Sources say that as cloud-base collaboration is becoming more and more important, Google is looking to introduce Google Circles and other concepts like Google Hangouts to its Apps users. You can already use Google+ within Google Apps for Business as a collaboration and sharing tool, but it doesn’t extend into the apps themselves.

We are told that Google Talk would give way to a new kind of a “unified messaging” product where focus is less on voice and more on data and video. More details will arrive later: make sure and check out our live blog here for the official news when it arrives.

These new Google+ social features are a good way to help reinvent the enterprise apps. The company has already been making some changes Like checking for sharing permissions for a Google docs when you email a link to people), but we will see something bigger in a few hours.

A good application of Google+ would mean company wide circles which would in turn allow easy communication and sharing of docs. This would put them in competition with Yammer, HipChat and other such products.

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Or, as the Microsoft blog post announcing the move put it:

“… you can already chat with your Facebook and Skype friends. But we heard that some of you who switched over from Gmail still want to chat with friends stuck on Gmail. Today, we’re excited to announce that you can now also chat with your Google friends.” (Emphasis is mine.)

And lest you still think we’ve entered a new era of good feelings, remember that Microsoft’s Scroogled campaign is still active, as I was reminded by one of my colleagues.

So, if you’re reading an email from a Gmail user, you can reply with a chat icon from your Outlook.com inbox. Or, if you and your Google-oriented buddy are collaborating on a document in Microsoft Skydrive (as opposed to, say, Google Drive), you can send an instant message to your Google contact with the click of a button. Microsoft is also rolling out Google Chat integration.

Basically, Microsoft is asking its Outlook.com users to use its automated process to connect with all their contacts on other services.

The timing is interesting here. Tomorrow, Google kicks off its big Google I/O conference in San Francisco. And, Microsoft is coming off a rather rocky migration of millions of its Hotmail users to Outlook.com. (To be fair, Google Drive has seen its own share of snafus lately.)

To be sure, Microsoft Office remains the desktop productivity giant but given this move, it’s clear it’s feeling pressure from Google Apps and Gmail.

This story was updated at 7:07 PDT to add the Scroogled reference.

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Most small workgroups already have favorite consumer-oriented tools they use every day (hello Dropbox!), so it makes a lot of sense to make it drop-dead easy for them to keep using those tools instead of trying to lure them away.

Do morphs into Do More

The original Do app, viewed as a way for individuals to manage tasks, has evolved into a project tracking and management tool for workgroups. These new links to other collaboration products are a further push in that direction.

Do co-founder Amit Kulkarni claims more than 100,000 small companies use “Do” as their collaboration home base and hopes to capitalize on that.

“As they use this tool, they also use Dropbox or Google Drive [for file sharing], Harvest for time tracking and Wufoo forms for leads — we thought it would be cool if you’re using Do as your persistent browser tag for you to be able to see all that information from the other applications inside of Do,” Kulkarni said in an interview.

Do More makes it easy to attach a Dropbox file to a project, comment on that file and then, if necessary, share screenshots just by clicking on the Dropbox icon, Kulkarni said.

With Do More, users can now:

• talk to customers and prospects using Wufoo online forms
• use Contactually to create and manage email contact lists
• share pertinent files with Dropbox or Google Drive.
• use Do Chat for instant messaging and collaboration.
• automate time tracking with Harvest
• use Salesforce.com’s Desk.com for customer service

Collaboration battle gets intense

Do, and now Do More, come out of Salesforce.com’s acquisition of Manymoon and its social productivity application — then at the top of the Google Apps Marketplace charts — two years ago.

Easy collaboration continues to be a big selling point for vendors old and new — with IBM pushing Connections; Google touting Google Apps and Google Drive; and of course Microsoft beating the drum for Office plus Skydrive plus SharePoint. Consumer fan favorite Dropbox is adding more IT-friendly controls to attract more business customers. Younger, potentially more nimble startups like Asana are also in the mix, so the competition here will be fierce.

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On Tuesday, the company’s beefing up Dropbox for Teams with a more powerful console for both users and IT admins that will keep company documents in the company — if that is the mandate — and allow admins to better track user activity.

