With Rewrite, Google Docs Takes Microsoft Office Head On

Intensifying its pursuit of business customers and its competition with Microsoft Office, Google has rewritten its online word processing and spreadsheet applications. The new versions show Google making a few major bets: That what people want most is real-time collaboration on documents, that they'll do it entirely in the cloud, and that, when it comes to features, less is more.

For the past year and a half, Google engineers have been rewriting the browser-based software, taking products the company acquired and turning them into a single online software suite.

Outwardly, the revised apps appear only slightly different. There's a new ruler for adjusting margins. Consistent integrated chat and presence means you can see where another person is working in a file. Documents imported from Microsoft Word retain their layout better, keeping things like tab stops. That's important because companies nearly always keep Excel and Word, and employees move between the rival apps.

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The biggest leap forward, however, is that changes from collaborative editing--two or more people working in a document or spreadsheet at the same time--now happen almost instantaneously, rather than the roughly 15-second delay they used to have. Google is betting that real-time, online collaboration is the feature people want. In today's business world, how quickly you can write a pitch or whip up a financial model is often less important than how quickly you can share, iterate, and get agreement (see "Down To Business: Google Changes Rules Of Productivity Race")

Google's other big bet is on the all-cloud environment; it's dropping for now the ability to use Docs when not connected to the Internet. Google thinks most employees don't care about offline mode, but the company knows that C-level execs--the ones who need to approve Google apps--do. They're often on airplanes without Internet connectivity, so not having offline access could be a big strike against the rewritten Docs.

Microsoft Office Stays

Nearly every big company using Google Apps keeps Microsoft Office. They go Google for its e-mail at $50 per user a year, and Docs comes with it, so they let people use it as needed. (Apps is Google's full suite, including e-mail. Docs is its name for the word processing, spreadsheet, and presentation suite, as well as its word processing app. It's confusing. We'll use Docs to refer to the entire suite.)

At biotech pioneer Genentech, 8,200 people--more than half of all employees--use Google word processing or spreadsheets in a typical week, double the usage from a year ago. "To be honest with you, I didn't know whether people would use this, and there was no mandate or driver to do it," says Genentech CIO Todd Pierce.

There's More

Video: David Berlind explores new Docs featuresMore analysis: Of Microsoft's cloud offerings, and other cloud productivity vendorsResearch: A report including this analysis and more, along with the complete data set of 14 charts based on our survey of 571 business technology pros» All available here «

The city of Los Angeles does have a mandate: It's moving 30,000 employees to Google Gmail and letting them keep Office, but it won't upgrade them for 18 months. People are expected to try Docs and will have to justify getting upgraded on Office. The city's ROI studies predict that about 80% of staff will be able to use Google Docs and just 20% will keep Office.

Make no mistake: Office is entrenched, easy to use, and generally well liked, so Google faces a tough battle. "As scary as people thought my idea of giving them a new e-mail system was, taking Office away was earth shattering," says Kevin Crawford, L.A.'s assistant general manager, which is why he's easing Docs in over 18 months.

Asked if Office generally meets all their needs, 78% of the 571 business technology professionals who responded to a recent InformationWeek Analytics survey say they agree or totally agree, and only 6% disagree or totally disagree. Some 87% of respondents say they expect their companies to still be predominantly Office shops in two years. Just 9% expect to rely mainly on non-Office Web tools.

Power Excel users won't find everything they need in Google's spreadsheet. It lacks pivot tables, for example, and if you want more than 100 rows, you need to add them manually. Google's word processing doesn't have the mail merge of Word. But everyday users will find most features they need in each suite.

When Office users switch to Google Docs, it's usually for easy document sharing. Microsoft's Office 2010 will be available to businesses in May, and IT teams should watch closely for how it matches the collaboration features people like in Docs.

Under The Hood

Google Docs is an online suite that mirrors Office--word processor, spreadsheet, and presentation applications. The main work Google did on Docs is under the hood, a rewrite of the editing engines for the document and spreadsheet, and a new data model tuned to the needs of real-time editing.

