Does Google's Postini Purchase Address the Real Issue?
|
By acquiring Postini, a web security company, Google is wagering $625 million that better security will lead more people to use its free, advertiser-supported, web-based software applications. But based on our soon-to-be released research on Software-as-a-Service, it isn't a sure one. |
Yes, security concerns seem to be scaring away users. 46% of respondents believe SaaS applications are less secure than conventional applications. That number is much higher for people who don't use SaaS now - 59% of non-users, 35% of users. (N=134) Improving or guaranteeing security should attract business users.
But will that be enough? Here's the fly in Google's ointment: our new survey finds only 21% of IT executives say their company is willing to use free SaaS applications that run ads. These respondents work for companies with at least $5 million in revenues and 50 employees. I'll bet a fair number of small companies will be willing to put up with ads. But it's going to be harder to get those $5 million-and-up firms to adopt ad-supported SaaS apps, even if the Postini acquisition does improve security.
Click here for more analysis of the deal.
Postscript: Shortly after posting this blog entry, I heard from Rajen Sheth, the product manager for Google Apps. "What you are finding is similar to what we're finding. The security and compliance part is a major deal for enterprises," Sheth told me. He also called to remind me for companies that don't want an ad-supported version of Google Apps, there's also a "premier edition" of Google Apps that is advertising free, but costs $50 per user per year. This edition, launched in February, seems to having a tougher go of it: "Several thousand corporations" are now using it or trying it out, including GE and Proctor & Gamble. Meanwhile, Sheth said, compared to the 100,000 small businesses he claims are now using the ad-supported, free "standard edition." Will the Postini deal help lure more big companies to the paid version of Google Apps? Security is certainly a non-negotiable necessity, especially for corporations under the thumb of Sarbanes-Oxley and other regulations. But that just gets Google into the game. Google Apps will have to deliver functionality, and be able to integrate well with other corporate applications. They know that; now they have to prove it.
Comments (2)
I have talked to many potential customers about outsourcing email archiving and electronic discovery. I tend to hear two major objections:
1. It is dangerous to let a third party hold your most confidential email. If the third party receives a subpoena for your mail, would they fight the request on your behalf when they have nothing to gain by fighting? Or, would they cooperate to protect their interests? (In the case of suspected terrorist-related activity, it may even be illegal under the Patriot Act for them to tell you of the search for your email.)
2. The amount of bandwidth required to send internal mail to an outsourced provider is enormous. Companies like Postini can easily archive external mail. The Google/Postini match is ideal for companies that host their mail systems with Google. But, large companies with their own email systems cannot afford the Internet costs for shipping that much mail.
Since I do not see customers willingly handing over their internal email crown jewels, I have to wonder if all of this activity is being driven by people in love with the outsourced business model -- not the customer.
In fairness, I should report that I am the CEO of InBoxer, an email archiving and electronic discovery vendor.
Posted by Roger Matus | July 10, 2007 4:12 PM
I believe this goes to show the importance of online security. Google is taking the next step to challenge Microsoft and they weren't going to be able to do it until they provided more security in the Gmail platform for business users.
Posted by Cap | July 10, 2007 9:55 PM