Compliance worries could shut out Google business apps

The search engine company is making a play for corporate users, but the jury is still out on whether Web-based apps can meet strict requirements for compliance and security.

Google is trying to lead IT administrators into the land of Web-based business applications with a new set of enterprise office tools aimed at corporate users.

As Microsoft and IBM bring out their versions of collaboration platforms, Google said it can provide hosted software-as-a-service applications for collaboration and messaging that will keep customer data secure. Google announced this week that it is adding a word processor and a spreadsheet to Google Apps Premier Edition, which is a bundle of office applications. It includes email, instant messaging, collaboration and Web authoring tools.

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"The benefit of Google Apps is that it's a tremendous jump onto a wave of innovation that they can leverage," said Rajen Sheth, product manager for Google's Enterprise division. "They can build on the functionality, and this will go faster and faster."

And securing data is as important to Google as it is to its customers, Sheth said. "Our perspective is that security is core to our company," he said. "It is central to our mission and if we fail at it, we lose our customers."

With that in mind, Google has taken many steps such as limiting access to its data centers and encrypting data between users and the data centers. Google's security team is tasked with monitoring code that Google programmers write to make sure it is as secure as possible, he said.

But, in addition to security, corporate users also worry about complying with government regulations that often require the need to archive email and store certain data in accessible ways. At least one IT administrator said his fears about compliance would prevent him from seriously considering Google Apps.

"It's not for us," said David Driggers, IT asset manager and deployment desktop systems team leader at Alabama Gas Corp. in Birmingham, Ala. Driggers said he worries about how Google's Web-based applications would square in terms of compliance with Sarbanes-Oxley regulations. "Do you have real control over [email]?" he asked. "Where is the mail hosted? We have ours here and we control it. We archive it here. How would you have an archivable solution?" he asked.

Email is not Drigger's only concern. "With the spreadsheet applications – what about compatibility with the people or companies we deal with? Will it be backward compatible with the Microsoft products?" he asked.

Google's Sheth acknowledged that compliance can be an issue but said customers can keep an existing gateway appliance in place between the company and Google Apps or use hosted compliance services for messaging from companies like Postini Inc., based in San Carlos, Calif.

Sheth's comments signal a change of heart from last summer when Google announced Google Apps, saying the product was not for everyone and probably was not a good fit for customers in highly regulated businesses.

But once IT administrators see how much more they'll be able to do with maintenance issues out of the way, Sheth said they may decide Google Apps are just the ticket. "They spend so much time maintaining their systems as opposed to working on strategic business moves," he said. "They see what it can do for them."

Low-cost maintenance-free applications sound appealing to Jason Bordun, IT manager at Cape Cod Cooperative Bank in Hyannis, Mass. Bordun said he could "potentially" be interested, citing cost as a big factor. Google Apps Premier Edition will cost $50 per user per year.

Another important consideration for him would be that a service wouldn't generate the same problems as aging software associated with software platforms. In short, you don't have to worry about upgrading products, he said.

Whether software as a service catches on quickly or slowly, it doesn't seem likely the tide will turn back, according to analysts. Other Web-based applications are already gaining momentum.

"The success of Salesforce.com has really broken through the resistance to important services being provided offsite," said Peter O'Kelly, an analyst with the Burton Group, based in Midvale, Utah. "It has helped people see that this is a reasonable way of doing things."

And cost is always a factor. In the case of Google Apps, the $50-per-user cost is a lot less than an average of $125-per-user for in-house office applications, said Tom Austin, a vice president and Gartner Fellow at Gartner Inc., the Stamford, Conn.-based research company. Savings alone will be enough to attract a lot of companies, he said.

And it won't just be just Google offering these services, Austin said. Yahoo and other companies will probably begin providing the same services soon.

"By 2010, we'll be able to look back and see there was a real market for [Web-based] enterprise products," he said. "We'll see that the balance of having it delivered as software-as-a-service will have tipped," he said.

Margie Semilof contributed to this report.

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