On Feb. 14, 2006, many Google e-mail users received an unexpected Valentine’s Day present. When they logged in to their accounts, there it was: instant messaging, fully integrated with their e-mail system. Gmail users could now chat in the same browser window as their inbox. Just as with e-mail, the system would save a transcript of every chat and, better yet, the text of archived transcripts would be searchable. There was nothing to download, nothing to install.
It was technology magic.
This was another overnight success for Google, the company most everybody loves (with the exception of a few countries, some municipal governments, and a host of proto-competitors such as Microsoft, IBM and Yahoo). Over the past few years, Google has released a series of Web-based applications that have raised the bar for its competitors, just as its search engine did when it burst onto the scene at the end of 1999. When Gmail debuted on April 1, 2004, for example, it gave users a gigabyte of storage—10 times as much as Yahoo and Microsoft’s free e-mail services.
Google releases its products with little fanfare, labeling them beta versions and leaving them that way for years. Yet its desktop search, map, e-mail and other services are among the world’s best and most popular applications. And whether you know it or not, your employees are probably using them.
But Google is not just a search company, or an applications company. A company that can scan billions of webpages for a handful of words in less than a second (a search for "CIO magazine" returned almost 28 million results, prioritized by relevance, in 0.14 seconds) deserves to be acknowledged for what it really is: a supercomputer.
"What Google recognized was that if they built their own system using cheap, off-the-shelf PCs and ran their own operating system"—the Google File System, a highly customized version of Linux—"they could afford limitless expansion," says Chris Sherman, executive editor of Searchenginewatch.com. In order to build the best search engine possible, Google connected thousands, then tens of thousands, of servers. And at some point that infrastructure and the possibilities it afforded became the company’s primary focus. What followed was a series of services that took advantage of Google’s ability to process transactions at a speed and scale never before achieved. And these Web-based services don’t require users to download a thing. Google provides the computing power. All you need is a browser.
"What Google has that’s extraordinary is not search but the highly optimized computing platform," says Sue Feldman, VP of content technologies research at IDC (a sister company to CIO’s publisher). That platform has Google poised to lead the Web computing revolution that everyone in the IT industry has been talking about since the 1990s.
Google’s platform, along with the others bound to follow in its wake, will, over time, move computing to the Web and away from the desktop. As this happens, IT will get better—applications will be easier, faster and cheaper to use—much as it did when it moved off the mainframe 20 years ago. "We’re still far away from a holistic Web computing solution," says Brian Shield, CIO of The Weather Channel. "But the pieces are not that far away. We’re not far from fostering greater productivity with Google’s name on it."
The move to online computing will change the relationship between CIOs and users. Just as accessing applications over the Web will give CIOs more flexibility to find the best fit for their businesses, their employees will enjoy that same flexibility in finding the applications that are best for them. In the Google-future, IT will be more scalable, agile and cost-effective. But it will also be less controllable by CIOs. This will require CIOs to adopt a new mind-set for how they manage the use of IT in their company. Those who succeed will be free to focus on driving innovation; those who fail will be fighting a battle they’re destined to lose.
"CIOs need to understand that it is a whole new world," says Feldman.
Inside the Googleplex
Web computing could make a CIO’s life much, much easier. Applications will be hosted by third parties that can support an almost unlimited number of users and store almost unlimited amounts of data. CIOs will no longer have to maintain large databases or expensive desktop software. And because these applications live on the Web, your employees will be able to access them with any device that supports a browser.
In this environment, upgrades are easy. Instead of an IT department pushing out a patch to every user, or installing software from a CD onto machines one by one, the application provider updates it once, and everyone gets the new version the next time they log on. That’s what Google did when it integrated chat into Gmail. CIOs will no longer have to buy large, packaged applications, like an ERP system, with hundreds of functions they’ll never use. Online applications will allow them to pick and choose the services they need. And because there are no legacy investment costs in each service, switching between services—and providers—will be easy. You just point your employees to another website.
