Vivek Kundra, recruited to Washington to overhaul city’s computer networks, plagued by cost overruns and viruses, treats his projects like stocks. The biggest “buy’’ on his trading floor is Google.
The 34-year-old city technology chief signed a contract worth almost $500,000 a year in June for all 38,000 municipal employees to use Google’s e-mail, spreadsheet and word-processing programmes, giving them an Internet-based alternative to Microsoft’s Office software, installed on computers. Accountants, teachers and firefighters use Google to set budgets, track truancy rates and map emergency routes.
Google is cracking Microsoft’s hold in the business-software market with skirmishes for orders like Kundra’s. Microsoft gets $19 billion in annual sales from applications such as Office and beat back a challenge for Procter & Gamble’s business this year. Google won clients such as Genentech, and D C provides a glimpse into how the Web company is gaining ground.
“If Google keeps getting big customers like the District of Columbia, that’s a lot of licenses Microsoft is going to lose,’’ said Jeffrey Lindsay, an analyst at Sanford C Bernstein & Co in New York. “This will be a huge signal to the business community that this product is being fairly rigorously vetted.’’
Kundra’s business pales next to the $16.6 billion in sales California-based Google brought in last year, almost entirely from ads that appear next to web-search results. Washington’s workforce, about the same size as insurance company Allstate Corp, can also still use Microsoft Office. Google is starting the software division from scratch, and it accounts for less than 3 per cent of the revenue.
“Microsoft is entrenched,’’ said Scott Kessler, an equity analyst at Standard & Poor’s in New York. “Microsoft isn’t going to lose market share to Google anytime soon. It’s going to take some time and Google is fully aware of that.’’
Customers use a web browser to access Google Apps, which includes an online word processor, spreadsheets, presentation and e-mail software. The programs and users’ files are stored on Google’s servers, while most Microsoft programs are installed on individual computers on office desks.
Google has to persuade businesses to switch from the software their employees already know how to use, and reassure them that the data is safe stored on Google’s machines. While Google says its approach makes it easier to manage the programs, they have fewer features and doesn’t work if there’s no Internet connection.
Google, whose stock has dropped 52 per cent this year amid concerns that ad sales may dry up, says more than 500,000 organisations use Google Apps. Clients are mostly smaller businesses and universities, and 3,000 more sign up each day.
Microsoft, down 40 per cent this year, lost 80 cents to $21.50 in Nasdaq Stock Market trading. Google gained $3.02 to $332.
“We have to focus our efforts on people like Vivek, who want to be at the forefront,’’ said Dave Girouard, Google’s president of enterprise.
Kundra, a New Delhi native who lived in Tanzania before moving to Washington’s suburbs at age 11, is betting on Google to help mend the district’s technology woes. As a University of Maryland student, he often helped his father, a DC public-school teacher, fix his classroom computer.
When he took the DC post 17 months ago, Kundra found that 85 per cent of the school computers had viruses. The city government’s fiber-optic network cost $6.3 million more than planned last year, and police computers had less power than laptops used by students in coffee shops.
Kundra, formerly an executive at two startup companies, responded by creating a stock-market-like trading floor in his 700-strong department.
Projects get rated “buy’’, “sell,’’ or “hold,’’ based on whether they meet deadlines and financial goals, as well as targets for employee turnover and customer feedback. Teams produce quarterly reports, just like company earnings.
