesses deploying Google Apps.

The outfit is growing fast. It has 175,000 users and stores 200 terabytes of data for its users, not just from Google apps, but also from Twitter, LinkedIn, Flickr, Blogger, and the Zoho Web-based office suite. One public customer is New York’s Museum of Modern Art, which uses Backupify to back up the Google Apps data generated by some 1,000 users. The data is all backed up to Amazon Web Services, but users can also download local copies of their data.

Why would you need to back up data that’s on a supposedly reliable cloud service? Because you might goof up — and delete something you didn’t mean to — just as easily in the cloud as on your PC. May says that roughly one-third of all data loss occurs because of user error. “We hear a lot of different things. When you delete something, Google assumes you meant to delete it. Sometimes things get deleted maliciously by a hacker, or someone who gets ahold of a password that wasn’t taken care of,” he says. “IT administrators want their own backup copy they can restore from. They trust Google not to lose it, but they don’t always trust their own users.”

Backupify’s $4.5 million A round was also led by Avalon and joined by General Catalyst and Lowercase Capital. Prior to that, First Round Capital led a $900,000 seed round, which was joined by Betaworks and several individual investors, including Chris Sacca and Jason Calacanis.

Yes, System Administrator Appreciation Day exists and has since about 2002. Naturally, the folks in Google’s Enterprise division, the people who bring you Google Apps, have something to say about it.

Google Apps, you see, are all about making the lives of sysadmins easier or more productive so they can focus on more important things than the mundane task of resetting passwords. It also frees them to come up with silly dances in response to the occasional Google April Fool’s prank. If I were a sysadmin, I’d rather have the cake, but that’s just me.

Anyway, to all you system administrators out there: Happy System Administrators Appreciation Day!

(Image from Wikipedia.)

Doing that is a pretty healthy business. I talked with Jon Hallett, Cloud Sherpa’s CEO, who tells me the outfit has some 500 managed clients and one million user seats under management, and that sales grew 600 percent last year.

It’s growing so fast that it will today announce its third acquisition in two months: It is buying WaveAdept, another Google Apps outfit based in Wellington, New Zealand. The move gives Cloud Sherpas a solid presence not only in New Zealand but in Australia, too.

In June, Cloud Sherpas bought Omnetic and Beloit Solutions Group, both Google Apps resellers based in the U.S. The Omnetic deal brought clients like National Geographic, Dr. Martens and retailer Design Within Reach under the Cloud Sherpas banner.

So what does a Google Apps reseller do? When a large company dumps Microsoft Exchange and other mainline enterprise apps, the challenge is the transition. “There’s usually a lot of challenges in areas like data migration and data integration,” Hallett said. “There are often a lot of applications running on- and off-premise that need to be managed.” As a Google Apps reseller, Cloud Sherpas not only sells Google Apps outright, but consults with companies about the shift and even provides some proprietary software that runs atop Google Apps.

One thing he’s not seeing: Any further doubts about the cloud playing a central role in enterprise IT. “Two years ago there was a lot of education taking place in the sales cycle. There were a lot of questions about cloud-based applications that simply don’t get asked anymore.”

Of course, if Ballmer’s exhortations aren’t enough, here’s another enticement: Cold hard cash. Microsoft said today that it has committed $5.8 billion in incentives, training and tools for members of its Microsoft Partner Network to get accustomed to the new products and services and to encourage them to sell them to their customers.

One big place where it’s putting that cash is behind messaging. It’s an area where Microsoft’s Exchange platform and Outlook desktop software has been under attack lately from the likes of Google Apps, and it’s a key component of Office 365, the new cloud-based version of Microsoft Office. Partners can train up in the newly created Messaging and Communications competencies and learn all about deploying Exchange and Office 365 and its video conferencing software Lync.

In August, Microsoft says it will offer new services in software assurance and planning, essentially paying partners to help their customers deploy Microsoft’s private cloud, and its Azure public cloud service, which competes with, among others, Amazon’s Web services and IBM.

Another area of focus: Dynamics CRM, an area where there’s stiff competition from Salesforce.com, plus longer-term CRM players like Oracle and SAP. Partners are being offered 40 percent of the sale of each new subscription to Microsoft Dynamics CRM. Microsoft is just a bit player in the online CRM world for now, but as history shows, it rarely stays in that position for long.

Having watched as Google nudged its way into the office productivity business with its Google Apps service, Microsoft is now bringing the strength of its enormous Microsoft Office franchise to the world of cloud applications.

The problem is, there are some risks. Where Google Apps was an incremental new business for Google that in time may or may not become big enough to figure in Google’s financials — it’s not big enough yet — sales of Office are a fundamental pillar that hold Microsoft up.

Office constitutes a huge portion of the Microsoft Business Division, and last year that segment was worth $18.6 billion in revenue, or slightly less than 30 percent of overall sales. It’s also wildly profitable, bringing in about half of Microsoft’s $24 billion in operating income last year. When you think of it that way, it’s not overstating things to say that Microsoft has chosen to mess with some of its crown jewels. There’s no small risk that Microsoft may in time cannibalize some of its own best customers.

But it’s not as though Microsoft hasn’t been talking about this for a long time. We’ve talked with other Microsoft execs about it before. And it’s also clear, judging by Google’s success so far, that Office applications need to move from their desktop-bound paradigm to something more flexible that only the cloud can accommodate by converting it to a service.

Also? This is Microsoft. It does nothing fast; it has been studying the opportunity for several years and thinks it can actually add more customers with Office 365, customers that it couldn’t reach with its traditional Office Suite products. I caught up with Kirk Koenigsbauer, corporate vice president of the Microsoft Office Division, to talk about all of these things. I also gave him the same chance I gave Google’s Shan Sinha earlier today to be catty about the competition. See if he took it below.

AllThingsD: So Kirk, we’ve known Office 365 has been coming for a while. That makes the market for these cloud-based office services more competitive. How does Microsoft see the market?

Koenigsbauer: First, it is an exciting day for us. We’ve been in the cloud business for six years. You heard Steve [Ballmer] mention Energizer, the battery company, as our first customer back then. We’re still deeply partnered with them and they are one of our best customers. Today is an important milestone for us because it is a new service. Office 365 brings the best of what we know about collaboration to the cloud. And so all of our modern capabilities are now in the service. The Office Web applications are now in the service. There are new capabilities that the service has not had historically, like conferencing and support for outside Web sites. It’s really where Office meets the cloud. We see a huge opportunity in the small and mid-sized company segment. Energizer is a huge company, and we work with lots of big companies, but with Office 365 we have the opportunity to meet the smaller companies that historically haven’t had the opportunity to have the best of what the big businesses have. Usually someone like the CEO or CFO has an additional part-time job as the IT person. And so they need things that are familiar and easy to use.

