Would Google Cloud Win Spell Doom For MSPs?

There’s a dirty little secret that has long been whispered, even if not widely discussed outside close circles of managed services providers (MSPs): Don’t work with Google.

For years, MSPs have bristled at the tech behemoth’s approach, long seen as ignoring the channel to market a growing array of user-friendly, self-serve technology products directly to consumers.

The disruption from tsunami-like adoption of public cloud services is bringing those old fears back front and center.

This year, Google placed huge bets on public cloud, vowing to catch up and dominate the competition with Amazon, Microsoft and others, and raising questions about the effect on MSPs should Google Cloud Platform (GCP) become the market leader.

“I think MSPs are generally afraid of working with Google because of their direct company history,” said Jim Lippie, principal at Clarity Channel Advisors, a consultancy that advises MSPs. “The fear from an MSP perspective is that Google will ramp up efforts on the direct side and freeze out MSPs.”

In fact, Lippie said he knows of MSPs that actively refuse to work with Google, citing perceived anti-channel practices.

For its part, Google offered nods to its partners on separate occasions this year.

In April, Google held an event in New York City for partners who sell products in their ecosystem, including Google Apps for Work.

The following month, a two-day event was held in Dublin, Ireland for EMEA partners.

Google used the events to tout the partner programs, discuss upcoming product releases and offer market overviews on how MSPs can succeed with cloud services.

“I do know that Google takes care of its partners,” said Fabrice Vanegas, a software integrator with Canadian technology solution provider Gestion-bsp.

Google, Vanegas explained, relies on its partners to sell to and cultivate relationships with truly small- and medium-sized business – those with fewer than 1,000 employees.

“We sort of do Google’s work for them,” he said. “Google having partners is crucial to its growth.”

At the same time, Google is pressing full speed ahead with an ambitious cloud strategy that includes cheap computing and storage, and a dizzying array of constantly improving, user-friendly, self-serve tools and applications.

“I definitely think Google is making things easier,” said Jovan Hernandez, an engineer with Google partner Mac-tech. “It’s really a toss up about how MSPs are going to play a role in the cloud revolution.”

Is Google ‘anti-channel?’

Right or wrong, perceptions that Google is less than committed to channel are easy to find.

“Google is not a partner company,” said Jamison West, president of Seattle cloud services provider Arterian CSP. “That’s not their culture.”

In March, Google, which trails Amazon Web Services (AWS) and Microsoft’s Azure division for market share in the public cloud competition, announced a massive escalation of its cloud effort.

VMWare co-founder Diane Greene, newly hired to head Google Cloud Platform, was tasked to lead an expansion of Google’s worldwide data centers from three to five by the end of 2016, with 10 more data centers coming on line by the end of 2017.

Along with dramatically increasing the supply of public cloud, Google has rolled out tools that let users do everything from building cloud-based web and mobile apps that scale with demand, to deploying massive fully managed databases, to monitoring and managing workloads on their own cloud-based virtual networks.

Vanegas, of Gestion-bsp, acknowledged that partners must come accept Google’s alternate market strategy.

“It does do it fair share of direct deals,” he said.

Arterian’s West noted the contrast between Google and its top cloud competitors.

Microsoft, of which Arterian is a long-time partner, is well known for its channel sales program and commitment to cultivating partner relationships.

Public cloud market leader Amazon is another direct-sale company that not so long ago was also seen as ambivalent to channel partners.

But in recent years, its Amazon Web Services cloud division has built a thriving cloud partner program that appears to be gaining traction, West said.

“They’re taking steps and there are visible sigs that they’re making progress,” he said.

‘Economics’ to dictate Google moves

In the cases of Amazon and Microsoft, managing cloud workloads and designing relevant virtual infrastructure remains sufficiently complex that third-party service providers can reasonably expect to find recurring revenue after completing the migration.

Google, on the other hand, has work to do to convince channel companies that it is a profitable partner choice.

Data from this year’s MSP501 worldwide ranking of top MSPs shows 82 percent of the firms on the list reported leveraging Office 365 services in 2015. By comparison, just 15.7 percent of companies that made the ranking offered Google Apps last year.

Clarity Channel Advisors’ Lippie, who made a presentation to Google partners during the Ireland gathering, said he’s seen signs that the tech giant is carefully considering cloud partner strategy.

“I think Google is trying to remedy that and I think you might see them come out with a stronger channel program to reverse that,” he said. “If they decide that they want to, it’ll depend on the economics.”

That is, whether the razor thin margins on granular cloud activity that GCP is relying upon, leave enough room for MSPs, other channel companies and Google itself to turn a profit.

Time will tell if the recent overtures to channel amount to lucrative new veins of revenue or empty gestures, West said.

“I’ve seen a lot of direct companies try to become channel companies and vice versa with mixed results,” he said.

It’s a question that has crossed the mind of at least one Google partner.

“I’d like to believe that we will remain useful in the equation,” Vanegas said. “Will we get cut out as partners? Is that something that could happen? Who knows?”

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