The Home Depot started working with Google Cloud in 2016, when it decided to migrate its on-premises ecommerce site to the cloud. It moved its legacy data warehouse into the cloud provider’s BigQuery two years later. During those years, it saw firsthand the “growing pains” of being an early Google Cloud adopter.
“Most notably, I remember their approach to terms and conditions, customer engagement practices,” said Daniel Grider, the chain’s vice president of Technology and head of Infrastructure and Operations. “They were just not adaptable to the enterprise customer like The Home Depot.”
Fast forward to 2022, and Grider cited a “drastic” change for the better after Thomas Kurian’s three and a half years as CEO of Google Cloud, which today remains the company’s preferred cloud provider as it continues migrating workloads from its “legacy debt” accumulated over decades to Google Cloud Platform (GCP).
When asked himself if Google Cloud is enterprise-ready today, Kurian told Protocol that customers such as The Home Depot — which extended its run with the cloud provider last July — are validating its arrival as an enterprise-worthy cloud contender.
“Given the number of very large customers — from stock exchanges to large telecommunications companies, to big banks, to hospital systems, manufacturing companies — that are running large systems and using our cloud to run the core parts of their business, I would say yes, the answer is yes,” Kurian said. “We've really, really transformed, and most of our largest customers have been super successful in adopting and using cloud through the work they've done with us.”
Count KeyBank among the Google Cloud customers that are convinced.
“We certainly view GCP as an enterprise-ready marketplace in cloud, or we would never be in the process of moving our workloads,” said Keith Silvestri, chief technology officer at KeyBank, which this year started a three-year migration from its on-premises data center to GCP. “From a maturity perspective, from production support, from the investments they make in security, through how they're organized, absolutely.”
Google Cloud’s annual revenue has jumped approximately 230% under CEO Thomas Kurian's tenure. Photo: Google
A former Oracle product development president, Kurian had an enterprise-oriented mandate from his start in January 2019, and took a three-pillar approach to reshaping Google Cloud as an open-source, hybrid and multicloud provider. That included sharpening its strategy by focusing on infrastructure, data analytics, cybersecurity, collaboration and communication, as well as industry-specific products and services; installing the people, systems and processes needed to execute the vision and support growth, including a tripling of its salesforce; and transforming its culture.
“All three had to come together in order to make us successful,” Kurian said. “There's always more to be done at all times, but clearly we've had a lot of success these last three years, and credit to our teams that did all the work.”
With new customers including Deutsche Bank, Ford Motor Company, Mayo Clinic, Univision and the U.S. Air Force, that success is showing up in the top line. Google Cloud’s annual revenue — which includes GCP and Google Workspace, its cloud-based productivity and collaboration tools — has jumped approximately 230% under Kurian to $19.2 billion in 2021, with GCP outpacing Google Cloud’s overall growth. In April, it reported first-quarter revenue of $5.8 billion, which was just about $17 million shy of what Google Cloud generated for the entirety of 2018 and puts it on track for a $23.3 billion annualized revenue run rate this year.
While Google Cloud continues to operate at a hefty loss — $931 million as of the end of the first quarter — parent company Alphabet has signaled it’s taking a longer-term view when it comes to the division's profitability, with plans to continue investing aggressively given the sizable cloud market that it sees. Though Google Cloud remains a distant third to AWS and Microsoft Azure in the cloud computing race, with a 10% share of the worldwide cloud infrastructure services market, according to Synergy Research, that’s up from 7% in 2019, and there’s plenty of room for further growth.
Wedbush Securities estimates that only approximately 44% of all enterprise workloads have moved to the cloud. Google Cloud also has a sizable revenue backlog: In April, Alphabet reported $50.5 billion in future customer contract commitments primarily related to the cloud business.
Kurian has put Google Cloud “truly on the map,” said Tom Galizia, global chief commercial officer of the Alphabet/Google practice at Deloitte Consulting, a global systems integrator and Google Cloud’s largest go-to-market partner.
“You don't go from $5 billion [in annual revenue] to $20 [billion] in three years and not get to claim that,” Galizia said. “He brought a rigor around enterprise and industry-based selling. He continued to shore up and build on the technical footprint that was already there. I also think he has taken a North American cloud company to the world. It is an enterprise global alternative that is formidable, and for the right clients in the right industries, it is absolutely the right answer.”
From playground to enterprise
Prior to Kurian’s arrival, Google Cloud had been trailing or was on par with now fifth-place IBM when it came to cloud market share. It wasn’t competing aggressively enough to win the lift-and-shift core infrastructure business that was going to AWS and Microsoft Azure, and had a reputation as an organization that was more interested in convincing customers to do things Google’s way than learning what they really needed.