The new console lets admins:

• View member details like per-user storage usage, recent activity, web sessions, linked devices and third-party applications.
• View team activity — member log-ins and team invitations and generate downloadable reports
• Set sharing controls to keep shared folders and links within the company or allow team members to decide access level on a case-by-case basis

The power of Dropbox is that millions of consumers use it from their tablets and smartphones, and want to keep using it at work. Its flaw is that IT views it as a problem — large companies, including IBM, forbid its use (along with the use of other consumer IT that it deems insecure.)

“Over 2 million businesses have people inside them using Dropbox. It’s already pervasive, we just want to make it easier for IT to say yes to those people asking for Dropbox,” Sujay Jaswa, VP of business development for Dropbox said in an interview.

Business users are an important target for San Francisco-based Dropbox. While it claims 100 million users total, it does not say how many consumers pay for the service nor how many use Dropbox for Teams, which costs $795 per year for 5 users plus $125 for each additional user.

Dropbox is the most entrenched of these competitors and it’s doing some good things here to make itself more palatable to IT at least in smaller companies, said Terri McClure, senior analyst for Enterprise Strategy Group.

While Dropbox is the champ of consumer cloud storage, it faces off in that market against Apple iCloud, Microsoft SkyDrive and Google Drive.

Among business accounts, Google is getting traction with the Google Apps-Google Drive combo and Microsoft integrates SkyDrive storage with Office and Windows 8. Box, usually the company most associated with the Dropbox-of-the-Enterprise crowd, touts its support of all client devices, but targets larger companies than Dropbox for Teams, said McClure.

Still, it’s hard not to see all these rivals battling it out for the same paying business customers down the road.

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But over time, it became clear to me that those who rejected cloud computing (typically in favor of that unicorn of technology: the private cloud) were experiencing a form of insanity that, if left untreated, would put the very existence of their companies at risk.

When I left Google last year (to found Upstart), I jumped over the table and became a consumer of the cloud. As CEO of a tech company that does not even own a computer, tablet or phone, I now get to fully experience the cloud from a customer’s perspective. So before I get into any specifics about the myths of the cloud averse, allow me to recount a couple of anecdotes to give a little context.

I’m entirely obsessed with Google Analytics’ real-time dashboard, so it was with much dismay that on the morning of Jan. 16 of this year  I saw our traffic at Upstart drop to zero.

Zilch. Nada. Zippo.

Checking quickly with our engineers, I learned that Heroku had gone down and since we’re hosted on Heroku, we got taken down with it. Hard. Because Heroku is an application platform that runs on Amazon Web Services, I didn’t know whom to blame. To me, it didn’t matter – we were down for 40 minutes or so, and that sucked. I checked Heroku’s status page, and figured out what had happened, and what they were doing to fix it.

But all I could really say to our users was “we’re waiting as fast as we can!”

That is one of the chief conundrums of cloud computing: you are powerless to fix a problem, and entirely dependent on somebody you can’t see, hear or yell at, to fix it. People hate that.

I was on the other side of this sort of panic many times during my years at Google. Despite the BS about the “end of email,” it’s still the most broadly and voraciously consumed business application in the world. So I occupied an elite circle in Hell when our services failed to deliver. In short, when Gmail went down, pandemonium ensued – particularly in Silicon Valley. In fact, the outcry from a sizable Gmail crash was enough to bring down Twitter, too.

I recall a particularly terrible outage that happened three or four years ago. I was in a hotel in Philadelphia when my own email stopped working, and my Twitter feed lit up like a roman candle. Gmail was down, and I’m not talking about one of those outages that affects less than 1 percent of users (you know, like a few million people). I’m talking about a big one.

I called a couple of engineers who I knew were close to the situation and were working to resolve it. But I got off the phone quickly, because I knew talking to me wasn’t helping anything. (To the contrary, I was wasting their time.) So I went out for a run, just praying that Gmail would be back up by the time I returned (which it was).  So even as President of Google Enterprise, I was powerless to do more than ensure that the best people were working on resolving the outage.

And this, in fact, is the essence of the cloud. As a consumer or corporate buyer of cloud computing, your task is ridiculously simple: Make sure the best people are working on it. And in fact, those engineers working on Gmail are so good that sizable outages are extremely rare these days. Yet whether it’s service reliability, data protection, or regulatory issues, there remains to this day an insane resistance to cloud computing that is quickly becoming the “Darwinian litmus test” for companies in every industry.