Google got its word processing and spreadsheets through the acquisitions of Writely and 2Web Technologies, respectively. From the start, Google's engineers faced the challenge of implementing features that don't come easily in browser-based applications. "Users were asking us for the most simple things like pagination, tab stops, and floating images," says Google product manager Jonathan Rochelle. "We had to say we're still trying two years on. It was because we were constantly fighting the browser."

Improvements in browser speed and new HTML5 capabilities let Google programmers solve some of those problems. But it required a whole new approach at times. The new data model hews to the model-view-controller paradigm, which separates data, logic, and interface for easier manipulation and maintenance. "In order to have collaboration, all collaborators need to agree on a data model," says Micah Lemonik, a Google software engineer. "When we separate model and view, we can do that."

The revision has also involved separating the rendering layer from the data model layer. Google says this allows presentation consistency across browsers, which often render display elements differently. This is critical in convincing users and IT decision makers that online apps and online collaboration can match desktop apps.

That brings us to the whopping user expectation Google won't meet with the new Docs: It won't work offline.

Starting April 12, people can use the rewritten Docs with no offline support, or the old editors, which allow offline use. Access to the old editors and offline use will end sometime in May--Google's promising to give enterprise customers a month's notice. While Google plans to bring back offline functionality using HTML5, rather than Gears, it isn't committed to a delivery date.

Google formed its enterprise group in 2004 and has spent six years trying to convince cautious companies that it's serious about the business IT market. Four years ago, it released its word processing and spreadsheets. By combining its online e-mail with Docs, for one price, it got companies' attention, at the very least as a bargaining chip with Microsoft.

Google played down the competition at first, not only because Office was far more sophisticated, but also because it wanted to cast Docs as something different--focused on online collaboration. Now it's taking the Microsoft rivalry head-on, complete with fightin' words.

"I think all companies will have Office; they just won't have as much of it," says Dave Girouard, president of Google's enterprise group. "Office will become something like Photoshop, something that a few users need. It's not really the right tool for most people."

Google is vague about the size of its enterprise business. It has 25 million Google Apps accounts, but Google won't say how many pay. It claims over 2 million businesses as customers, and the "Other" revenue line on its income statement--everything but advertising, including enterprise licenses--totaled $762 million last year, about 3% of sales.

Big businesses are taking it seriously, especially for e-mail. But they share a big worry: security and compliance.

For the Gmail deal in Los Angeles, which replaced Novell GroupWise e-mail, Google had to address considerable fears that sensitive city data--think cops and prosecutors--wouldn't be secure enough. Google had to encrypt data in transit and storage, keep city data in the United States, and some Google staff had to get the city's security clearance. Yale University in March delayed a planned switch from the Horde Webmail service to Google Apps in order to address community security concerns.

chart: What Will Your Company's Approach To Productivity Tools Be In 24 Months?

Asked why their companies aren't using Web-based productivity tools, 48% of survey respondents cite incompatibility with corporate governance policies, and 46% cite insufficient security.

Google, not surprisingly, has more faith in cloud computing. "In some ways, regulatory issues are better solved by the cloud paradigm," says Bradley Horowitz, VP of product management. He argues it's easier to do discovery for litigation if the data's all on central servers instead of spread out on PCs.

Microsoft's Office franchise shows no sign of weakening, but Web tools are creeping in. Thirty-nine percent of respondents to our survey never use Web-based productivity tools, 37% use them tactically, and 19% use them strategically but not pervasively. Only 5% like and actively use Web apps as their main productivity tools. But 8% are evaluating new productivity tools or actively planning a change.

It Starts With E-mail

Motorola's Mobile Devices unit tells an oft-told Google Docs tale: Start with Google e-mail, leave Office in place along with Docs, and watch Docs get tapped for collaboration.

The Motorola unit, which will become a separate company next year, has 15,000 Google Apps users. "We don't have any plans to uninstall Office in the future," says Jason Ruger, senior director of IT strategy. "We have found they actually work seamlessly together." (Motorola is a close partner with Google, whose Android mobile operating system runs Motorola's Droid phones.)