Embarking on its new strategy, Google Cloud’s first step was on the product side, allowing its engineers to build, mature and differentiate core services, Kurian said. He also took on Google Cloud’s previously freewheeling internal culture.
“Google had a very strong engineering culture,” he said. “We needed to add to it this focus on the customer and make a lot of our innovation be customer-driven. We spent a lot of time talking through and helping each part of our organization understand how the technology that they're building, how the role they have — whether it's in data center operations or sales — eventually meets at the customer, and how [we are] making the customer successful.”
On the business side, Google Cloud had to pick countries where it would scale its sales and distribution organization and settle on how it would approach enterprises differently than younger, cloud-native technology companies.
“You need not just sales and technical engineers, but also professional services, customer support,” Kurian said. “And along with that was being very clear with our partners: how do we work with partners, because they're a big part of the ecosystem when you're working in enterprise.”
Kurian is referring to the company’s channel partners — the systems integrators such as Deloitte, resellers and managed service providers that sell Google Cloud and wrap their own products and services around it — along with independent software vendor partners. In early 2019, Google Cloud committed to having a partner involved in every one of its deals.
To help execute its new game plan, Google Cloud hired senior leaders such as nearly 27-year SAP veteran Robert Enslin, who joined in April 2019 as global sales president. Enslin, who left Google Cloud this year, helped build out its sales organization by geographic regions and industries with recruits from enterprise players including AWS, Microsoft, SAP and Oracle.
We had to build many functions that did not really exist before.
“We had to build many functions that did not really exist before,” Kurian said, “whether that's a commercial legal team to negotiate contracts … customer service, etc. To support them, we had to put in place many systems: contracting, ordering, forecasting, customer service systems, revenue recognition — all of the underpinnings that make these people productive.”
Core business processes had to be transformed, according to Kurian, from how customer support requests and premium support would be handled, to forecasting and how salespeople entered orders, to the system for helping partners drive deals with Google Cloud.
One of Kurian’s most impactful moves was establishing the Google Cloud Customer Advisory Board in early 2020 for 50 of its top customer CIOs and CTOs to provide feedback across its business and technology strategy, said Grider, who now sits on the board, which Kurian chairs.
“This has proven to be a successful mechanism to hear directly from strategic customers about their needs, their friction points and what's most important to them,” Grider said. “I appreciate the fact that Thomas personally attends every one and engages. Feedback is a gift, and providing that type of forum to solicit it is one that Google has shown a heavy interest in, and it's making a difference.”
Grider also appreciates Google Cloud’s willingness to develop products in conjunction with customers.
“It's not a typical situation where we say, 'Here's our pain point,' and then [they] come back with a solution,” he said. “We work directly with them. Thomas has impacted that ability from a product offering — that the customers have a front seat at what that looks like. And being in retail, we can appreciate that.”
The technology selling points
Since Kurian came on board, the biggest change for Google Cloud’s Office of the CTO has been “making sure that we were involved not just with enterprises directly, but also fostering connectivity, architecture and approaches that were inclusive of the ecosystems and partners that those organizations already maintained,” Chief Technology Officer Will Grannis said.
The Office of the CTO also plays a larger role today in “emerging themes,” ensuring Google Cloud’s road map and investments are well-tuned over time so the cloud provider can meet customers where they want to be in the future.
“In the past, I would say about 60[%] to 70% of our function focused on deep technical advice to the world's top brands,” Grannis said. “That advice is still critical, but we kind of flipped to where now about 60% of our time is spent synthesizing the signals we get and making sure those signals are really strong for our internal engineering and product teams and for the cloud leadership team so that we might embark on more forward-looking endeavors that are multiyear and very strategic versus doing things just for one customer.”
Cloud computing today is about transforming almost every aspect of an enterprise organization and how it operates, Grannis said.
“The shift that you've seen from us in terms of [a] product road map that goes from core compute and storage to a more fully fledged analytics platform, to open architecture and multicloud platforms, to even just refinements in our Workspace products and rounding out our security portfolio — all of that is matching this wave,” Grannis said. “A full partnership requires a full set of capabilities.”
Infrastructure, data and analytics, and cybersecurity are typically the top three reasons why organizations choose Google Cloud, according to Kurian.
At the Google Cloud Next conference in April 2019, in his first major address to partners and customers, Kurian heralded Google Cloud’s embrace of multicloud with the launch of Anthos into general availability.