What’s a little unclear to me is the relationship between the traditional Microsoft Office boxed software and Office 365. Is this a fundamental rethinking of Office, or will this be a complement to the existing product or both?

I absolutely see this as the evolutionary step of taking Office to the cloud. One of the things that we’re really focused on with our cloud journey is providing it on the customers’ terms. And there’s a massive transformation happening in this space as you know, and small companies and large companies are going through it, and they all have a different pace and they all have different objectives. We want to make sure that our largest enterprise customers can decide for themselves if they want to use our multi-tenant service, or if they want to use the dedicated service. Do they want to run in a hybrid environment with some workloads running on-premise and some in the cloud? If they’re a government customer they often have to go through certain vendors. Sometimes they want to buy from a hosted provider or a private cloud provider, so we want to support all those options. For small businesses, sometimes all they want is to move their email to the cloud, so we have packages and services for them as well. We also have a version for big enterprise that includes the Office client, and it’s basically a subscription and it runs like a desktop client, but is deeply integrated into the service.

And it works with which versions of Microsoft Office? Please say it works with the Mac, too.

You can use Office 2007 or Office 2010 on the Windows side and then Office 2011 works with it on the Mac side.

When I talked with Google about their Google Apps service, they said that when they land a customer they’re often replacing an Exchange installation or traditional Microsoft Office. Here you’re bringing something that could conceivably do the same thing. Exchange and Office are part of Microsoft’s bread and butter. Are you worried that you’re going to be displacing yourself — and in the end hurting yourself financially in some of these situations?

I think there’s a few ways to think about it. First, we think about it as a great thing for our customers. Specifically, small and medium-sized companies are getting access to products and services that they didn’t have access to before. While we love products like Exchange and Sharepoint, those products have historically sold more into the large enterprise space. So when we can deliver through the small business offering the kind of richness that Sharepoint and Lync and Exchange have, that’s a huge upside for us. In the enterprise, it’s all about doing what’s right for the customer. This is a big transformation that’s happening and its going to take many years. And customers are going to go at different rates. So I don’t worry at all about it displacing revenue. By running a service for our customers we’ll have a longer-term relationship with them. They’ll have access to the most up-to-date version of our software. But we’re also displacing other things, too. We see a lot of customers coming from Lotus Notes and Groupwise. Seventy percent of our old BPOS (Business Productivity Online Standard Suite) came from Lotus.

Is the transition easy for customers?

We have migration and transition planning. We talk about strategies to consider based on the workflow. We’ve got a lot of experience in doing Notes migration that we can do outside of the cloud experience that we can bring to bear.

Talk about the pricing model. It seems like there’s an awful lot of options. Google Apps is either $50 per user per year or $5 per user per month. It seems Microsoft is a little more complicated.

It’s all about providing choice and flexibility for customers based on what they need. For small businesses, we know they want something super simple. And so we have a single offer, $6 per user per month. You can use the current version of Office if you want or you can add on another subscription of Office. On the enterprise side, we know our customers want more choice. We have four core plans labeled E1 through E4. You can imagine, it ranges from basic capabilities to a plan where we add the Web Apps, to a higher end plan where we add Sharepoint. The highest is E4, where we offer Lync Voice services. Then there are Kiosk versions for customers that we’ve never really reached before, who have a lightweight usage of, say, Sharepoint and Exchange. They may be mobile workers or retail shop floor workers. That’s a net new opportunity for us.

I offered Google the chance to get a little catty and they opted not to take it. I’m going to offer you the same chance. People are going to compare Office 365 to Google Apps. Size up the competition for me, if you would, and how do you like your chances?

My take on it is that of course we think about the competition. There’s a massive transformation that’s happening in the workplace. We’ve been in the collaboration and productivity space a long time. We understand it incredibly well. And we’ve been in the cloud collaboration and productivity space for five or six years. I feel like for us it’s like a transformation of our business model. We can update our software every 90 days. We can reach new segments of customers that we couldn’t reach before. Our customers will have the most modern software. That’s a big deal because they’ll be more satisfied, and happier with us. Those are the kinds of things I think about when I think about the marketplace out there.

At the time, I asked out loud, “Where’s Office 365?” The answer I got back from Redmond: “Later this year.”

Well, “later this year” equals today. In a few hours I’ll be headed to a Microsoft event in lower Manhattan, where the software behemoth will formally launch Office 365, its own Web-based office suite, essentially a cloud-based competitive response to Google Docs. In advance of that, I thought it worthwhile to check in once again with Sinha. You’ll remember he’s the former CEO and founder of DocVerse, a company that Google acquired, and whose product got turned into Google Cloud Connect. He’s now Group Product Manager at Google’s Enterprise Group. I caught up with him last week to talk about the soon to be more competitive market for cloud-based office services and about what’s going on at Google Apps.

As a counterpoint, tomorrow I’ll have seven questions for Kirk Koenigsbauer, Corporate VP of Microsoft’s Office Division, and we’ll be talking all about Office 365.

AllThingsD: Shan, this week things kind of come to a head, with Microsoft launching Office 365. Clearly there’s a lot going on in the cloud-based office suite business. How does Google see the state of play right now?

Sinha: The enterprise business at Google is actually really great. We’re seeing a lot of growth. It’s accelerating, which is more important. We’re going from zero to 60 faster than we ever have before. We’re talking about larger revenue bases. We’re obviously not breaking out our revenue yet, but it’s just been a really phenomenal year for us. We’ve got 30 million users of Google Apps; three million businesses have signed up. We’ve seen a tripling of signups this year alone. All the growth we’re seeing across the board. We’re seeing large enterprises, midmarket companies and small businesses.

I get the point with small business and education institutions, and even everyday people like myself. I’m a Google Apps user myself, but I also still have a Microsoft Office seat. But the part I find myself being a little more skeptical about is the large enterprises going to Google Apps. Who’s doing it, and how is it working out?