MMD employees often work in Excel and import work into Google Spreadsheets for sharing and collaboration. Having a single, authoritative document that everyone can rely on rather than 15 versions spread across different services is huge, says Ruger. "We've seen an explosion of benefit from the collaboration side," he says.

Motorola's global footprint also shows why not having offline capabilities will turn off more than top execs. Noting that employees often spent 24 hours on flights from the Midwest to Asia, Walt Oswald, MMD's VP of IT, calls offline functionality "an absolute must-have."

Canadian luxury hotel management company Delta Hotels & Resorts signed up for Google Apps early last year for one reason: a lower price than it had for Exchange. "Make no bones about it, $50 per user per year is bargain basement from our perspective," says Michael Rodger, the company's director of digital innovation.

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In March, after six weeks of testing, Delta rolled out the Google service to 2,500 employees. Now it's up to about 4,500, as Rodger extended e-mail to everyone in the company because the price was so low and it wanted to "foster a sense of community" across its hotels.

Prior to the Google rollout, which included its word processing and spreadsheets, Delta's IT was "kind of a black hole," Rodger says. "You come to work and are given a Windows workstation that's locked down to the nth degree, and you're using tools that haven't been updated in quite a while." Now, the constant addition of features is energizing.

Delta employees are using Google Docs to store files so they can work on them at work, home, or on the road. Some are re-creating Excel files as Google spreadsheets for regional budgeting and reporting in hotels.

Office is still the standard on nearly all employee PCs. But Delta recently deployed some PCs without Office--the front-desk terminals at hotels. "Our property management system is all Web-based, and now our communication system is all Web-based," Rodger says. "There's really no need to put an Office client onto that workstation."

chart: Reasons To Switch -- What would make your company consider switching to, or increasing use of, Web-based productivity tools?

The situation at PicScout, a company based in Israel with offices in Silicon Valley, shows that if Microsoft makes online sharing easy, it could steal a lot of the reason to use Docs. The 50-person company, which makes technology to help photographers track pictures online, has been using Office and other Microsoft products for the seven years it has been in business and just recently began using Google Apps for collaboration.

It was a decision, says CEO and co-founder Offir Gutelzon, driven by the need to work more effectively with its Silicon Valley employees. "We're still massively using Office," he says. "But when we want to share, we're sharing on Google Docs." Gutelzon expects a mixed environment for a while. People are emotional about the IT tools they use, he says, and it's hard not to worry about Google going offline for some extended period, taking all your data with it.

What's Ahead

There are a few ways the market could go over the next few years.

Microsoft, roused by Google, could deliver such a compelling, comprehensive set of online and on-premises applications in the coming months--particularly Office 2010 and SharePoint 2010--that Google won't be able to gain traction. If Microsoft matches Docs' online collaboration, it nixes a big reason to go back and forth.

However, Google still offers that price point--$50 per user a year for e-mail, with Docs thrown. Microsoft's pricing is complex by comparison, with prices for different pieces, and CIOs love keeping that Google bargaining chip in play.

Alternatively, Google could overtake Microsoft, the way Facebook shot past MySpace. Don't count on it. Office shows no sign of fading, Microsoft says it's serious about the cloud, and SharePoint is deeply entrenched in many multinational customers' collaboration strategies. "Packaging has worked for us in the past, and it helps that we already have business relationships with most of these customers," says Kurt DelBene, senior VP of Microsoft's Office group.

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Or, the two suites could cohabitate. Today, CIOs can justify leaving Docs for people to use or not because it's essentially free once they pay for Gmail. Google's rewrite makes it easier to move documents from Office to Docs. And Google last month acquired DocVerse, which lets people collaborate on Office apps online. Google is trying to make itself the bridge to the cloud, trying to be the collaborative backbone information workers use, even for those using Office. "The way you win in this space, and the way the market is going, is in this redefinition of how people are working," says Matt Glotzbach, Google's enterprise product manager.

Stay tuned for Microsoft Office 2010 in May. This rivalry's for real.

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What Genentech CIO Likes About Google Docs
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Desktop Apps: Time For Change