Sounds great. So why isn’t everyone doing it?
"Building a suitable Web computer is really hard to do right now," says Paul Kedrosky, executive director of the William J. von Liebig Center, a venture capital firm that commercializes technologies developed at the University of California, San Diego. "But it was also really hard to create a single-circuit board. Then it turned into a commodity." Like the circuit board, most experts believe Web computing will also turn into a commodity.
But today, Google is the only company that’s got it. (For companies that are close, see "Google’s Progeny," Page 46.) And the reason for that is under the hood.
Google started out with two advantages. First, it was a technology greenfield, unencumbered by a legacy architecture. Second, its founders were cash-poor grad students who needed to make their system run with tools they could afford. Google cofounders Sergey Brin and Larry Page taught themselves how to turn cheap, off-the-shelf PCs (which, legend has it, they liberated from the Stanford computer science department’s loading dock) into powerful servers. And they connected these servers to one another with Linux, a free operating system that they customized over time to meet their needs.
By 2002, Google’s homemade, commodity-based servers outperformed comparable equipment from IBM that cost $18,000 for 360 gigabytes of storage; Google spent about $1000 for the same amount.
Google treats its infrastructure as a closely guarded secret. It doesn’t allow outsiders into its data centers, so any description of the company’s infrastructure is an educated guess. Philipp Lenssen, who runs the Google Blogoscoped website, says that the last semiofficial count of the company’s servers was 100,000. Arnold suspects that it is now more than 150,000, spread across 24 data centers—making Google the third largest server manufacturer in the world, according to Arnold. The power per dollar that Google is able to achieve compared with its competitors explains the speed of its Web searches, the 2.5 gigabyte inboxes it gives each Gmail user, and other storage-intensive initiatives, such as Google video, which essentially invites anyone to upload a video to Google’s servers.
"Our infrastructure is an important competitive advantage for us," allows Dave Girouard, general manager of Google’s enterprise division. "It has incredible reliability and scalability, and the cost per user is incredibly low."
Behind the Fun and Games
Given the combination of Google’s secrecy and its relatively anodyne media image—which the company works hard to foster with its "Do No Evil" corporate motto—it’s no surprise that people looking at the company just see a search engine, some snappy consumer applications and no coherent commercial strategy. "But what you see on the surface is just what they choose to show you," says Lenssen. "It’s like they are holding a magnet beneath a table. All you see is a metal ball moving around on top. Because you can’t see the magnet, you assume the ball is moving randomly."
Less colorfully put, because Google’s strength lies not in the applications it shows the world but in the architecture it doesn’t, the company’s business strategy is not readily apparent. But according to Lenssen, people who look at Google and see nothing more than random growth are making a big mistake.
Most of the high-tech industry is just starting to realize this. "IBM executives in the early 1980s didn’t understand what Microsoft was," says Arnold. "Now Microsoft is in the same spot, and they are trying to understand what Google is. And they’re having a hard time."
Arnold, who has spent the past year performing competitive analyses of Google for large technology companies, says, "People don’t want to believe things that run counter to their vested interest." Meaning, in this case, a way of computing that is not dependent on the client/server architecture. "They refuse to recognize that a search engine with ads has got something different enough to alter the rules," he says.
But it does.
Google has slipped under the radar as a potential enterprise computing powerhouse because it hasn’t tried to compete directly with Microsoft or any of the other big technology vendors. Google could offer an unlimited number of applications on top of its infrastructure. The ones it has chosen to unveil—search, e-mail, maps, blogging tools, chat—aren’t exactly Office. But Google has all the pieces. Gmail contains many of the rich text features, such as font selection, highlighting and alignment, found in Word; the Google search bar can perform the same mathematical functions as Excel; and Picasa, Google’s online photo-editing service, has some of the presentation capability of PowerPoint.
Google hasn’t integrated these features into something that approximates a Google Office for one reason: It doesn’t want to. Why compete directly with a company that has more than $30 billion in revenue and a monopoly on the desktop?