That’s a common thing that people worry about. It’s not unreasonable to ask if a cloud solution is suitable for something as critical as messaging. The answer we’re hearing a lot is “yes.” What’s even more interesting about it is that it feels like we’re breaking out of the early adopter segment of the market. If you look at some of the biggest customers we’re working with, there’s McClatchy, which rolled it out to 8,500 users, and there’s IHG, the International Hotel Group — that’s a 25,000-seat deployment. You might go so far as to say they’re on the early edge of the adoption cycle, but then we’ve also started working with the state of Wyoming, and I don’t know the last time that anyone considered a state government as part of the early adoption cycle of anything. Wyoming just deployed 10,000 seats for everyone in state government. A lot of people like to talk about the reticence of companies to adopt cloud-based applications, but I think that’s an artifact of two or three years ago, when the question was “why?” Now they get the benefits — there’s cost and ease of deployment. For something that’s as commoditized as email, which everyone has, it’s something that just makes sense.

What changed? You’re offering something that every office has.

Three things. First, email has changed. Every single company has email, so it’s not a strategic tool or technology. You just have to have it. Companies want simple, hassle-free ways to bring email into their organizations. Second, the world has changed. The world is no longer moving off typewriters and printouts. You’re talking about groups of connected people who work in teams, and Google Apps is built for that world. You get collaboration across the whole suite. You get integration between email and docs. Third, in an organization, you’re looking for the way to get the best leverage out of the IT organization. One of our biggest customers is Genentech. They told us that in the past, when they had Exchange deployed, they had a team of 12 managing hard disks and quota and backups and disaster recovery. Now that they’re on Google Apps, they have one person. Those 11 other people are working on more important things to help the company be more competitive.

So when you get into these companies and governments, are you displacing Office and Exchange? Or are you enhancing them or coexisting with them?

When we talk about mail, typically we’re displacing something. We’re either displacing Exchange or Lotus Notes, or some of the smaller products. Now, we do enable companies to incrementally roll out so that it’s not a night-and-day kind of switch. When it comes to Google Docs and collaboration, what we’re seeing is a need for two things: working in teams and working mobile. You’re seeing a need to support lots of different types of devices — iPhones, Android, BlackBerry, tablets, as well as traditional PC desktops. The second piece is centering around teams. If you look at Microsoft Office, it’s a product that was built for individuals, and it was built at a time when the goal was to get people off of typewriters. I think the last typewriter company in the world just shut down. And so what we’re really seeing is Google Docs enabling team collaboration to help people get the most out of teams and groups. Microsoft Office certainly isn’t going away. What we’re seeing is a shift in how people use it. In the past, companies would buy a sitewide license for Office and give it to everyone. Now, companies are considering buying it on a case by case basis. If the finance department is building complex financial models, sure, get them Office. But for everyone else, Google Docs has become a great set of tools for creating and editing documents.

Last time we talked, you told me about Google Cloud Connect for Microsoft Office. You were the founder of DocVerse, which basically became Google Cloud Connect after Google acquired it. How has that been working out so far?

It’s rare that you see an acquisition stick so closely to its original intent. Our goal was to help create that bridge into the cloud. We’ve been seeing really great uptake of Google Cloud Connect, both at large companies and midsized companies. It’s only been three to four months, so we’re not going to break out any numbers, but so far we’re really pleased with the adoption we’re seeing.

So what are your priorities? What’s on your to-do list for the next six to 12 months? One thing I keep reading about is “offline availability” for both email and Docs. What can we expect?

When we think about our offering, it’s not just products and features, but it’s about a completely new way of doing business. At a product and feature level, yes, offline is important, and it’s coming later this summer across all the Google Apps products. We’re going to be making a lot of user interface improvements. And then there’s going to be a lot of rapid iteration. We have a release that comes out every two weeks. Last year we did more than 200 feature releases. This year we’ve done about 100 so far. We push them out to users so that they don’t have to wait three years for the next version. But it’s also important to think about all the ways we do business. We’re going to be making significant improvements to our support infrastructure so our customers can go and get support more easily and in a broader way. We’re also going to make improvements to the collaboration and communications aspects across the suite. We also just changed the billing arrangement. We used to have a $50 per user, per year flat model. And we actually just introduced a $5 per user, per month no-commit model. We’ve seen a tripling in signups because of changes like that.

Let’s get a little catty here. Microsoft is out with its big Office 365 release today. How do you see the competition coming from them? Google Apps is fair competition for Microsoft. But is Microsoft’s online offering going to provide fair competition for Google Apps now?

I think at a very high level, it’s exciting to see a real emphasis on the cloud. This is great for the market. This is where customers are headed, and where they want to be headed. To see Microsoft going in that direction is a great thing for the industry and it’s a great thing for customers. Stepping down a bit, what I would say, it’s reassuring for us that Microsoft is competing on our turf. This is a business we’ve been doing for a few years, and it’s something we know how to do. We’ve built systems processes and products all geared around the cloud, because we don’t have a business model to compete with. Microsoft has to compete with a business model from the past in order to make its way into the cloud-based way of doing things. Microsoft is taking its existing product and kind of putting a cloud sticker on some pieces of it, but it’s still vested in desktop software. You’re still running Outlook, you’re still running Office. And there are still management headaches that come with it. I think we compare favorably on licensing terms. We have one pricing and licensing model. Microsoft has 1,000 people working on Enterprise licenses and schemes, and has 11 different editions and versions. Its a more complicated picture, when we think the world is looking for some simple solutions to problems that frankly aren’t strategic anymore.

When he first joined Google nearly seven years ago to start its enterprise division, Gmail was barely out of the gate and Blogger was the search giant’s most notable acquisition. What could Google offer enterprises that they weren’t already getting from Microsoft and Oracle and IBM and scores of other established software and hardware vendors?

The answer? An alternative. Sheth pitched Google’s trio of senior executives–Eric Schmidt, Larry Page and Sergey Brin–on the idea of experimenting with standard office applications–a word processor, a spreadsheet–that operated entirely within a browser. The product evolved into Google Apps, and while Microsoft Office still dominates the enterprise desktop, it’s widely accepted that Google Apps has made some important inroads against it: 3 million businesses use it in some way, and some 30 million people use it in their businesses.

Aside from the scores of companies, governments and non-profits that have adopted it, there are millions of college students using it, attracted by the zero-dollar price tag. Microsoft has responded with its own cloud-based office offering, Office 365, but its clear that Redmond’s traditional grip on the enterprise desktop isn’t quite as tight as it once was.

Now Sheth has an even bigger target in mind. If Office isn’t so sacred, why does Windows have to be? As the Group Product Manager Chrome OS for Business, he makes an interesting argument that the Redmond-centric world of corporate desktops is quietly nursing a desire for change. Where will it come from? A combination of cloud computing, and a desktop that’s stripped down to nothing but a browser. I talked with Sheth by phone earlier this month and my first question was about his education.

