On Monday, June 14, 2010, Enterprise 2.0 Conference in Boston conducted an "Evening in the Cloud" session focusing on collaboration in the cloud. I attended this session and came away with some distinct impressions about how collaboration technologies and companies are making strides in the rapidly evolving cloud computing marketplace.

Here are some of the highlights and takeaways from this event:

David Berlind, Chief Content Officer of TechWeb opened the session with the observation that from a productivity point of view not much has changed since the invention of the first spreadsheet and word processing programs three decades ago. Really? What about the PC revolution of the 80's, the Internet revolution of the 90's, and the mobile and cloud tsunami that's upon us now? Hasn't that made us all a lot more productive? One could argue that in the knowledge-driven economy that we live in today, it's the productivity and innovation of teams working together that matters — not the individual productivity.

The hard fact is that despite the proliferation of a variety of web-based collaboration, communication, wiki technologies in the past few years, many teams still collaborate in an old-fashioned and inefficient way: attaching and emailing large documents around, particularly when it comes to collaborating with people outside the company. Why does this happen? The answer to this question comes later in this post but first I will touch upon Berlind's interesting observations (and my commentary) around the ongoing battle between Microsoft and Google to gain the upper hand in the lucrative office applications space.

Microsoft's grip on the office productivity applications market came about through the widespread adoption of their document formats, their platform, their servers, and their application software. However, all of this does not (and did not) lead to a quantum leap in collaborative productivity. Microsoft realized early that the true collaboration productivity potential lies in a cloud-based offering; they strongly signaled their move in this direction with the release of Office Web Apps and Office 2010. But, according to Berlind, Microsoft's cloud-based document collaboration requires each user to have access to a Sharepoint 2010 server (on-premise or hosted, but not yet a true cloud service) and a license of MS-Office 2010. Microsoft is moving to a "hybrid" model in the cloud, which fits right into their powerful Software plus Services vision. Our own research shows that hybrid clouds are where most of the action is going to be in the next 3-5 years.

I think Microsoft's engineers have already done a tremendous amount of work with Azure and with the myriad other online services (MS Live, Office Live, Xbox Live, Skydrive and so on). While Google, Salesforce, and other "pure" cloud players are gaining ground, arguably, Microsoft has more experience with cloud services than the other two companies combined. It's too early to rule out Microsoft. We have seen what Microsoft can do once they get into the game seriously.

One challenge Microsoft has to address is around aligning the far-flung reaches of its vast empire towards realizing the inevitable future of computing in the cloud. This is already happening with the "We are all the cloud" message from Steve Ballmer himself.

Another major challenge for Microsoft (and many entrenched on-premise software vendors) will come in building a cloud offering that's profitable and one that does not cannibalize its on-premise products. This is not easy to do as it ultimately affects their licensing model and has ripple effects throughout the channel and the partner ecosystem. Consider these words of a tech executive of a large technology vendor:

"Over the next two years, more than 50 percent of traditional IT spend — software, infrastructure, and services — will be up for grabs and rethinking, and frankly the impact on the channel will be even greater."

With the release of the latest Google apps, a compelling price point & pay-as-you-go model, and a powerful cloud-based document collaboration capability, Google is clearly encroaching Microsoft's territory. With the recent acquisition of DocVerse, Google is bringing an element of real-time collaboration to Office users. This is a powerful feature that eliminates the need for reconciliation engines and screen sharing technologies. Google's pure cloud vision revolves around getting users to use nothing but a Web browser as a client. As collaboration crosses organizational boundaries and as a plethora of mobile and tablet devices flood the market, Google's use of a browser (and the use of HTML5) as the obvious and universal client is an important differentiator. Google is even closing the document fidelity gap and now allows users to store their documents in the native formats on the Google cloud.

One interesting statistic, Sean Poulley, VP of online collaboration service, Lotus Software, IBM shared with us is that the average number of users for Enterprise Google apps is 12. It would be interesting to find out how much traction Google is actually getting with larger enterprises. Unlike Microsoft and IBM, Google is relatively inexperienced working with large enterprises. The fact is that enterprise users will want and need to have offline access as well as require integration of their cloud services with on-premise services (hybrid), not to mention enterprise-grade technical support. How well Google will address these challenges will determine their success (or failure) in cracking the enterprise office productivity and collaboration market.

In the final analysis, Microsoft and Google are moving towards the same place on format support and hybrid collaboration (Google plans to offer offline access through DocVerse later this year). According to Berlind, the old-lock in points (platform, formats, etc.) are nearly dead. The new point of control to watch: "The collaborative backbone."

"It becomes a battle that's less about Google Docs versus Microsoft Office and much more about the collaborative infrastructure behind Google Apps versus Microsoft's SharePoint and Exchange."

In the heat of the battle between Microsoft and Google, let us not forget that IBM is a major player in the cloud computing and enterprise collaboration space. Sean Poulley, VP Online Collaboration Service at Lotus Software shared IBM's view of cloud computing. IBM's position is that customers will use a mix of private and public cloud deployments — or hybrid deployments — based on the security and privacy requirements as well as workload characteristics.

We profiled IBM's largest cloud deployment of LotusLive at Panasonic back in January. We saw IBM demonstrate some of the latest features of this very powerful and highly integrated LotusLive collaboration suite which includes file sharing, instant messaging, project management activities, surveys and charting, web-based meeting management, email, and much more. IBM recently partnered with companies like Ariba, Salesforce.com, UPS, Skype, and Silanis to integrate essential business services into LotusLive. It was clear from the demo that IBM did a terrific job providing a seamless and integrated user experience with many conveniences such as single sign-on and intuitive and easy-to-use user interface. Overall, my impression is that IBM is really listening to their customers and I like the direction they are taking with LotusLive. The pricing starting at $7/month/user is also very attractive and I can easily see why Small and Medium size businesses would want to adopt this suite. However, the many options and packages can confuse customers and make it difficult to evaluate and compare competing offerings.

Finally, Yuvi Kochar, CIO of Washington Post and William McNee CEO of Saugatuck joined in the conversation on stage and discussed the opportunities and challenges with moving enterprise collaboration to the cloud. The key question that came up was around how to move from the current state (a lot of diverse but inefficiently used collaboration tools and technologies) to an integrated cloud-based offering. As it turns out, the technical reason why most companies use the old-fashioned email- and document-based collaboration system is because all the different business services and collaboration and communication components are not well integrated together and are not extensible via open standards. IBM is squarely addressing this issue with their one-stop solution backed by their strong integration services and tools (recall IBM's recent acquisition of CastIron).

Berlind calls this the "collaboration stream or wave" where document notifications, team member updates, relevant emails, infrastructure events, project updates, relevant news, associated business services and so on are all accessible in one place. This kind of one-stop collection of the streams of consciousness around the context of the relevant project or work being undertaken is the wave of the future.

Upcoming Cloud Event: We are co-hosting a Software Executive Networking Dinner "Achieving Technology Leadership in the Cloud" on Tuesday, June 29 at 6:00 pm at Perry's Steakhouse in Austin, Texas. If you are based in the Austin area or are visiting, please join us for the dinner and enhance the quality of the interactions and networking. Please drop me a note (kamesh@sandhill.com) if you can make it to the dinner.

Kamesh Pemmaraju heads cloud research at Sand Hill Group. He welcomes your comments, opinions, and questions. Drop in a line to kamesh@sandhill.com.