The News: Google recently created a new division Google Public Sector that will operate as a subsidiary of Google LLC. The new division will focus on helping myriad federal, state, and local organizations and education institutions digitally transform their businesses. The new division will help Google Cloud’s vertical focus as more firms in the cloud market continue to isolate high-growth vertical markets. Read the full blog post from Google Cloud here.
Google Continues to Strengthen its Vertical Ecosystem Focus by Creating its Google Public Sector Division
Analyst Take: Google Cloud’s move with Google Public Sector is a solid move on many fronts. The growth of cloud computing is undeniable and organizations in myriad vertical and sub-vertical markets are clamoring for help in digitally transforming their businesses; the public sector without a doubt is no exception.
Growth of Ecosystems – What’s Old But New Again
The growth of ecosystems — whether they are vertical, sub-vertical, departmental, or workload specific —is where the major ISVs (independent software vendors), cloud providers and others have been heading for quite some time now, and we’ve seen a flurry of recent and prior merger and acquisition activity to capitalize on that. More recently, on the vertical market front, we’ve seen Oracle acquire Cerner and Microsoft acquire Nuance in the healthcare vertical, while prior examples include Oracle’s Opower, Textura and Vocado for utilities, construction and education industries. At an application or departmental level, we’ve also seen SAP acquire Concur Technologies (expense management) in 2014 and Oracle acquiring leading mid-market ERP cloud platform Netsuite in 2016.
As much as ecosystems has been the headline-grabbing buzzword over the last few years, it’s a re-washed-up shell on the shore again, but one that is more polished with pressure and time. Fundamentally, as much enterprise storage is a horizontal technology, it will typically land in highly data intensive industries such as financial services, healthcare, manufacturing, retail, and the government market. Ultimately, the major cloud providers are targeting data intensive workloads along with contracts with hopes of porting them into their cloud environments where they can weave in artificial intelligence to help optimize those operations to create additional stickiness or analytics-as-a-service.
Sharpening the Blade – Isolate and Attack
Obviously, Google Cloud already has an exceptional client and partner base in the FED/SLED markets where Chromebooks are almost ubiquitous with students, coupled with most MSPs (manage service providers). In fact, most of the MSPs I run across have Google listed as a partner on their line cards, along with Amazon and Microsoft. At the GSI (global system integrator) level and strategic partner level, Google Cloud also has strong partnerships with Accenture Federal, Deloitte, ManTech, Worldwide Technology, Carahsoft and a slew of others that are targeting federal and state agencies. That’s where this newly-formed Google Cloud division comes in — the Google Public Sector offering targeting the federal and state government markets may help the company in winning deals in the future, since many contracts often call for unique or more stringent needs, such as advanced security clearances. Although Google Cloud has employees with many of these clearances, Thomas Kurian, Google Cloud CEO, said, “The Google Public Sector division will help add employees and facilities with the security clearances necessary to bid on Pentagon work. By bringing this into a separate division, it allows us to bring more resources and support missions and programs more effectively. If you want to serve certain kinds of programs, you need employees with clearances to operate within that secure facility. Those are things we do have but this allows us to scale up much more quickly and brings focus in a specific unit that can do that and help the government with them.” Google Cloud is working to beef up its customer base — this is but one of many ways to do that.
Wrapping it up, the newly formed Google Public Sector division is a solid move for Google Cloud since many vertical markets such as the FED/SLED often have specific needs that must be met to win contracts. Although the JEDI contract was sunset last summer, there are myriad contracts such as the JWCC (Joint Warfighting Cloud Capability) that the Google Public Sector team can go after. Again, this is also reminder that ecosystems are “very old” whether they are technology, vertical, or departmental and vendors are trying to figure out ways of connecting to them via partner adjusting partner programs, mergers and acquisitions, etc.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
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