NewEnterprise: You did your undergraduate degree in electrical engineering, but now you work in software. Circuit design wasn’t for you?

I realized I liked software a lot more than hardware. But I was most of the way through with electrical engineering at Stanford. So I did my masters in software.

Does having been educated first on hardware give you a different perspective on any of the work you’re doing at Google?

It is actually relevant. A lot of what I’ve done involves software and user-facing interfaces, but it also involves a lot of infrastructure. When you look at VMWare, which is where I worked before Google, it’s about what you can do with a combination of hardware and software and change the game. It’s similar with Google Apps. It’s a big set of user-facing applications, but the big thing is the cloud computing infrastructure that’s underneath. The fundamental question is about how you wire computers together in the most efficient way possible. That is really the bread and butter underneath Google Apps. And finally with Chrome OS it’s the same question: What can you do to the form factor of the hardware if you’re really only running a browser on it. The background in hardware has served me well.

So you joined Google about seven years ago with the mission of creating something–you basically had a blank sheet of paper–that Google could offer the enterprise. And your first idea got shot down. What was it?

At the time I joined Google the enterprise division was literally 25 people. We had a few engineers and salespeople, and we brought in a manager, Dave Girouard. I came in with the explicit mission of starting something else within Google that was to be aimed at businesses. And that something else was completely undefined. When I was still at VMware, a friend sent me a Gmail invite, and I started using it, and it was better than my corporate mail. I thought it could be a very interesting enterprise product. After I joined, I pitched Eric, Larry and Sergey on the idea of putting Gmail into an appliance and shipping it out to corporations. They didn’t go for it. I went back six months later, with some new insight, specifically that we could use our server architecture to make it easier for businesses and educational institutions to deploy and manage email, and that from there we could move up-market to deploy applications. We got exactly one engineer to work on that.

It was very much like running a start-up. I was the product manager and was tasked with starting this new business and we went through all the classic things that a start-up does. Building the product, building the team, selling the vision to an early set of adopters–San Jose City College was our first college customer and Northwestern and Arizona State followed after that. We started small and incubated it within Google. We did a lot of experimenting with that small team to see what was viable and eventually we were able to get more resources to make it bigger.

So how does the Google Apps experience compare to your new role in building a business around Chrome OS for businesses?

It’s very similar. In Chrome OS I’m back in start-up mode. Essentially I’m trying to build a vision. We have a small team of people that all sit together in one area, building out the business model, and we’re trying to start small and grow from there. One way to look at Google is as a closed confederation of start-ups. All these teams are empowered to build something that is visionary. But we all have a lot of leverage behind us, and so we’re able to do a lot more than we ever would have been able to do if we were a small company.

I see a potential problem there: Don’t all these start-ups within Google run the risk of creating independent silos or fiefdoms that aren’t all on the same page? We hear a lot of criticism of the silos at companies like Sony or even Microsoft. Even at Google, there’s Google Voice, which is a great product but doesn’t really fit with anything else, though I understand it eventually will. But how do you avoid this silo problem?

It’s a great question, and its something we’ve thought about a lot. There are basically two extremes. The first extreme is on one hand you have different teams doing things completely different from each other. The other extreme requires that everything be integrated extremely well together. We tried to find a happy medium. The benefit for one is that you can move quickly. But if you do the other extreme, you slow down innovation. Your project may take several times longer. One big advantage is the Google infrastructure is all there. You don’t have to think about user authentication or how to store files. That’s all done for you, so everyone is using the same infrastructure. A lot of the parts you need are there and you just build on top of them. You can never strike a perfect balance, but we think ours is pretty good.

So what’s your mission with the Chrome OS?

My mission is to bring Chrome to business and to ask how we make it something that can reshape the enterprise desktop. The thing that was really intriguing for me, is that cloud computing has done so much for businesses. You don’t need to think about deploying the hardware, you can just turn things on. You don’t need to worry about massive up-front payments for hardware, you can just pay monthly for what you use. And your applications just keep getting better. In my mind the cloud really stops at the desktop.

The desktop is tremendously hard to manage. It costs a lot to maintain, most of the cost for a business is all in the maintenance. It doesn’t get better over time, it gets slower as you use it. I think there’s a huge opportunity to bring the principles of cloud computing to the desktop. It gets better, and it’s fast and secure. That’s the vision. We think we can do that because we have a unique operating system. It’s just a browser that’s completely stateless. As a result of that, you can boot up in 5 to 10 seconds. And no matter where you go, you log in, you have your entire desktop. If the system breaks, that’s not a problem, you just jump on to another system. If you lose it, it’s not a problem because its stateless.

There are people who would say its crazy to try and dislodge Windows as the operating system of choice for businesses, and yet you think you can do it. What kind of results have you seen so far?

If you just have a browser and take out everything else, life gets a lot simpler. And this is why I think that the desktop OS is ready for a radical change much like the enterprise applications were a few years ago. One thing we’ve found is that very significant portions of the population are using only a browser right now. Those trends show that this area is ripe for a change. If you look down the line in three years, the majority of those business users will use only a browser. We created this pilot device called the Cr48, which is a notebook with Chrome OS installed on it. We received 50,000 applications from businesses interested in trying it, and we now have thousands deployed in the field. We have companies like Intercontinental Hotel Group, Virgin American and Groupon using them for different things. We’ve even heard from the US Army Intelligence Office. We heard from a lot of companies we didn’t expect interest from.

I think you’ll see some early adopters, groups of users within companies, this year. Some companies’ pilot programs want to do large roll-outs to call centers and to customer service reps and some want to roll them out to mobile sales people. Many will find that it makes sense to them because it brings the cost down. No one wants to pay to have to fix a system that’s broken because two applications are in conflict with each other. No one wants to pay to go patch an operating system. That kind of thing is going to become a lot easier with Chrome OS.

To coincide with Earth Day, which apparently was today, Google decided to give a little peek inside its data center in Moncks Corner, South Carolina. Google would like you to know that its data centers are very energy efficient, as you’ll learn toward the end of this segment.

Google probably also wants to take advantage of the fact that it scored higher that Apple on the Greenpeace Dirty Data report because its facilities rely less on coal-generated power than those of Apple, Facebook, Hewlett-Packard, IBM or Twitter. But the environmental stuff is saved for the end.

