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Postini buy helps Google address IT compliance demands

With Postini in its pocket, Google hopes to win over IT shops running Microsoft Office to Google Apps with its new security credentials.

By scooping up email security provider Postini Inc., Google Inc. hopes to erase any doubt IT managers might have that the Google-hosted collaborative application package cannot meet stringent corporate needs for products that address regulatory compliance.

Google, based in Mountain View, Calif., plunked down $625 million in cash for Postini this week. The messaging security company, based in San Carlos, Calif., boasts having about 35,000 corporate customers. When the deal closes -- late in the third quarter -- Postini will become a wholly-owned subsidiary of Google.

Since Google introduced Google Apps last year, the company has taken incremental steps toward adding security features to make the messaging software more appealing to business customers, particularly those that use the Microsoft Office suite.

Dave Girouard, vice president and general manager of Google Enterprise at Google, said that so far about 1,000 small to medium-sized business customers have signed up for Google Apps. In February, Google added a spreadsheet and word processor to its Google Apps Premier Edition.

Girouard said Google has seen significant interest from large business customers looking for an easy way to deliver applications. Until the Postini acquisition, corporate regulatory requirements were something that Google was attempting to address with partnerships. "It's in our interest to pull together a solution with compelling user applications and the back office," he said.

Whether the acquisition of Postini will be enough to convince IT shops to move to software-as-a-service (SaaS) continues to be a big question. Google is definitely studying enterprise requirements and rounding out its business product.

"But look at what's in [IBM/Lotus] Notes, Exchange and Zimbra, and there is a pretty long list of corporate requirements," said Peter O'Kelly, an analyst at the Burton Group, a Midvale, Utah-based consulting firm.

There is no doubt that Google intends to be a credible competitor in the enterprise, O'Kelly said.

IT managers continue to voice skepticism about whether SaaS can be a viable option in the corporate enterprise. "My gut says no," said Robert Kuehfus, an IT manager at Sodexho, a Gaithersburg, Md.-based food service company.

Though Kuehfus does not manage Sodexho's messaging server, he said he thinks any IT shop would be concerned about how the technology would integrate into an infrastructure. "I don't think our comfort level will be there," he said. "I could see small shops having an interest, however."

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