Will Enterprise Customers Climb Aboard Google Apps with Postini Protecting their Data, Threatening Microsoft's Dominance?

Google's deal with Postini is a useful lens through which to see where Google plans to go in the future. Large enterprise customers have always been concerned about incorporating Google Apps because of security issues, but now that Google has begun addressing this problem by acquiring Postini, an e-mail filtering company that developed compliance technology that enforces a company's communications policies, Google has attended to some of these concerns as they take Google Apps to the big business market.

A great place for Google to start is Postini's current customer base of 35,000 customers and 10 million users. "Basically this is [Google] throwing the gauntlet down to Microsoft and saying 'we intend to compete with you in your core market,'" said Shar Van-Boskirk, an analyst with Forrester Research. "And if that's the case we will see Google compete with Microsoft's broader set of back office applications."

Google's Apps like Gmail, Docs and Spreadsheets provide a collaborative work environment that Microsoft currently provides in Exchange, SharePoint and Office for a much larger price. But the thought of risking confidential information in the hands of an external service provider like Google isn't a risk many businesspeople are willing to take. Most large business IT directors still believe that, no matter how secure they say their system is, outsourcing it to a third party opens their data up to to a security compromise.

"Small businesses and universities are likely to become a significant business for Google as [they] use our leverage in terms of sales and infrastructure," Eric Schmidt said. Once Google has made a presence in small businesses and universities it could prove easier to convince large businesses that their system is safe. But while the combination of Postini and Google Apps isn't going to initially make much of an impact on Microsoft's dominance, it will give businesses another set of tools to choose from down the road when Google Apps is more widely accepted.

Meanwhile, Google's acquisition of Postini isn't just a long-term threat to Microsoft, it is sign of Google pushing even harder into enterprise software. And any tier-one enterprise software vendor should be on the lookout no matter how close their relationship with Google. When growth becomes a higher priority than not being evil, even the best intentions aren't enough to hang onto fickle customers looking to save a buck, large company or small.