This insanity has three pervasive dimensions to it:

Insanity #1: These big outages mean we should keep things in house

I have news for you: a big public outage is actually a sign of success for a cloud vendor – after all, it means tons of customers are relying on its service, no?  (When was the last time you read about IBM experiencing a hosted Lotus Notes outage?) But underlying the essence of Insanity #1 is the presumption that a cloud outages implies your in-house IT organization could do it better.

In reality, outages merely provide your IT department with excuses to protect their kingdom. The facts are that Gmail uptime is in the range of 99.99 percent – meaning the average user experiences about four minutes of downtime per month – and Amazon targets 99.95 percent for AWS. So, can your team beat that?

Further, this confused IT leader thinks his team can manage a service more reliably than a company whose entire existence depends on its ability to do so. To put it bluntly, Google has assembled the greatest collection of computer science talent in the world. Similarly Amazon has a multi-year lead in delivering compute power by the drop, with which it’s happy to provide to you with the single-digit gross margins of a successful retailer. Your IT organization simply doesn’t rate at this level.

Insanity #2: I need somebody to talk to when a service interruption occurs

I’ve never understood why IT departments seem to care deeply about how important they are to their vendors. It’s a dysfunctional need that can only result in you paying far more to your vendors than is necessary, so that they can afford to show you the love.

Needing to talk to a cloud vendor when there’s an outage is a striking example of this: Would you rather have your cloud provider spending millions on account managers to call you when something goes wrong, or instead to spend their money on world-class engineers working to fix the problem?

You can’t have both (unless you want to pay a lot more for your service). By this time, any credible cloud vendor has mastered the art of providing online status updates (just as Heroku did for us here). It’s no small challenge to do this right (we worked on it for years at Google), but it’s critical to servicing customers well in the cloud. So why are so many large companies turned off by the idea of getting updates via a website or RSS? Because it doesn’t make them feel special.

As a consumer of cloud computing, your goal is to be as unimportant to your cloud vendor as possible – to ride the curve of innovation and cost reductions that result from their efforts to serve an enormous and diverse customer base.

Insanity #3; Cloud is OK for non-critical applications with non-sensitive data

If you believe that cloud vendors are just plain better, faster and cheaper at delivering IT services, then it’s another level of insanity (and illogic) to limit the use of these services to inconsequential applications that aren’t critical to your organization. This is the status quo’s last stand – “this data is too sensitive to enable Company X to manage it for us!” (A similar concern is for those who find perverse comfort in actually knowing where their data physically resides.)

This thinking is backwards. If you care about the reliability, security, and the protection of your data, then you should entrust it to those who are most capable of managing it. If you believe you can match the capabilities and rigor of Google’s Security Operations team, I wish you well.

Of course, the objection to the cloud heard more often than any other is “it’s not me, it’s them.” In this case, “them” means the boss, the lawyers, the executive team, or the board of directors. And just as frequently, “them” is a varied assortment of regulators whose statutes invariably fail to give clear guidance on whether cloud computing is, in fact, legal. Strangely, even when you speak with these regulators, you will hear the same thing: It’s not me, it’s them.

Ultimately, the spoils of cloud computing will accrue to those organizations that break through the insanity, that resolutely fight through these distractions and ambiguities to drive this radically better approach to computing throughout their organizations.

Dave Girouard is founder and CEO of UpStart. Previously he was President of Enterprise at Google. Follow him on Twitter @davegirouard.

Photo courtesy of John Wollwerth/Shutterstock.com.

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Cloud Sherpas CEO David Northington

Google reportedly earned $1 billion on Google Apps last year– a number the company won’t confirm. If accurate,  that figure pales in comparison to revenue from Google’s gigantic search-and-advertising business, but it’s not chump change either, and indicates that Google Apps now constitutes a “real” business. Cloud Sherpas CEO David Northington told me many companies are opting for Google Apps instead of re-signing pricey enterprise licensing agreements for Microsoft Exchange and Office. (Let’s stipulate that Microsoft would dispute that.)