“You can build applications that can co-exist across clouds, you can do analytics that span data that sits across clouds, you can use our machine-learning tools to access information and get better insights from data and inference across clouds,” Kurian told Protocol. “That was not possible before then. It's become almost a norm now in large companies, where they want to use the best of the best from different cloud providers.”
Based on Google Kubernetes Engine, Anthos is a managed hybrid and multicloud platform that allows customers to build and manage applications across Google Cloud, in their own data centers and in third-party clouds, including those of rivals AWS and Microsoft Azure.
Major League Baseball uses the open architecture enabled by Anthos to run applications on bare metal in ballparks as well as on clusters in the cloud. HSBC, one of the world's largest banks, is using Anthos across an infrastructure that includes thousands of applications and global regions in a highly regulated industry.
Infrastructure, data and analytics, and cybersecurity are typically the top three reasons why organizations choose Google Cloud, according to CEO Thomas Kurian.Photo: Google/Weinberg-Clark Photography
“Those pathfinding activities have been critical to the growth of Anthos and, in my opinion, the growth of multicloud as an architectural pattern that more and more people are embracing,” Grannis said.
BigQuery Omni is an example of how far Google Cloud is taking its multicloud approach, according to Grannis. The analytics tool, which allows users to access and securely analyze data across clouds, is built around BigQuery, the 11-year-old serverless data warehouse that’s the centerpiece of Google Cloud’s data and analytics suite. BigQuery Omni, which runs on Anthos clusters, became available for AWS and Microsoft Azure last October.
“We're the only cloud that I'm aware of that purposefully enables computation and analytics over other public clouds,” Grannis said. “That's a pretty big indicator of how committed we are to multicloud. We embed our values and principles in our engineering, and one of our values and principles is that people should be able to run any shape of compute the way that they want it.”
Google Cloud also strengthened its analytics and data warehouse capabilities with its $2.6 billion acquisition of Looker, a multicloud business intelligence software and big data analytics company, in early 2020. Looker has since introduced new integrations with the Google Cloud portfolio, including Connected Sheets and Data Studio in April, as well as with Salesforce’s Tableau, whose business analytics software helps users visualize and understand data.
Other acquisitions have helped fill holes in Google Cloud’s security portfolio amid more rampant cybersecurity attacks.
In January, Google Cloud disclosed its purchase of Israeli startup Siemplify, a security orchestration, automation and response provider, for a reported $500 million, and said it would integrate its capabilities into Chronicle, its security analytics platform.
Using Chronicle and GCP, payments company NCR — a point-of-sale digital banking customer — can look over two years’ worth of security-related data in a matter of minutes, according to Grannis.
“Being able to crunch that much data in just a few minutes was really a game-changer,” he said. “That's enabled not only by an intelligent security approach from Chronicle, but also the scale-out infrastructure nature and the integration of those two things.”
And then in March, Google Cloud announced a $5.4 billion deal to acquire Mandiant and its extended detection and response SaaS platform to help round out a “full-service” approach to security that, in addition to Chronicle, also includes Google Cloud Armor, its network security service that provides defenses against DDoS and application attacks, and BeyondCorp Enterprise, its zero-trust identity and security platform.
“Today, the challenge most organizations have is they don't have the capability to understand what occurred to cause a cyber breach, analyze which of your systems have been compromised, remediate that through workflow and then test whether you, in fact, are secure,” Kurian said. “We realized in the front, we needed really great threat detection and response capability. Mandiant brought us that.”
Custom-fit for everybody
Developing industry-specific products and services tailored to customers in 10 areas — consumer packaged goods, financial services, gaming, health care and life sciences, manufacturing, media and entertainment, public sector, supply chain and logistics, retail and telecommunications — has been a big part of Google Cloud’s enterprise push under Kurian. They range from Lending DocAI, which is designed to reduce the time and cost of closing loans for the mortgage industry by automating mortgage document processing, to Supply Chain Twin, which allows companies to build a digital twin or virtual representation of their supply chain for better visibility.
Kurian has been pretty focused on repeatability: how Google Cloud can drive systemic change through an entire company or industry rather than one-off, bespoke, uniform-like programs, Galizia said.
When Carrie Tharp joined Google Cloud as vice president of Retail and Consumer in August 2019 from Neiman Marcus Group, “it was a little bit of what I call, from my industry experience, kind of the bright, shiny object syndrome of, ‘Hey, can Google do something cool for me in this space?’ and TBD if that was scalable or sustainable to do from a partnership perspective,” said Tharp, a former chief digital and marketing officer for the retailer. “We really evolved … to driving true large-scale, across-the-value chain transformation.”
Retail is one of Google Cloud’s largest and fastest-growing industries drawing in customers, many of whom eschew AWS because they view its parent company, Amazon, as a competitor.