But there’s another reason: Google isn’t designed organizationally or philosophically to compete with Microsoft; it’s designed to bypass it. Since its applications live on the Web, they aren’t dependent on an operating system the same way desktop applications are.
"Microsoft in the 1980s allowed you to do tasks on a desktop that you could previously only do on a mainframe," says Marc West, CIO of the brokerage firm H&R Block. "They took computer power and moved it to the desktop. The same play is happening here. With the Web, you can self-select applications and piece them together into something you use. That’s the difference between an operating system and an operating environment. You move from client/server to client/Web."
Google Eyes the Enterprise
Web-based applications have taken off in the consumer world because of the penetration of high-speed Internet access. Just a few years ago, work was the only place where people could use high-bandwidth applications. Today, more than 70 percent of Internet-connected homes have broadband. Furthermore, coffee shops, airports and even entire cities now offer high-speed wireless. Not only do near-ubiquitous connections have implications for how people consume technology, they also have ramifications for the nature of the new workforce.
"The wall between consumer and worker is dropping," says Google’s Girouard. "People can work from anywhere. There’s a real blurring of the line."
In the office, CIOs control the applications workers use. Usually these are client/server applications that have been chosen because they conform to a set of business requirements and meet the needs of the greatest number of employees. But outside the office, the users are in control, and users will choose whatever applications they feel make them more productive, says Steve Mullaney, VP of worldwide marketing for Bluecoat Systems, an Internet security company. "And, as a user, I like that my IT department has nothing to do with it," he adds.
The Web applications that your company’s employees are using at home are raising their expectations for the applications they use at work. "People are people," says Girouard. "They don’t turn into information scientists when they show up at work in the morning." Google believes that people no longer make a distinction between work and home when it comes to their expectations for technology, and its strategy for moving into the enterprise is based in large part on this analysis. "Why, for example, should I have two different calendars?" asks Girouard (one for work and one for home). "There are a lot of opportunities for us there."
Google is getting ready to chase these opportunities. The enterprise division accounts for less than 1 percent of the company’s revenue, today, "but over the next five to 10 years, we will become a big part of Google," says Girouard.
John Battelle, publisher of Federated Media and author of The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, thinks five to 10 years is a conservative estimate. He points to the Google Pack, a suite of Web and desktop software capable of updating itself that Google released in January 2006, as a sign that Google understands that its future is as a software company.
"I would be stunned if in the next year they did not make a lot of noise in the enterprise space," says Battelle. "It is just too big to ignore."
Googling the Workplace
Today, Google’s enterprise division has two products—corporate versions of its search and map tools—and just over 2,500 customers. But the unit has opened support operations in the United Kingdom and Japan, and is growing its support group in California.
"Business intelligence is the place where Google has a foot in the door," says The Weather Channel’s Shield. Google’s enterprise search application indexes information on a user’s desktop, the company’s servers and, of course, the entire Internet. CIOs can configure it so that different users have access to different information. Google’s enterprise search tool doesn’t distinguish between the information on someone’s desktop, the company’s intranet or the Internet as a whole when it returns results: Information appears in the same browser window regardless of the source. "They are blurring the line between the inside of the company and the Internet," says Shield. "It’s preparing you for the Web computing model."
Girouard isn’t shy about talking about this. "When a CIO puts in an application," he says, "the user has no other choice." Conversely, Girouard believes that the home scenario, where users choose the applications they want, is a better model, and he thinks it will find its way into the workplace. That’s a major shift in the way IT departments operate, but "CIOs need to be OK with some chaos," Girouard says. "They’re too concerned with security and locking information down, but those aren’t the things that will make a company great for the next 20 years.
"My message is: Think about the innovation engine in your company and what’s driving it. What environment are you putting in place to make your company a place where people can innovate?"