Most Cloud Sherpas’ accounts are companies with 1,000 to 10,000 employees “but the entire market is ripe for Google adoption,” said Michael Cohn, Cloud Sherpas’ SVP of marketing.  ”Many are coming from on-premise Exchange, some from Lotus Notes and a few education and government accounts from Novell Groupwise.”

Cloud Sherpas is also buying Cloud Trigger, a San Diego-based Salesforce.com “platinum” implementation partner in a move that will give it a bigger West Coast presence and more hardcore Salesforce.com expertise. The addition will bring total headcount to 350 from 300, said Northington. Terms of the deal were not disclosed

Northington said the company has been in investment mode for the past year or so but is now on the verge of profitability.

The just-closed Series B round  includes contributions from new investors Greenspring Associates and Queensland Investment Corp., along with existing backers Columbia Capital and Delta-V Capital. The money will help Cloud Sherpas keep up with what it calls booming demand for cloud-based applications and services and to tie them into customers’ legacy software.

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Anecdotally, people on Twitter are reporting Chrome crashes left and right, and some of those with more experience on the systems administration and development side are blaming Chrome’s crashes on whatever is plaguing Gmail.

RT @davidu: Amazing that gmail being down causes Chrome to crash. Total failure to isolate critical systems. Can't wait for this post-mo …—
Stacey Higginbotham (@gigastacey) December 10, 2012

Over at a Hacker News thread, users are blaming the problems on Google’s Sync service that lets you sign into Chrome as the culprit.

I’ve long noticed that Google’s web services are more likely to crash Chrome and have asked Google about this on multiple occasions (both officially and by asking random Apps engineers at parties,) but have never gotten an explanation. One hunch is that because Google has engineered its multiple services to run across a common architecture, failures in one place can set off problems in another. Because Chrome is actually a stand-alone program as opposed to a service (although there are options like Sync that require a Google service element) maybe Google has built-in hooks to its applications and services that render it unstable when those applications and services go down.

Whatever the cause — and, Google, I’d love to learn more — this isn’t great timing since Google recently said it would stop offering free accounts of Apps for enterprise users. Google’s status dashboard shows that things are wobbly on the Gmail front, and a spokeswoman declined to comment. However, over at Data Center Knowledge, Rich Miller provides an overview of outages past for those who want to stroll down 502 or 404 lane.

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This change indicates that Google is treating Apps for Business as a real business  albeit a tiny one compared to the company’s huge search operation. According to a Wall Street Journal report  the company sold $1 billion worth of Google Apps for Business last year — a contention Google would not confirm. That amount is itty bitty compared to the multiple billions Microsoft earns on its Office juggernaut annually but is still a respectable number if true. For its FY 2011, ending last June, Microsoft Business Division — which includes Office –  generated $21.99 billion in revenue.

At Google I/O in June, Google said it had 5 million Google Apps business customers but did not break out paid versus unpaid.

The news of changes to the Google Apps sales plan was posted on the Google Enterprise blog late Thursday. According to the post, people wanting to keep using freebies can create personal accounts for Gmail and Google Drive. But even small businesses may opt Google Apps for Business for $50 per user per year, in return for which they get phone support, 25 GB of storage and service level agreements of 99.9 percent.

It’s unclear what impact, if any, Microsoft’s cloud-based Office 365 is having on Google Apps adoption. Update:  And interestingly, IBM which bought Lotus, along with its Office-wannabe SmartSuite years ago, is apparently back in the game, according to InformationWeek. 

IBM SmartCloud Docs, according to that story is:

“available for $3 per user, per month, as an add-on to SmartCloud Engage Standard and the IBM Connections networking platform. IBM also added new features, such as enhanced presence awareness, to its SmartCloud for Social Business service.”

Note to IBM:  SmartCloud Engage Standard? SmartCloud for Social Business? Let’s do something about these names or neither Google nor Microsoft will have much to worry about.

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The beauty of cloud is that users can easily download and install lots of cool applications — from a variety of app stores. The danger of cloud… is also that users can easily download and install lots of cool applications from a variety of app stores. That freedom of choice is a nightmare for IT shops in this bring-your-own-device (BYOD) era.

