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As Next ’19 approaches, Google confronts strategic challenges in the cloud

Google has become one of the top-tier cloud vendors. In the past few years, Wikibon has called attention to Google’s key role in driving cloud-native open-source initiatives to ubiquitous adoption among enterprises and solution providers everywhere. It remains a pacesetter in the core innovations behind cloud-native computing—especially in the Kubernetes container orchestration layer, the Istio mesh fabric, and the Knative serverless abstraction layer.

Google understands that there are several strategic keys to its remaining in the thick of the cloud wars, as illustrated by these outtakes from theCUBE interviews at last year’s Google Cloud Next event:

  • Artificial intelligence is the key to competing in the public cloud: Former Google Cloud Chief Executive Diane Greene: “Obviously we had this amazing foundation with our modern enterprise company, Google Cloud. But what we’ve done with Google Cloud is we’ve realized that Google values engineering so much, and so do our customers. So one is, we’re taking a very engineering-centric approach. People really love our open-source philosophy. And then we’re so doubled down on both security and artificial intelligence. So if you have this underlying, incredibly advanced, scaled infrastructure, high performance, security, availability and all the goodness, and then you start taking people somewhere where they can really take advantage of AI, where they can be more secure than anywhere else and you have the engineering to help them really exploit it and to listen to the customer, it’s about where they want to go.”
  • Hybrid cloud is an essential infrastructure for customers to modernize legacy information technology assets: Aparna Sinha, group product manager of Kubernetes, and Chen Goldberg, director of engineering, Google Cloud Services Platform: “Cloud Services Platform is a big part of our hybrid cloud strategy. As a Google platform, we also have networking and compute and we bridge private and public, and that’s a foundation. But Cloud Services Platform, it comes from our heritage with open source. It comes from our engagement with many large enterprises, banks, healthcare institutions, retailers. We know that there are large portions of enterprise IT that are going to remain on-premise, that have to remain on-premise, because they’re in a branch office, or they have some sort of regulatory compliance requirement, or that’s just where their developers are and they want to have a local environment. We’re very, very sensitive and knowledgeable about that and that’s why we introduced Cloud Services Platform as Google’s technology in your environment on-prem, so you can modernize where you are at your own pace.”
  • Developer enablement is the key to unlocking cloud value: Jennifer Lin, director of product management at Google Cloud: “At heart I think we really are a software innovation company, and Google is a company of developers that want to do creative things with software. That sort of ability to do that in a way that hides the complexity but also excites emerging developers with all the things that they can do [is] what we’re seeing in cloud. Originally we started very much with the cloud natives who were doing very new types of consumer applications. When we moved into doing business applications and more and more people were developing enterprise applications with a cloud-native model, we started to see a big uptake and adoption of our cloud platform. And I think with a lot of the things we’re doing in security and the ability to enable administrators to manage that in a more automated way, that’s a lot of what I think we’re differentiating around.”

However, the iconic Silicon Valley solution provider confronts several strategic challenges that may slow its growth in the cloud market:

  • Google remains far from the lead in public cloud: Google has been in the public cloud market for more than a decade but has failed to dislodge Amazon Web Services Inc. and Microsoft Corp.’s Azure from the top spots in market share. According to RightScale’s 2018 study of the public cloud market, about 68 percent of enterprises were running apps on or experimenting with AWS, 58 percent were using Microsoft Azure and only 19 percent were using Google Cloud Platform.
  • The company has not yet released a production hybrid and multicloud management solution: Lacking an installed base of on-premises enterprise deployments, Google has not yet entered the hybrid and multicloud market in earnest. Over the past few years, public cloud providers— most notably AWSMicrosoft and IBM — have beefed up their support for hybrid clouds, while also rolling out a wide range of deployment, development and management tools for these environments. Delivering a consistent “true private cloud” experience in a hybrid-cloud context is what they’re all aiming at. However, Google is late to the game, having only recently released a beta of its Cloud Services Platform solution. This on-premises, software-based offering — for which Google has not yet announced a general availability date — will provide a comprehensive framework for development, configuration, management and control of hybrid clouds as well as the data and applications that span them.
  • It lacks a credible software-as-a-service business application portfolio: Google lacks a SaaS portfolio of prepackaged cloud business applications, a deficiency that severely limits its growth potential in this market. It is principally a vendor of horizontal solutionsacross a wide range of technology segments. As stated in Wikibon’s 2018 Cloud Markets and Trends Report, SaaS is the largest segment of the public cloud market and will remain so. SaaS offerings for customer relationship management, enterprise resource planning, human capital and other applications are the core of business’ digital transformation initiatives. Likewise, industry-specific and line-of-business SaaS offerings are essential for delivering fast business value on strategic application initiatives. Until such time as Google, perhaps through strategic acquisitions, enters SaaS in earnest, it will watch from the sidelines as Oracle Corp., SAP SE, Inc., Workday Inc. and others benefit from these opportunities.

As Wikibon looks ahead to Cloud Next ’19, Google seems to be focused on addressing its competitive deficiencies, most notably in the person of new Google Cloud CEO and Oracle veteran Thomas Kurian. With Kurian at the helm, Wikibon expects that Google will deepen its focus on hybrid and multicloud opportunities, and we recommend that the vendor make the following strategic moves:

  • Ramp up Google Cloud direct sales to enterprise customers: To compete effectively in the cloud arena, Google Cloud will need to shift its culture from an engineering bent toward sales and marketing. Kurian has signaled his intention to drive that change, going beyond the company’s longstanding focus on “digital native” customers to address large, technically savvy enterprise buyers. Already in the past three years, Google has quadrupled its direct enterprise sales force for its cloud platform, and Kurian has signaled his intention to deepen those investments.
  • Maintain a strong Google Cloud customer success program: To leverage Google Cloud’s high customer loyalty and low churn into future bottom-line opportunities, Kurian has indicated that he will double down on the company’s established customer-success program. A key focus should be on Google tracking, onboarding and upselling enterprise customers, both on the tech and business sides, and converting them to advocacy roles.
  • Build out the Google Cloud partner ecosystem: The foundation of customer loyalty is verticalized solutions that address specific customer opportunities, and partner enablement is fundamental to sustaining such initiatives. Kurian has signaled his intention for Google Cloud Platform to build up partnerships with systems integrators in the financial services, telecommunications, retail and health care vertical. It’s hiring salespeople who are familiar with these industries and can manage the long sales cycles associated with such deals.
  • Go deep on Google SaaS applications for business: Up the SaaS stack: Wikibon expects that Kurian will acquire SaaS application providers in marketing automation, multichannel contact centers and so on. To encourage partner development of sophisticated domain applications on these platforms, with a key focus on AI-infused functions, Google will also probably acquire providers of low-code tooling, data science workbenches and robotic process automation with a highly vertical focus.
  • Add autonomous self-managing capabilities to Google Cloud: Kurian will almost certainly add AI-driven autonomous management to Google’s hybrid and multicloud solutions. This is table stakes for competing in this arena, and we can see equivalent initiatives underway at AWS, Microsoft, IBM, Oracle and other providers of public, private, hybrid and multicloud solutions. This will be utterly essential for Google Cloud to achieve scale, efficiencies and services levels on a par with the competition.

For cloud professionals, a key step in the enterprise hybrid and multicloud journey is to attend Google Cloud Next 2019, which will place April 9-11 in San Francisco. TheCUBE, SiliconANGLE Media’s livestreaming studio, will be doing live interviews with Google executives, developers, partners and customers during the conference.

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