MSP Top 501 Profile: Agosto Goes All In With Google Apps

Google Apps or Microsoft Office 365? Of MSPs who participated in the 2014 MSPmentor Top 501 survey ranking the top managed service providers globally, about 66 percent said they leveraged Microsoft Office 365 to drive revenues. That compares with 24 percent that said they leveraged Google Apps.

It’s not a huge surprise that Microsoft (MSFT) is the bigger player there. The company has a long history of working with channel partners. Plus, it has a legacy installed base with its traditional (non-cloud) Office suite of productivity applications, including PowerPoint, Excel and Microsoft Word. And if you are talking strictly about the on-site licensing business, Microsoft has offered partners a higher profit than Google (GOOG) Apps or other cloud offerings could likely ever provide.  

Agosto goes Google

So maybe it takes a different kind of thinking and a different kind of business model to achieve success as a Google Apps partner. To find out we spoke with Aric Bandy, the top executive at Agosto, a Minneapolis-based MSP and cloud service provider (CSP) that ranked 360 on MSPmentor’s  2014 Top 501 list. His company is a Premiere Google Apps partner and has gone all in with Google. And Bandy is a bit of a Google evangelist. (He even served as the Google Enterprise Advisory Board Chairman in 2012.)

Some of the more leading-edge efforts Agosto is pursuing include use cases for Google Glass. But the company makes most of its revenues from Google Apps (email and collaboration – the online productivity suite) and the Google Cloud Platform (the infrastructure as a service). But why Google? Bandy explained.

“The day and age of the large Microsoft licensing deal is over,” Bandy said. “When Google Apps first came out Microsoft thought it was a joke.  Then Microsoft launched Office 365, and they are trying to match Google from a technology standpoint as well as economic standpoint. Because that’s how customers want to buy. Not with huge licensing and forklift upgrades.”

Instead, customers want pay as you go and incremental improvements. But does the business model work for managed services providers?

Today’s deals are different

“It used to be that you could make a lot of money from a hosting business,” he said. “That has fundamentally changed.”  The entry of Amazon, Google and Microsoft has changed the dynamics. Today, Bandy said, “the profitability comes from being able to have technical chops to take advantage of leading technology,” such as Google’s cloud platform.

“You have to have capability to do more around creating a business solution. The day and age of someone coming and saying: ‘This is what I want and here are my technical specs’ is over,” he said “Now, businesses come to us with a problem and ask us what we can do to solve it.”

Agosto has migrated many midmarket and enterprise companies to Google Apps, mostly from Microsoft, with a handful of Groupwise and Lotus Notes shops thrown in, too.  The Apps business makes up about 40 percent of the total revenues, and 40 percent of that is around change management work – helping companies not just with migration but also with the painful cultural changes that happen when favorite go-to tools are switched out for something else. 

The Google Apps advantage

But there are benefits to Google Apps over Outlook and Exchange, Bandy said. “People spend 20 to 25 minutes each day just sorting email. You should never sort anymore. We are good at this thing called search.” 

Another 20 percent of the overall Agosto business is Google Cloud Platform, Google’s infrastructure as a service. The rest of the business comes from other Google services including Chrome and Search.

One of the benefits of running on the Google Cloud Platform is using the same infrastructure that is capable of searching the entire internet and streaming millions of videos (Google Search and YouTube), according to Bandy. He notes that Google is the third biggest manufacturer of server hardware, and also one of the top makers of networking equipment and a top operator of dark fiber, although most people don’t realize it.

Leveraging Google’s infrastructure

“The same infrastructure that Google uses to index the internet and run YouTube and provide intelligent analysis around all that,” he said. “That’s where you run your virtual servers and do app dev on Google’s app engine.”

Bandy points out that Google has been tested by services such as Snapchat and Angry Birds, which were written on the Google Cloud Platform because those developers needed to start small due to economic constraints, but be able to scale quickly if they were successful.

All these factors and more drew Bandy and his company Agosto to the Google partner program.

“Google is doing some really interesting things. The reason why we aligned with them is because they are building out this massively global infrastructure. We are writing apps for our clients that have that same kind of scalability.”

App development

Among the applications Agosto has developed are its own internally-used lightweight workflow tool for Google Apps. Another application from the company is a sales force automation tool with a plugin that automatically tracks salespeople – checking them in and out of customer appointments.

Another customer runs large events and needs to scale up a registration automation tool. The infrastructure scales up for spikes in registration, and then it scales back down again after the event. During the down time it costs $3 a month.

Google Glass

Agosto is also working on developing use cases for Google Glass, and has been invited by Google to present these at investor conferences. For instance, what if a car rental business was able to visually identify VIP customers when they entered the lot, get their cars ready to go and give them a bottled water and the keys as they arrived? Or what if police officers on patrol could check license plate numbers without ever taking their eyes off the person at the wheel of a stopped car?

“We’ve made a huge bet that Google is going to be one of the biggest players, if not the biggest player,” Bandy said.