The company says CloudLock Apps Firewall can help guide organizations to discover, classify and safely enable third-party mobile and web apps that require access to users’ Google Apps data. It can assess existing applications and categorize them as trusted, not trusted or banned. Then it can automate the remediation of those applications.

Google Apps for Business is getting traction both in startups and in more established larger companies even as Microsoft pushes its rival Office 365 suite. Last week, Cloud Sherpas, a systems integrator and VAR, said its revenue from Google Apps-related business more than doubled last year

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According to Cloud Sherpas, there is plenty of money in that market — the Atlanta-based Google partner says its Google Apps-related revenue more than doubled year to year. And it’s brought on Chris Arroyo, former VP and CFO at Capgemini as CFO to help it attack more of that big-business opportunity.

There’s a lack of objective numbers on sales of Google Apps and rival Microsoft Office 365, but one thing is clear: Companies don’t want to pay a ton for productivity applications — a market dominated by Microsoft Office for years before coming under attack by less expensive (and less feature-rich) software-as-a-service offerings like Google Apps.

Atlanta-based Cloud Sherpas was Google’s Enterprise Partner of the Year in 2011, so it’ s hardly a neutral observer here, but it’s claims nonetheless bear noting. The company said it logged $12 million in revenue last year on Google Apps and $10 million on Salesforce.com and this year expects  to hit $45 million in total revenue across both businesses. Even discounting its merger last year with GlobalOne, a Salesforce.com partner, that’s impressive growth.

Cloud Sherpas CEO David Northington

The vast majority of new Google Apps customers are coming from Microsoft, although some are also transitioning from Lotus Domino, Novell Groupwise, or open source products, said Michael Cohn,  Cloud Sherpa’s SVP of marketing.

Google Apps undoubtedly gets traction among cash-strapped startups — younger companies that are less tied to Microsoft’s apron strings. But, Cloud Sherpas CEO David Northington, said he sees enterprises adopting Google Apps at a nice clip. “The real push is in the enterprise space and we’re in the middle of that,” he told me last week.

The battle of the SaaS upstarts

Google Apps can be had for free but the “business” version lists for $5 per month per user or $50 per user per year, considerably less than the list price of old-line Microsoft Office. Microsoft has since responded with  Office 365 which starts at $4 per user per month for email, but the version with desktop productivity applications lists for $20 per user per month.

But those are all “list” prices — that don’t take into account discounting that can be rampant when an enterprise account is at stake.

“We do see Microsoft in [enterprise] accounts and when they win it’s by heavily discounting [Office/Office 365] and rolling it into enterprise agreements that are predicated on buying more legacy software and [client access licenses],” Cohn said. That strategy has worked to devastating effect for Microsoft in the past, pushing huge adoption of SharePoint and Microsoft CRM, example.

Cohn said he doesn’t think Microsoft can replicate that past success with Office 365, however. “Office 365 has cloud elements but it more a hybrid that remains tied into Microsoft on-premises software. When companies move to Google Apps, it’s their last migration. They won’t have to deal with upgrades every 3 or 4 years,” he said.

Cloud Sherpas isn’t alone in claiming Google Apps adoption gains. Last week,  BetterCloud, a company that offers IT services around Google Apps and Google Drive and (using technology acquired from Cloud Sherpas)  said it has added 10,000 users in the last year bringing its total to 2.75 million users.

Wanted: a SaaS applications ecosystem

That traction seems to indicate that Google, which is at heart an internet search and ad company, is starting to “get” that it needs an ecosystem of  third-party VARs and integrators to tie its SaaS applications into legacy software and other SaaS products.

Last week, Google announced a Google Apps Reseller API that lets authorized partners more easily place orders and manage Google Apps accounts. The new API supports Google Apps for Business, Google Drive storage, and Google Apps Vault.

Cohn said there are several ways an integrator can thrive in this low-cost SaaS world. First, Cloud Sherpas gets margin on the upfront sale and a continuing piece of the ongoing revenue from Google Apps.  Beyond that, it can integrate SaaS applications from different vendors with each other and to older on-premises software. “We can provide our customer with a single place to consolidate their service level agreements [SLAs] and track users. We can also enhance their applications and carry them to mobile devices and adapt them for vertical applications,” he said.

Feature art courtesy of Shutterstock user Raywoo

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