Microsoft Leapfrogs Google As Cloud Productivity Market Surges, Bitglass Reports

Businesses have doubled adoption of cloud-based office productivity tools over the past year, and in that period Microsoft has knocked Google off as the market leader, according to a comprehensive new study released Thursday by Bitglass.

The cloud access security broker based in Silicon Valley reported that almost half of global businesses now use a cloud productivity suite, and that Microsoft has tripled its penetration into that market.

The 2015 Cloud Adoption Report, which culled Internet traffic from 120,000 organizations using analysis bots, was the second from Bitglass to track Software-as-a-Service adoption rates at a global scale.

In its 2014 study, which sampled cloud usage from more than 80,000 businesses, Bitglass found that security concerns still hampered adoption.

But those barriers appear to be eroding rapidly as the competitive landscape significantly shifts.

The productivity suite market was initially dominated by Google's groundbreaking Apps suite of tools, like Docs, Sheets, Gmail and Drive. But the world's largest software company, working for years to bolster its rival product, Office 365, has sprinted to the front of the pack, Bitglass reported.

"2014's underdog, Microsoft has surged ahead of Google, more than tripling its adoption from 7.7 percent in 2014 to 25.2 percent in 2015, besting Google's 22.8 percent," according to the Bitglass report.

To further break down the Microsoft-Google battle, Bitglass documented that larger companies -- those with more than 500 employees -- choose Office 365 over Apps at an even higher rate: 34.3 percent to 21.9 percent, respectively.

This year's market inversion was dramatic.

In last year's study, Google was still way out in front, with 16.3 percent of companies using Google Apps, and only 7.7 percent running Office 365 to power their business. Google's 40 percent growth wasn't enough to stay on top.

Email services are a good example of how the rising tide lifted all ships.

Last year, just under a quarter of small businesses, and 18 percent of fairly large ones -- with more than 1,000 employees -- were using cloud-based e-mail.

In the latest Bitglass study, more than 44 percent of small companies had adopted cloud-based email like Gmail or Exchange Online.

But the more glaring stat concerns the larger companies: More than 57 percent of firms with more than 1,000 employees now use cloud-based email, growth of more than 300 percent in a single year.

Another striking indicator of cloud software adoption was the use of single sign-on (SSO), which Bitglass noted is "the most basic cloud security step."

While security concerns were paramount for IT professionals last year, the vast majority weren't using those access controls.

In 2014, 9.2 percent of Salesforce customers used SSO. That number climbed to 25 percent this year.

That trend, however, wasn't consistent for all SaaS vendors. Only 5.5 percent of Box users were logging in through SSO in 2014, and that number only inched up to 7 percent this year, according to Bitglass.

And only 4 percent of Google Apps users integrated SSO, likely because of a customer base consisting of more small businesses that are often less concerned about security. Microsoft's typically larger customers found the service more vital, and 22 percent were running single sign-on.

Another interesting revelation from the study was that enterprises in Europe, the Middle East, Africa and Asia have turned to cloud productivity tools more aggressively than their North American counterparts, with those regions hovering around the 60 percent mark in adoption.

Google Apps partners recently speculated in interviews with CRN about what could be causing the shifts they were recognizing in the market -- those that Bitglass has now more rigorously documented.

Many said that Microsoft's Office 365 had caught up in product quality after Google had established a major first-mover advantage with Apps, which was miles ahead of the field when it launched in 2007.

As soon as Microsoft became able to offer a somewhat comparable product, it leveraged its overwhelming penetration of the business marketplace and relationships with its existing customers, they told CRN.

Others blamed the market inversion on channel dynamics. They said Microsoft was poaching Google's partners, adding foot soldiers as the battle heated up.

"They are very good at this and have done it for decades," one partner who works with both SaaS vendors said of Microsoft's raiding of rival channels. "Cisco partners, VMware partners, Novell Partners, Apple Partners. However far back you want to go. They have a mastery of this thing."

Many regional managed services partners told CRN that Microsoft was courting them while Google didn't seem to be interested in nurturing their relationships. As a result, many said, they were now evangelizing for Office 365.

PUBLISHED AUG. 27, 2015