The announcement this afternoon of a Google/Sun agreement (see stories here: CW, CNET) seems pretty small in some ways: distribution of Google Toolbar in Java downloads, agreement to “explore opportunities [together] to promote and enhance” Java and OpenOffice. And, in and of itself, it was small – in fact I couldn’t even find a press release about it on Google’s corporate site. But it reminds me of a conversation I had at the European IT Forum about Google and the future of SAP, Oracle, and other enterprise application vendors, that suggests today’s announcement might fit into a much more sweeping scenario for the future of enterprise software.
The question at hand was how small and medium enterprise customers would migrate to the next generation of more dynamic, business-responsive applications – the ones that are, or will be, running on dynamic platforms like IBM WebSphere, SAP NetWeaver, Oracle Fusion, et al. Because of the significant investment in application infrastructure and skills needed to fully exploit the new model, early adopters have been predominantly large and very large organizations.
At the Forum, I shared the view of a number of IDC analysts that software-as-a service (SaaS) could be a “disruptive innovation” – in the terminology of Clayton (”The Innovator’s Dilemma”) Christensen – that allows small companies to get “good enough” enterprise application functionality, in a model that works for them, by passing the IT skills and capital investment burdens on to the service provider. Salesforce.com is often cited as an example of this approach: it has both reduced the buy-in barriers for smaller companies, and been criticized for it’s limitations (”not good enough”) by the established enterprise software suppliers (even as they themselves have launched SaaS offerings!).
Here’s where the conversation got interesting: one of the big challenges of SaaS is that, by using a number of in-house and SaaS provider applications, an organization creates a major information management headache – business information that needs, increasingly, to be shared across these applications actually gets more fragmented among these applications and services. For SaaS approaches to become more pervasive, there is a need for information management services that can bridge between these applications, giving customers better control over their information, and greater visibility of their information.
In my view, this is where Google really has the opportunity to disrupt the market. If one of the hardest parts of SaaS – or really, network-based business services that heavily leverage enterprise application functionality – is the coherent management of organizations’ information across these services, are there many – if any – companies that have a stronger platform and brand from which to build or support such a next-generation SaaS environment? The center of Google’s compentency is certainly in aggregating and indexing information from a wide variety of sources, and simplifying the act of accessing relevant information.
By agreeing to “explore opportunities” to use and enhance OpenOffice, Google is – of course – a long, long way from offering, say, ERP as a network service for small businesses (of course, one might argue that classic ERP is the last thing small businesses want!). Google’s first destination seems likely to be providing basic office applications (the long-rumored GoogleOffice?), in competition with Microsoft Office. On the other hand, if Google does evolve into an Internet-based enterprise application platform (competing with SAP, IBM, Oracle, BEA, Microsoft and others), it may become a very attractive alternative – or at least an additional channel – for a large community of smaller/niche application providers who are looking at SAP, Oracle, et al., as their current choices for application infrastructure providers.
An important factor in this scenario is that, for Google – which has no legacy revenue streams from enterprise applications – encouraging other software vendors to make money on top of its platform offers no hardship, or strategic (”innovator’s”) dilemma. That could make Google a very intriguing competitor to SAP, Oracle, IBM, and others. Of course, in this time of consolidation, it also means Google could make a very interesting merger/acquisition partner as well.