And if this isn’t enough data center fun, you might have missed my tour of the Lucasfilm data center last month, the one that when I last saw it, was actively cranking on the bits behind all the special effects for the summer blockbuster movies. Hey, Memorial Day is about five weeks away!

The bulk of the video focuses more on how Google protects data belonging to its customers with multiple layers of physical security (hint: don’t even think of trying to sneak in), and destroying hard drives when they wear out. After watching it twice, what I really want to know is this: Where can I get myself one of those crushers?

(Fort Knox Image via Wikimedia Commons)

This will certainly trigger talk of a showdown in the cloud between Microsoft and Google, whose Google Apps service is trying to win business from large enterprises, including big companies and government agencies. And in some cases the competition between the two has gotten ugly.

Google, you may remember, is suing the Department of the Interior, saying they were improperly excluded from bidding on a big project to provide cloud-based office and collaboration software–after Microsoft won the contract. Microsoft has accused Google of not having the right security certifications for doing business with the federal government. Google slapped back, saying Microsoft didn’t know what it was talking about.

Whatever. The point is, starting today, you can try Microsoft’s cloud-based version of Office for yourself. Still no word on when it will be ready for prime-time. I took the opportunity to subject Ron Markezich, corporate vice president for Microsoft’s U.S. Enterprise and Partner Group, to the Seven Questions treatment. We talked about the state of Microsoft’s cloud application and service offerings, including not only Office 365 but also BPOSS, its Business Productivity Online Standard Suite, which includes a cloud-based version of Microsoft Exchange, SharePoint and other applications. And yes, during the conversation, more swiping at Google–as well as a little at IBM–occurred.

NewEnterprise: Ron, when I think of Microsoft, I think of Office. And when I think of Office, I see it as a box of software that I have to schlep to the a store to buy in a box. I tend not to think about it as something I can get in the cloud. When did Microsoft start thinking about moving its multi-billion dollar software franchise to the cloud?

Markezich: My background is that I’ve been at Microsoft for 13 years. Prior to this I was CIO. And about six years ago Bill Gates and Steve Ballmer called a meeting and said the future of our company is selling our software over the Internet. They wanted to take the operational folks in IT and put them in engineering in order to really combine this online service delivery of our software. And really that was the beginning of what we now call BPOSS and now also Office 365. Six months after that meeting we signed up our first customer, which was Energizer, the battery company, and we serve them today, globally. I soon moved out of the CIO role and into engineering, and built this business based on our traditional software, as the engineering teams re-architected our software like Office and Sharepoint for the cloud.

So who are your customers? And who–obviously Google is one–do you see as your competitors?

If you look at just where we stand now, we have the best set of clients you could ever hope for: Glaxo SmithKline, Ingersoll-Rand, Coca-Cola, Kraft, McDonalds. These are customers who aren’t just using bits and pieces of the cloud. I think its getting hard to tell who’s a customer and who isn’t. In some cases you don’t even have to pay for these services. You might have two or three people inside an organization using the service. But these are all cases where the entire company has moved to BPOSS. They are using it across their entire work force.

As to competitors, I think Google gets a lot more press because it’s a lot more fun to write about than Microsoft and IBM. It surprises me how much Google is visibly going after the enterprise. Frankly it’s nowhere near ready to go after the enterprise. Google throws out a lot of customer references. But when you sign Google’s contract you give them the right to use your name as a customer reference, regardless of how many seats you buy. Our default is we can’t use your name unless we get your permission. In reality we don’t see Google as getting that much traction. If you look at where we battle more in the enterprise, it’s against IBM on Lotus Notes. And so about two thirds of our seats in the enterprise are coming to us from Notes. We see more of a fight there with IBM trying to hold on to their Notes base.

The fact is, Google just isn’t ready for these types of customers. If you go to the RFP [Request for Proposal] and look at all the requirements, there’s many that they simply don’t meet. I think they want to be given a fair shot but they’re really not ready.

What makes Google not ready?

They’re taking a consumer service and trying to provide that to businesses, and architecturally there are a lot differences. As a consumer you probably don’t ask where your data is going to be stored. That’s the first question an enterprise customer asks. They ask what countries their data is stored in and where that data flows. We take our data flows and we make them available to customers. We tell them where and how its stored and what the circumstances are where it can be accessed from outside of that country and moved outside of that country. You’re just not going to think about those things with a consumer service. But it’s one of the reasons that we don’t use Hotmail, for example, as an enterprise service. Hotmail wasn’t built that way. Their mail service is built right on top of GMail. In fact what you’re paying for is support, but even there they fall short. They don’t have the kind of service level agreements that we do. I’d love to be a fly on the wall inside Google right now, because they’re probably sitting back and saying “Wow, this enterprise IT stuff is a lot harder than we thought.” It’s not easy, and the demands are high.

So what are customers telling you? Where are they hurting and what do they need?

Every customer loves the cloud. In fact, a lot of customers are embracing the cloud because their CEO is hammering them, asking for it. But it’s dangerous. What people love about the cloud is the fact that they don’t have to worry about upgrades, they don’t have to worry about hardware, and they don’t have to do a big capital investment. The flip side is that as a customer you’re now one voice of many, and a lot folks don’t realize what that means in terms of support and feature requests. One customer doesn’t get prioritized over another. The other thing is the sense of control. When you’re running everything yourself, you know exactly what’s going on. In the cloud, you’re running with thousands of other customers and you have to rely on the provider to let you know what’s going on. Some customers love it. Some struggle with it at first until they realize, for example, that they’re benefiting from the scale.

I realize this will vary case by case, but by and large, what are customers saving on per-seat cost?

I was with one customer last week who told me they’re saving 50 percent from what it cost him to run Exchange in his data center to running Exchange online. Typically, what we see are customers saving in a range of 30 to 50 percent. We usually see those who come from Lotus Notes save 50 percent. Notes is a little more expensive to run. But this customer was a Microsoft customer saying he saves 50 percent. We’ve also had customers say they’re breaking even, but they’re breaking even with better availability, and with geo-redundant data centers. But the bulk of them fall into that 30 to 50 percent range.

I know what your customers’ pain point are. What are yours?

Once customers move to the cloud they want more stuff, faster. I always liken it to running. The hardest step to take is the first one out the door. Once you get out the door everything is easier. With the cloud, once you take that first step and move a mission-critical system to the cloud, you’re kind of there and you want to move everything to the cloud. So they want Windows Intune faster, they want Microsoft Project faster. I was with Coca-Cola recently, and they said they wanted to do everything they did with Office 365 and do it with everything else. And so keeping up with that portfolio of additional cloud services is tough, and launching a cloud service is not easy. There’s a lot of engineering work, then you have to work out the support model, the regulatory aspects, and the certifications. All of these are things we have to work through before we launch a service. Then you launch and customers want more features. So our big challenge is keeping up with the appetite that our customers have for more services.