Retail Search, which became generally available in March, gives retailers the ability to provide Google-quality search capabilities to customers using their websites and applications. It uses Google technologies that understand user intent and context to improve the shopping experience. When a customer searches for a red dress with lace, for example, red dresses with lace appear at the top of the search results.
These targeted, industry-specific products comprise one area where that work with customers pays dividends: The Home Depot helped Google Cloud build Retail Search.
“A reduction in our secondary queries has been drastic as a result of the retail search problem that we put in front of them to help us solve,” Grider said. “And we continue to refine that based off their team and our team of data scientists.”
Retail Search also is an example of Google Cloud’s progress in bringing the power of Alphabet to enterprise customers, capitalizing on assets such as Google’s search and digital advertising capabilities or Waymo’s autonomous vehicle work.
KeyBank worked with Google Cloud on Anthos, and eliminating all paper from banks and reducing fraud are two other challenges they’re considering working on together, according to Silvestri. A key part of why the relationship works, he said, is that as Google Cloud created its industry-specific services, it hired people who had worked in those industries — in this case, people with financial institution experience.
“You're talking to someone who actually understands banking, which is a heck of a big importance to me,” Silvestri said. “We've already got a basis and the foundation to work on.”
When Enslin left Google Cloud in May to become co-CEO of UiPath, Google Cloud decided to streamline its sales and customer success organizations to consolidate points of contact for customers. It unified sales, technical account management, professional services and customer success personnel under two teams: Kirsten Kliphouse leads the Americas team, and Adaire Fox-Martin heads the team covering Google Cloud’s other international territories. The move was prompted by feedback from customers and partners, according to Kurian.
“When we started in 2019, we were largely focused on acquiring customers,” he said. “As we have ramped [up] our business, increasingly the sales organization that's working with the customer to identify new opportunities in the account, and the customer success team that ensures the projects are going well and the team that works with partners like Accenture, Deloitte, etc. all need to come together. They all need to work in one coherent fashion, right at the point of client engagement.”
Google Cloud’s biggest challenge right now is expanding globally, according to Kurian. The cloud provider has announced 19 new cloud regions since he joined. It currently has 34 regions with 103 zones and 147 network edge locations, with availability in more than 200 countries and territories. Additional cloud regions are forthcoming in Berlin; Tel Aviv; Dammam, Saudi Arabia; Doha, Qatar; and Turin, Italy.
“Obviously, we have a certain size and scale,” Kurian said. “There's a lot of work going on to expand both our data center footprint around the world as well as our sales, distribution and service organizations. There's a lot more geographies that we want to go to, in addition to expanding in our core geos, whether that's the U.K., France, Germany, United States, Canada, etc.”
Deloitte’s Galizia believes that Google Cloud needs to make it easier for customers to buy and adopt its technology.
“A lot of Google technology is in modules, and you have to kind of assemble the modules together to get the business value out of it,” he said. “But enterprise clients want an ‘easy’ button to buy a solution, and so I think there's still room to work on that.”
There’s also the matter of Google Cloud’s operating loss, which stood at $4.3 billion when Kurian became CEO and ballooned to $5.6 billion two years later, primarily due to compensation expenses for newly hired engineers and product managers. That loss was cut to $3.1 billion by the end of 2021 thanks to 47% year-over-year Google Cloud revenue growth and Alphabet’s decision to extend the operational life of its servers and certain network equipment by a year.
Like many tech executives, Alphabet CEO Sundar Pichai and Chief Financial Officer Ruth Porat have said it’s early innings for the cloud, and the company remains committed to a longer-term path to profitability, with increased scale expected to erode the losses over time.
“It's a massive growth expansion opportunity for them,” Galizia said. “The key right now is how do you drive the $51 billion backlog to consumption in a thoughtful way that drives enterprise value for clients. And when they do that, I think you're going to see the profitability engine kick in pretty directly.”
Alphabet executives agree.
“When I look at the innovation and the product pipeline and the overall demand we are seeing and how early our journey is, there's definitely a lot to look forward to,” Pichai told analysts during the first-quarter earnings call in April. “Overall, the execution has been great. We are scaling up, particularly in our go-to-market … and I think that will play out well.”
Galizia was more concerned about Alphabet giving up on Google Cloud five years ago than today, he said. He believes Alphabet now is committed because of the sheer amount of capital it’s invested.
“They're so deep at this point in the investment, I don't see them coming out of this one,” he said. “I think they're very excited about the success of the business that they've had … Think about this: Google Cloud is starting to rival even the size of YouTube. It's pretty amazing in a very short period of time.”