Google + Salesforce – Should Microsoft Worry?

Implications: The integration of Google Apps into Salesforce.com’s products can only help both companies, so it is certainly not going to help Microsoft.  On the other hand, this level of integration has been available for quite a while between Microsoft’s Outlook and ERP solutions, so it’s not likely to have any dramatic impact on Microsoft.

Analysis: Google and Salesforce.com are both doing very well today, and integrating their products will help both companies.  Salesforce can benefit from the cachet associated with the Google name, while Google can gain some new business customers for its applications.  Salesforce has both large enterprise and smaller customers.  The large enterprise customers are probably so entrenched as Microsoft customers that they won’t be interested in using Google Apps, but some of the smaller customers may view this as an economical approach to get access to an application suite for minimal cost.  If nothing else, the publicity associated with the announcement will provide an incremental boost to both companies.

Although it may not be common knowledge (who reads all the fine print in license agreements?), it appears that Google’s Terms of Service for Google Apps assigns ownership of the content to Google.  While that likely doesn’t matter much to the home user keeping recipes and the like on Apps, it matters hugely to enterprise customers.  No responsible business would ever agree to these terms.  This factor alone severely limits the acceptance of Google Apps, with or without Salesforce integration.

Another consideration is that integration of this nature is already available between Microsoft Office and other CRM packages.  Microsoft’s own Dynamics CRM offers unparalleled integration, which indeed is one of the strongest selling points of Dynamics CRM.  SAP offers Duet, which integrates SAP’s CRM offering with Outlook, albeit the process is not as simple as Salesforce/Google or Microsoft/Dynamics.  Oracle’s Siebel has offered similar integration for several years.

The vast majority of Salesforce.com’s customers are already using Microsoft Office and thus have little if anything to gain by going with Google Apps.  There is already some level of integration between Salesforce and Office, although it requires the user to switch between the browser and an Office application and is more in the nature of an export/import facility. The Salesforce/Google integration occurs fully in the browser, so provides a very simple integration environment.  It seems unlikely, however, that that minimal gain will be sufficient to offset the vast installed base of Office users, so most Salesforce customers will continue using Microsoft rather than Google Apps.

This does represent a gain, however incremental, for Salesforce and Google, and thus a hit to Microsoft.  As such it’s worthwhile for Google and Salesfoce, but at the same time it does not appear to be something Microsoft should worry about.