With this you’re making fundamental changes to how a key Microsoft franchise that has brought in billions upon billions of dollars is sold. Can this new model ultimately catch up with and supplant the old one?

It’s even more than that. We’ve made a version of Office that anyone can use online for free. But as a business model we see this as something that can be beneficial to Microsoft in a couple of ways. One, every customer that has bought BPOSS, we see their total software spend with Microsoft go up. Even that customer I told you about that saved 50 percent, they still are spending far more than they did before. For one, they were just buying Exchange Client Access Licenses. Now they’re buying Exchange CALs, plus spending some money for the service. Now we don’t make as much profit margin, but we make some profit margin on that. But the biggest reason is that most of the time, they buy other things from Microsoft. They buy new versions of Office, they might be buying Active Directory if they didn’t have it before. They might not have had Sharepoint or Lync, and now they’re buying those. So every one of these customers, we see their total spend with Microsoft go up anywhere from 2 to 6 times what it was before. The other thing is that if you look at the total industry spend, most of it is on activities where there’s no value added. Every dollar you spend on software from Microsoft, you spend $6 trying to get it to do anything. What we’re trying to do is drive that six dollars to zero.

That’s the idea behind a new commenting system being introduced in Google Docs today. Comments have been converted into what Google is calling Discussions. And these discussions are comparable to the streams in so many social media sites like Twitter and Facebook, complete with the Twitter-like convention of “@ mentions” (A sample comment is pictured) but they’re also linked to email, so you can participate in the discussion without having sign into Google Docs. You can also tell who made a comment and when, as it includes timestamps, profile pictures and email notifications make it easy to keep track of the feedback process.

The feature is going live today, but only on new documents, and for those Google Apps users who have opted for the Rapid Release track on new features–those who haven’t will get it over the next week or so. A two-minute video below gives you a pretty good idea of what it looks like.

Cloud applications like those found in Google Apps are a little different. Since everything works within the browser, there are fewer, if any, things that are likely to break when a new app or feature gets introduced. And Google likes nothing more than pushing the latest shiny things–new features and apps–to its users as soon as they’re ready. Not all IT managers are cool with that, however, because it forces them to get familiar with the new apps and features before they’re ready to field questions about them from their users.

Today, Google is making it possible to choose between being an early adopter or taking a more careful approach by giving Google Apps administrators a two-track deployment approach. One track, known as Rapid Release, gives users access to new apps and features as soon as Google rolls them out.

The second track is known as Scheduled Release, and gives admins a week to familiarize themselves with new apps and then allow their users to get them on a weekly basis, with updates taking place every Tuesday. Google says new features for GMail, Contacts, Google Calendar, Google Docs and Sites will follow this new release schedule going forward.

It’s called Google Cloud Connect for Microsoft Office, and it’s going live today for all Windows users running Microsoft Office 2003, 2007 and 2010. (Sorry Mac users.) It’s a plug-in (reader Ben provides a download link in the comments below) that gives Office users in multiple locations the ability to edit and collaborate on Office documents at the same time. The new service grew out of Google’s acquisition of DocVerse last year.

Alongside the new service Google says it is launching a 90-day trial period that will allow companies that haven’t yet embraced the notion of cloud-based productivity and collaboration to try Google Apps for 90 days. Google is calling it the 90-Day Appsperience, and it’s available for what Google calls “a nominal fee.” Companies who take advantage of the trial get unlimited use of Google Apps for 90 days, plus support.

This is taking place as the competitive scrum between Google and Microsoft concerning cloud-based office tools heats up. Microsoft of course has the huge Microsoft Office franchise, which is the Big Kahuna within the Microsoft Business division, which reported $18.6 billion in sale last year. Its own cloud-based enhancement for Office, known as Office365, was first announced in October, but remains in a limited Beta test period, and so isn’t generally available. Microsoft has promised to release it generally during the second half of later this year. Google is clearly trying to take advantage by finishing its beta test of Cloud Connect well before Office365 is ready. Maybe this will spur Microsoft to speed it up a little.

Earlier this year, BoomTown’s Kara Swisher visited with Shan Sinha, former DocVerse CEO, who’s now product manager for Google Apps. In the interview below he talks about the learning process Google has been going through as it goes after the enterprise market.

]]> http://allthingsd.com/20110224/googles-cloud-connect-beta-is-over-now-wheres-office365/feed/ 4 http://allthingsd.com/20110223/google-tool-to-move-microsoft-files-to-web/ http://allthingsd.com/20110223/google-tool-to-move-microsoft-files-to-web/#comments Wed, 23 Feb 2011 22:19:45 +0000 Amir Efrati http://voices.allthingsd.com/?p=36710 Google Inc., taking aim at Microsoft Corp.’s lucrative Office franchise, plans to release a free tool allowing users to transfer files from the widely used software suite to the Web so that multiple people can edit and collaborate on them.

The long-anticipated move is intended to bolster one of Google’s fastest-growing businesses not related to its popular search engine–selling online software to companies. The company’s Google Apps offering includes online word-processing, spreadsheet and collaboration tools used through a Web browser that are part of a service called Google Docs. They compete with Office applications such as Word, Excel and PowerPoint.

Though Google Apps comes in free and paid versions that are much less expensive than Office, some customers have resisted using them because employees are accustomed to Office.

Google plans to formally introduce the new Google tool, called Cloud Connect for Microsoft Office, later this week after releasing it to early testers in November.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20110223/google-tool-to-move-microsoft-files-to-web/feed/ 0 http://allthingsd.com/20110114/google-apps-new-promise-no-more-downtime/ http://allthingsd.com/20110114/google-apps-new-promise-no-more-downtime/#comments Fri, 14 Jan 2011 17:20:55 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1817 Google is announcing some changes to its service level agreements for its Google Apps customers today. It would seem routine except for what on its face comes across as an extraordinary promise: No more downtime, not even for maintenance.

The promise comes in a blog entry posted by Matthew Glotzbach, product management director for Google Enterprise. “Unlike most providers, we don’t plan for our users to be down, even when we’re upgrading our services or maintaining our systems,” writes Glotzbach. From now on, all downtime that does occur will be counted and applied toward the customer’s service level agreement. In fact, the entire section of its SLA that covers scheduled downtime is being removed. This includes periods of 10 minutes or less, which under the terms of its old agreement didn’t count as downtime.

