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Dec 19th 2006 | SAN FRANCISCO
From The Economist print edition

Consumer technologies are invading corporate computing

IN OCTOBER, shortly after taking over as head of information technology (IT) at Arizona State University, Adrian Sannier gave the nod to his contact at Google, the internet giant known for its search engine, and with one flick of the proverbial switch 65,000 students had new e-mail accounts. Unlike the university's old system, which stores e-mails on its own server computers, the new accounts reside on Gmail, Google's free web-based service. Mr Sannier is not forcing anybody to change but has found that the students, many of whom were already using Gmail for their private e-mail, have been voluntarily migrating to the new service at a rate of 300 an hour. Crucially, they can take their “asu.edu” e-mail addresses with them.

The service, part of a bundle called “” that also includes instant messaging (IM) and a web-based calendar, has not even been officially launched yet. It began running in a test (or “beta”) form in August. But Dave Girouard, the boss of Google's small but growing enterprise division, says that “tens of thousands” of organisations have already signed up to use Google's web-based tools in place of traditional in-house e-mail systems and other software.

Computing and software

The internet

Mr Sannier describes the move to Gmail on his blog. See also the Google Enterprise Blog, and FaceTime.

Using Google's services has several advantages for companies. Most employees already know how to use web-based software, and thus do not need training. They can access the services through any web browser, regardless of what kind of computer (or telephone) they use. Like the consumer service, the corporate product is free. (Mr Sannier pays for support—“less than $10,000”—but most organisations do not.) And in-house IT staff need do absolutely nothing, since the data and software reside on Google's server computers.

For Mr Sannier, however, a bigger reason than money for switching from traditional software to web-based alternatives has to do with the pace and trajectory of technological change. Using the new Google service, for instance, students can share calendars, which they could not easily do before. Soon Google will integrate its online word processor and spreadsheet software into the service, so that students and teachers can share coursework. Eventually, Google may add blogs and wikis—it has bought firms with these technologies. Mr Sannier says it is “absolutely inconceivable” that he and his staff could roll out improvements at this speed in the traditional way—by buying software and installing it on the university's own computers.

In the past, innovation was driven by the military or corporate markets. But now the consumer market, with its vast economies of scale and appetite for novelty, leads the way. Compared with the staid corporate-software industry, using these services is like “receiving technology from an advanced civilisation”, says Mr Sannier. He is now looking at other consumer technologies for ideas. He is already using Apple's iTunes, a popular online-music service, to store the university's podcasts.

Mr Sannier is ahead of his time because most IT bosses, especially at large organisations, tend to be sceptical of consumer technologies and often ban them outright. Employees, in return, tend to ignore their IT departments. Many young people, for instance, use services such as Skype to send instant messages or make free calls while in the office. FaceTime, a Californian firm that specialises in making such consumer applications safe for companies, found in a recent survey that more than half of employees in their 20s and 30s admitted to installing such software over the objections of IT staff.

Executive toys

Consumer technologies such as IM usually make employees more productive, says Kailash Ambwani, FaceTime's boss, so IT bosses should concentrate not on stopping them but on making them secure. In the case of IM and some kinds of file-sharing, the risks are that viruses or spyware could come into the corporate network from the outside, or that employees could ship vital information outward.

With Google Apps for Your Domain and other software services that are accessed through a web browser, the security issues are more subtle. Since the software and the data reside on the service provider's machines, the danger is of losing control of sensitive data, which is now in somebody else's hands. Most IT bosses find this scary. Not so Mr Sannier. He remembers a picture that Google showed him of one of its data centres burning to the ground; it looked awful. The point, however, was that no users of Google services anywhere even noticed, because Google's systems are built to be so robust that even the loss of an entire data centre does not compromise anybody's data.

“I have a staff of about 30 people dedicated to security,” says Mr Sannier. “Google has an army; all of their business fails if they are unable to preserve security and privacy.” Google's Mr Girouard says a similar evolution in trust occurred when people reluctantly accepted that their money was safer in a bank than under a mattress.

This trend could cause problems for traditional software firms such as Microsoft, Oracle and SAP. Already, start-ups such as Salesforce.com and NetSuite provide “software as a service”, supplying sales-force automation, accounting, payroll and other features via the web. (Marc Benioff, the founder of Salesforce.com, had the idea for his firm while browsing on Amazon's online store one day. Why, he wondered, could business software not be delivered the same way?) Other firms, including Google, provide web-based e-mail, word processing, spreadsheets and databases.

Big companies will probably keep “mission critical” systems in-house. But as everything else migrates to web-based services, software will increasingly resemble the web technologies of the consumer market, says Mr Benioff. Those enterprise firms, such as his own, that follow the lead of consumer-oriented websites will do well in this environment, he argues.

Security concerns, Mr Benioff implies with a wink, are red herrings thrown by ageing IT bosses trying to justify their salaries. They will, after all, be out of a job if companies no longer maintain their own big data centres. Mr Sannier agrees. The old IT bosses “can't possibly embrace this idea unless they're getting ready to retire,” as his own predecessor did after decades in the job. But at 45, Mr Sannier believes the trend is inevitable, and his job requires him to get on top of it.