Google is reportedly looking to dramatically augment its portfolio of enterprise applications through a series of acquisitions, according to a new report from Re/Code. If this comes to pass, Google would have a much broader portfolio of cloud software to target small and medium-sized businesses. Here are some of the key details:
Google has assembled an early working list of possible acquisition targets in enterprise that include a number of startups, according to sources familiar with the discussions. The list includes: Metavine, an automated app services startup that has raised $5.5 million; Shopify, a Canadian e-commerce public company with a market cap of $2.25 billion; CallidusCloud; Xactly; and Namely, a startup that handles payroll and health benefits services that raised a combined $77 million $108 million in three rounds, its latest led by Sequoia Capital.
Sources stressed the approaches have so far been preliminary in nature and haven’t reached a formal stage. Google declined to comment. Reps from Shopify, Namely and Metavine declined as well. Xactly and Callidus did not return requests for comment.
CallidusCloud offers a wide range of products centered around sales, and groups many of them into a category it calls "lead to money." This includes everything from territory management to CPQ (configure, price, quote), contract lifecycle management and sales gamification. Other products include ThunderBridge analytics and a suite of talent management apps for salespeople.
Xactly focuses more on sales performance management software, and it would seem there'd be some overlap between its capabilities and CallidusCloud's.
Overall, Google's reported shopping list would go a long way toward fleshing out an product suite that along with Google at Work could have appeal to midmarket companies, as Re/Code's report notes.
Last year, Google appointed former VMWare CEO Diane Greene as head of its enterprise cloud business, and also bought a startup called Bebop Greene had founded. There isn't a wealth of information about Bebop's intent, but Greene told the Wall Street Journal last year that it involved a programming environment for making easier-to-use enterprise apps. Presumably, that technology could play a role across an expanded Google applications portfolio.
Analysis: Deals Would Be A Pragmatic Move for Google
"All cloud vendors are looking for load to make their cloud investments scale, and nothing creates lasting scale better than enterprise software applications and databases, as they create load plus stickiness," says Constellation Research VP and principal analyst Holger Mueller. "In general, startups are having an exit challenge as market conditions for IPOs are not favorable, so valuations can be lower than they should or could be." Hence, cash-rich companies such as Google are in a good buying position.
Meanwhile, "Google For Work has a lot of great products, but to really make them sticky, you need apps that address enterprise," says Constellation Research founder and CEO R "Ray" Wang. "Google's challenge is they often look at enterprise differently than other vendors. For them, enterprise is what's not consumer."
But true enterprise apps have defined business processes, which provide excellent cross-selling opportunities, Wang adds. That's why Microsoft has been so focused on Office to Dynamics integration and SharePoint to Dynamics integration, he says.
The bottom line? "Google's enterprise strategy has been a bit all over the map," Wang says. "But if it wants greater adoption, getting into enterprise apps and related partnerships will improve its standing in the enterprise world."
Reprints
Reprints can be purchased through Constellation Research, Inc. To request officialreprints in PDF format, please contact Sales.