Traditional vendors of office applications have maintained an edge over Google Apps by offering better security and scalability with their on-premise, installed solutions. With the Postini acquisition, Google aims to narrow that gap.

"It's in our interest to deliver a service that delivers both compelling end-user applications but also has the back office sort of requirements that these businesses need," says Dave Girouard, vice president and general manager for Google Enterprise. The division handles Google Apps and other applications like Gmail (an e-mail application), Google Calendar, and Google Documents & Spreadsheets.

With Postini, Girouard says Google will have the tools to tackle the compliance and information security issues the software-as-a-service (SaaS) model has left unaddressed or relied on the customer to deal with. "We have, to date, really focused on partnerships in order to answer that part of the equation," he says. "But we really believe that asking customers to pull the parts together themselves quickly begins to drain some of the value out of this SaaS revolution."

During a conference call, Girouard reiterated Google's commitment to the SaaS model. "The costs are much less," he says. "Our products are platform neutral and very scalable."

There are those who remain skeptical of the deal and of Google's ability to break into the large enterprise space more forcefully anytime soon. Installed office applications aren't going away anytime soon, they argue.

"SaaS isn't the Holy Grail that everyone thinks it is," says Eric Goodwin, CEO of Fortiva, an e-mail archiving vendor that does encrypted e-mail archiving for Microsoft Exchange. "I don't think it's going to be that easy for Google."

But Google Apps continues to gain speed in the marketplace, with 100,000 businesses already adopting it, according to Girouard. In addition, Google has the benefit of constantly testing their products in the consumer space.

"If you can combine the user centricity and simplicity of consumer apps with the manageability and cost-effectiveness and the security of enterprise technology, you really have the best of both worlds," he says.