Google also released some data about the availability of Gmail, both the consumer and enterprise versions. It says that in 2010 it managed to maintain uptime 99.984 percent of the time. This, Glotzbach says, works out to about seven minutes of downtime per month. Citing data from the Radicati Group, he says that makes Gmail 32 times more reliable than the average on-premise email system and 46 times more reliable than Microsoft Exchange.

Over the years, Google Apps has taken some criticism for downtime issues and for not meeting the level of availability spelled out in its agreement. Shortly after it introduced its premier version in 2007, there were reports of availability problems. And there have been occasional Gmail outages like this one in 2009. As services we use daily migrate to the cloud, downtime seems an unavoidable by-product, as this list of incidents in 2010 from Data Center Knowledge suggests. It may seem like a small thing, but Google is making a strong statement here. It will be interesting to see if any of the other cloud providers respond in kind.

]]> http://allthingsd.com/20110114/google-apps-new-promise-no-more-downtime/feed/ 2 http://allthingsd.com/20110106/google-apps-adds-an-anti-spam-weapon-to-its-arsenal/ http://allthingsd.com/20110106/google-apps-adds-an-anti-spam-weapon-to-its-arsenal/#comments Thu, 06 Jan 2011 17:05:04 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1405 One of the most frustrating aspects of the battle against spam over the last several years has concerned overly aggressive filters. You can be a perfectly innocent person sending a perfectly routine email, yet the spam filter on the other end of the line treats your message as if it came from a dodgy pharmaceutical company in Kazakhstan, and diverts it to the spam folder. There are lots of reasons this can happen, but one of the most common is when those who are actually sending spam falsely place your email address in their “reply” field.

The way to solve that problem, and this is especially true of companies, governments and nonprofits whose domains are often used for the purposes of spamming, is to vouch for the messages you do send, making it easier for spam filters to correctly catch the ones that really are spam.

One widely used method of doing this is by using DomainKeys Identified Mail. DKIM is an industry consortium that over the years has absorbed similar email security work done by Yahoo and Cisco Systems. One key problem is that it’s tricky to put DKIM in place.

Google announced today that its Google Apps customers will get a new feature that easily enables DKIM-certified mail. Google has long supported the DKIM standard, and in 2008 worked with eBay and PayPal to authenticate inbound messages from those domains. Now Google Apps customers can get the same certification. DKIM-signing for outbound messages will be enabled for Google Apps customers who turn on the feature in the “Advanced Tools” tab of their dashboard. Take that, spammers.

]]> http://allthingsd.com/20110106/google-apps-adds-an-anti-spam-weapon-to-its-arsenal/feed/ 1 http://allthingsd.com/20110105/judge-google-was-excluded-microsoft-favored-in-federal-contract/ http://allthingsd.com/20110105/judge-google-was-excluded-microsoft-favored-in-federal-contract/#comments Wed, 05 Jan 2011 18:08:31 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1377 When the U.S. Department of Interior said it would move to using Microsoft’s cloud-based email and collaboration services, it was seen as a big validation of cloud computing by a big organization. That is, unless you’re Google.

In November, Google sued the Department of Interior, arguing that the Google Apps platform was frozen out of the bidding. Today, a federal judge, Susan Braden, sided with Google by issuing a preliminary injunction preventing the department from deploying Microsoft’s Business Productivity Online Suite. Braden also found that Google had made a preliminary showing that the department had violated a 1984 regulation on competitiveness in government contracts.

Google and a reselling partner, Onix Networking, had argued in court that the Interior Department’s request for bids specifically excluded Google Apps by stating the system had to include the Microsoft product.

The case isn’t over, but it’s certainly not looking good for the Interior Department, which may be forced to reconsider Google Apps for the contract.

]]> http://allthingsd.com/20110105/judge-google-was-excluded-microsoft-favored-in-federal-contract/feed/ 3 http://allthingsd.com/20101217/meet-todd-mckinnon-ceo-of-cloud-management-startup-okta/ http://allthingsd.com/20101217/meet-todd-mckinnon-ceo-of-cloud-management-startup-okta/#comments Fri, 17 Dec 2010 21:28:05 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=780 Todd McKinnon saw the first phase of the cloud computing revolution close up. He joined Salesforce.com as its head of engineering in 2003 and saw firsthand how companies mistrusted the idea of using software they didn’t run on their own computers in their own buildings, but instead trusted to someone else.

Over time, CIOs everywhere got over their skepticism of the cloud, and Salesforce.com went on to become a billion-dollar company that is widely used in numerous industries.

But he knew there was more to it. Lots of other small companies where adapting the Salesforce software-as-a-service model to other job functions besides tracking sales relationships. There’s SuccessFactors, which tracks employee performance, and Workday, which manages basic company operations like payroll and benefits.

For companies large and small that are embracing the cloud, that’s a lot to manage. McKinnon’s plan with Okta, a start-up company that’s received investments from Andreessen Horowitz, Floodgate and SV Angel, is to make it easy for companies to take advantage of cloud applications and services by giving them a single place from which to manage it all.

I caught up with McKinnon last week in Menlo Park, Calif., at the Sand Hill Road offices of Andreessen Horowtiz, which in July invested $10 million in Okta, its first cloud investment. The company is planning a big launch in January.

NewEnterprise: So your last job was at Salesforce.com, but it led directly to you starting Okta. Tell me about that.

Todd McKinnon: I went to Salesforce at the time their engineering team was really small. Their engineering team was only about 10 or 15 people. They brought me in to be the first non-founder VP of engineering. They wanted me to scale the company and scale the group.

NE: So you got into Salesforce early, and things look pretty good over there now. Why did you leave?

TM: We had a booth at Dreamforce, and I saw a lot of my old friends there, and they asked me the same thing. I was at the tip of the spear in terms of seeing this transition in the industry. When I first started at Salesforce, companies were first starting to adopt the cloud and the software-as-service approach, but they were really skeptical. They had to scrutinize everything about it before they would buy it. One time I spent an entire weekend–I remember because it was my birthday–reviewing the code line by line with a big bank, for security. Over the years, that attitude changed. Rather than view it as something risky, they viewed it as beneficial, and they got more comfortable with the risk.