According to Girouard, some of Google’s products that could be configured for businesses in the near future include Gmail, the blogging tool Blogger, Talk (an instant messaging and VoIP service) and Orkut, a social networking tool that helps connect users with similar interests. In fact, Google announced in February that San Jose City College is currently testing a corporate version of Gmail that’s hosted by Google but gives the college’s network administrators all the controls of an in-house application. More generally, Girouard says, "We let things take root and mature on the consumer side. And where it makes sense, we’ll bring something over to the enterprise."
At its core, however, Google’s enterprise strategy will remain viral. It won’t try to convince CIOs to replace the applications they already have with Google versions. Instead, Google will continue to produce products that people like using and will use—at home and at work.
"It will happen without people noticing," says Girouard, prophetically. "People look for a eureka moment but things just seep in. That’s what’s happening here."
In other words, one of these days you could wake up and find that most of the applications your company uses are provided by Google.
That’s a vision bound to keep most CIOs on edge (see "You’ve Been Googled," Page 43). "It’s hard to figure out if they’re your best friend or your competition," says Shield. But Girouard doesn’t want to alarm anyone. "Legacy applications don’t go away overnight," he says. "We aren’t telling CIOs to get rid of your mainframes or get rid of your client/server [systems].
"We want CIOs to think about the new areas that they could be investing in. We will start them down that path."
The Naysayers Say Their Nay
It may not be Google that ultimately brings CIOs to the brave new world of end-to-end Web computing. Consumers and businesses have vastly different needs. A consumer application doesn’t need to comply with Sarbanes-Oxley or a corporate travel policy. Making an application that can account for these and other business needs takes an understanding of the market it is catering to.
"Google has the platform, but they don’t have any expertise," says H&R Block’s West. "That’s their challenge. The platform allows them to bring more horsepower. Now they need to make something that businesses will buy." West acknowledges that many of Google’s consumer products are better and easier to use than their enterprise counterparts. And if Gmail was able to address the archiving, monitoring and reporting requirements that the Securities and Exchange Commission has for financial services companies, then West would probably buy it. But until that day comes, he has no choice but to stick with his legacy client/server e-mail application.
If Google keeps its consumer focus, it may never acquire the business skills to satisfy customers like West. "Consumers aren’t yelling for the kind of protection that businesses require," says IDC’s Feldman. But Girouard says that Google created its enterprise division to make its consumer products more appealing to businesses. And, he says, Google is partnering with companies in the corporate space, such as consultancy BearingPoint, which started an enterprise search practice in February that will use Google’s technology. In mid-April, Google announced partnerships with enterprise software vendors Oracle, SAS and Salesforce.com to enable real-time search across those companies’ applications.
Adam Sohn, director of global consumer marketing for Microsoft’s MSN, is dismissive of his budding rival. "The golden halo around them doesn’t guarantee them success in the software business," he says, Microsoft’s indisputable might lending weight to his words. The software giant has not yet decided whether to wage an all-out war with the upstart. If it does, Microsoft has a pretty good track record in these fights. (Raise your hand if you’re still using Netscape.) And Microsoft knows it’s in a fight. Last year, Bill Gates told Fortune magazine: "They are more like us than anyone else we have ever competed with."
But unlike Microsoft’s previous competitors, Google’s applications are not wedded to the Windows operating system, so Microsoft cannot use its monopoly there to limit access to Google. "They cracked the one thing that Microsoft has not cracked: They have a Web-capable platform," says West. "Microsoft does not have that."
But even if Microsoft prevails—or if Google simply implodes on its own, done in by growth, internal squabbling or hubris—the model will survive and thrive. Applications are destined to move to the Web. Perhaps not all at once, and maybe not even quickly (after all, companies are still running Cobol applications on mainframes), but Google has demonstrated that the Web computing model is viable.
"Google is a great search engine," says West. But, he says, its real legacy will be that it pioneered a new approach to computing, "combining Web services and cheap hardware to deliver on a massive scale. In the process, they changed the way consumers approach technology."
And that’s going to change everything for CIOs.