Google Apps is useful in a limited set of circumstances, the report says. Start-ups and other small businesses might want to use it as a basic office and collaboration suite. Google Apps can also be considered a point solution for businesses that need a "lite" collaboration or enterprise content-management application, or a rudimentary replacement of Microsoft Office for "non-power users" who need only basic e-mail, word processing, and spreadsheet capabilities.

Even at Google's offices, Apps is used internally only as a collaboration add-on to Microsoft Office, the report says.

"Google has caught the attention of enterprises with its inexpensive Google Apps Premier Edition (GAPE) product: available at $50 per user, per year," the Burton Group's Guy Creese writes. "However, the seductive price can spell trouble for enterprise architects and their companies if they don't do their homework: the solution's rudimentary feature set means that enterprises need to pick carefully and implement slowly."

The 55-page report was released last week and is titled "Google Apps in the Enterprise: A Promotion-Enhancing or Career-Limiting Move for Enterprise Architects?"

Comparing features

Microsoft Office has a huge lead in features over Google Apps, the Burton Group says, giving these examples:

-- Documents: "Google Docs does not support a table of contents, headers, footers, automatic creation of footnotes or end notes."

-- Spreadsheets: "Google Spreadsheets does not support some of the more esoteric functions within formulas (e.g., database functions), and cannot hide rows or columns."

-- Presentations: "Google does not yet offer a presentation application, although it is in the process of developing one."

-- Customized applications: "Using Visual Studio Tools for Office, developers can create customized business applications that leverage capabilities in Microsoft Word and Excel, for example. While the Google APIs offer some programmatic control, they do not offer the broad level of capabilities that Microsoft does."

In the area of collaboration, Google Apps supports instant messaging and VoIP, but not audio-video chat or group Web conferencing. And although Apps has e-mail and calendar support, it does not include wikis, discussion forums or RSS feeds.

The strengths of Google Apps are that it is easy to use and it minimizes cost. More specifically, the Burton Group says, with Google you don't need to pay for unnecessary power-user licenses, there's minimal training, it's easy to include workers outside the enterprise, there's no software to install, and online documents are not scattered on C drives or fileshares. Colleges and universities are a perfect fit for Google Apps, the consultancy says.

Disadvantages for enterprises

There are significant disadvantages for enterprises: power-users, however, and sophisticated documents are not supported, records management is relatively complicated, telephone support is available only five days a week, and it's difficult to plan for product upgrades.

Also, Google policies could put you at risk if data is lost. There's a 99.9% uptime guarantee, Burton Group says, but it's for e-mail only. And Google says in its user agreement that it will not be held liable for lost data, lost profits or lost revenue, or the cost of buying a substitute product if the Google Apps service fails.

Despite Google Apps' obvious limitations, the service's release was a market-changing event felt by Microsoft, IBM, Oracle, Salesforce.com and Cisco with its WebEx acquisition.

The Burton Group predicts Microsoft will take a hit but come out stronger with its argument that software-as-a-service augments software rather than eliminating it.

"While Microsoft may take a perception hit from Google, especially in the [small and midsize business] market, in the short run, it will no doubt regroup and come out stronger in the end," the Burton report says.

IBM, on the other hand, is looking weak, with a Lotus Notes strategy that hasn't embraced software-as-a-service, the Burton Group says. Both IBM and Microsoft admitted to feeling heat from Google Apps during a panel discussion in June. An IBM executive noted the company has a partnership with Google but said IBM still expects the search giant to become a competitor in the corporate market in the future.

While Oracle has dabbled in collaboration and content products for years, and offers the software-as-a-service Siebel CRM On Demand, it's likely to be overshadowed by Google's entrance into the market, Burton Group says.

Burton Group is more optimistic about Salesforce.com and Cisco's WebEx. Many enterprises will choose Salesforce over Google when it comes to software-as-a-service, because the products are more sophisticated, and Cisco's purchase of WebEx makes it a "new but potentially huge competitor in this area," according to the firm.