That to me was an important moment. When the industry shifts, that creates an opportunity, the kind of opportunity that small companies can take advantage of. I couldn’t sit there knowing there was so much opportunity and so much disruption going on and watch someone else go out and do it.

NE: Clearly we’re seeing Salesforce broadening out from its original offering. We’ve seen it launch Database.com and acquire Heroku in recent days. It didn’t occur to you to try and build this within Salesforce?

TM: It did. But there’s challenges there in terms of what the company is going to focus on and how long to focus on the primary mission before it branches out. I wanted to build a company. I wanted to have an impact, but I also wanted to build a company.

NE: So explain how you got from there to starting Okta.

TM: I had been thinking about building a monitoring system for big companies rolling out their mission-critical cloud services, like call centers. The idea was to monitor performance and gather compliance data in a way that was similar to what companies were already doing with the systems they had in-house.

I called a bunch of people who said that monitoring was a good idea. But one thing I heard was that it would only make sense to large companies. The other thing was that there were a lot of companies, some big, some small, that were deploying cloud applications. I started to see companies who were running most of their IT infrastructure outside the firewall. Once you think about a world where the center of gravity is outside the firewall you have to solve a lot of problems in the cloud that have already been solved inside the firewall.

I kept running into a simple example: If you have a Windows network, you have file servers and print servers and email. Microsoft has made that work well. But if you’re trying to build your corporate IT in the cloud, there’s a bunch of unsolved problems. You have some file utility, and email from Google or a hosted Microsoft Exchange, and maybe a print driver on your copy machine. What I learned is, before anyone needs monitoring, there were all these basic problems that needed solving.

NE: What kind of basic problems?

TM: There’s the the most basic problem of identity. How do you get users authenticated in a consistent way across all these cloud services? How do I make sure that when someone joins the company they get access to what they need to do their job? And more importantly when someone leaves the company, how do I make sure that they don’t have access to all the things they did when they were an employee?

When you run your corporate IT in the cloud, all your files and services are out there on the Internet and so you have to make sure you de-provision that user’s access. There’s a great bonus with the cloud that files are accessible from everywhere, on your PC or your phone. The downside is that they’re available everywhere and so you have to manage that. If you’re truly going to reap all the benefits of the cloud, like lower costs, in the next five to 10 years, companies are going to have to rethink how they build their networks.

NE: And that’s where Okta comes in?

TM: Right. We set out to build a domain controller for this new type of network–we call it a Cloud Area Network.

NE: At most companies there’s a mixture of infrastructure that’s in the building or in a managed data center, mixed with some cloud services. What you’re saying is that if I want to manage my infrastructure on things like Amazon Cloud Services or Microsoft Azure or Google Apps, some combination like that, then you’ve got to have a way to control who can access what.

TM: Exactly. Okta sits in the middle of your services, and knows what you use. Right now it’s focused on applications: Workday, Taleo, Success Factors, GoToMeeting, Salesforce. We have hundreds of prepackaged combinations. You tell it which ones you have, and you get three very concrete benefits right out of the box. The first is that your users get a single dashboard to access them all, with a single sign-on. Administration staff gets a single point to create accounts across all of your services. And then, most importantly, when someone leaves you can automatically de-provision them, so you can cut them off from the services all at once.

NE: So what are your launch plans?

TM: We’ve been selling in the marketplace for a while now, and the main thing we’re going to talk about is customers.

NE: That was my next question. What kind of companies are you going to be talking about?

TM: These are known companies. They’re not huge. Our biggest installation is about 1,500 seats. But when companies deploy it they want to give it to every employee because it manages so many applications. One customer has 21 applications in there, and one had 15. It crosses all the job functions, and touches all employees.

NE: So if you counted up all the active seats in use right now, how many would it be?

TM: We’re going to be announcing that in January too! (Laughs.)

NE: So what’s the business model?

TM: It’s a subscription model just like all the other software-as-service companies out there. It’s based on per user, per month. The default is that they choose to license for the whole company so we get a lot of broad deployments.

NE: So where do you want to be a year from now?

TM: The big thing a year from now, we need to start to position ourselves toward our bigger vision of becoming a platform. The initial product is easy to understand. Over time we need to turn it into something bigger. We want to get beyond the applications and turn it into a platform-as-service. We’re starting with applications, because that’s where the adoption is right now. Ultimately we want to be the controlling layer for a lot more: Programming tools like Heroku and Force.com and Google App Engine, and then there’s the infrastructure-as-service layer like Amazon. Our ambition is to be a domain controller for all of it.

]]> http://allthingsd.com/20101217/meet-todd-mckinnon-ceo-of-cloud-management-startup-okta/feed/ 0 http://allthingsd.com/20101202/gsa-goes-google/ http://allthingsd.com/20101202/gsa-goes-google/#comments Thu, 02 Dec 2010 11:00:43 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=53479

The General Services Administration–which oversees government procurement–will soon become the first major federal office to move to cloud-based email and calendar apps on an agency-wide basis. And it’s chosen Google Apps to do it.

A hard-won victory for Google, which beat out Microsoft for the $6.7 million five-year contract, leaving the folks up in Redmond more than a little peeved to see Office’s ubiquity in government threatened in this way.

“We are disappointed in the GSA’s internal e-mail decision,” the company said in a post to its “Why Microsoft” blog, adding that it is nonetheless “gratified that so many federal, state & local governments have chosen Microsoft to meet their business needs.”

You can almost hear the gritting teeth, can’t you? The horror of 15,000 GSA employees all using Gmail….

So again, a coup for Google, which has been working hard to push its cloud computing suite of messaging and collaboration apps to the government.

Interestingly, sources close to the negotiations tell me that the RFP (Request for Proposal) for the GSA contract was amended midway through the process to allow for offshoring of government data outside the United states–as an accommodation for Google.

Which is odd, because you’d think that if the United States government is embracing cloud computing, it would prefer the clouds in which its data is stored to be within its own borders. That Google requested and was granted the option to store GSA data offshore isn’t necessarily troubling (it must meet GSA security requirements regardless), but it is…interesting.

Google wouldn’t tell me the reason for its request, although I’ve heard it may have something to do with how the company segregates data and apps geographically. It was, however, quick to insist that it isn’t planning to offshore any U.S. government data entrusted to it–at least, currently.

Said spokesman Andrew Kovacs, “The government’s starting with Gmail and Calendar, and their data will be stored in a segregated system located in the continental United States that is exclusively for our government customers.”

]]> http://allthingsd.com/20101202/gsa-goes-google/feed/ 0