By Aaron Tilley
Google's decision to cut jobs at its cloud-computing division is
the latest move in a yearlong effort by Thomas Kurian to shake up
the unit and put greater focus on delivering growth to parent
Alphabet Inc.
Mr. Kurian, after joining from Oracle Corp. in November 2018,
imposed hard project deadlines, riling some workers used to looser
execution targets, according to former Google employees, some of
whom left because of the move. The job cuts that Google disclosed
last week to The Wall Street Journal were part of a restructuring
aimed at improving how the company works with cloud customers, it
said.
Among the objectives Google has set since Mr. Kurian joined are
to become one of the top two cloud-computing providers and exceed
$25 billion in sales within a few years, according to former
employees. Google has room to grow -- its market share in the cloud
is just 4%, according to Gartner Inc. It trails Amazon.com Inc.,
Microsoft Corp. and China's Alibaba Group Holding Ltd.
Google wouldn't comment on specific internal targets, and Mr.
Kurian said league tables aren't his priority. "I don't wake up
counting if we're first, second or third biggest," he said. "If we
deliver the right product innovation, we'll grow with [customers]
and see results."
To spur growth, Mr. Kurian has focused on six industries,
including financial services and health care, to chase customers.
He is also building out regional sales teams.
Mr. Kurian is also exploring ways for Google Cloud to pursue
business in China, according to former employees. The size of
China's market makes it an attractive target for cloud providers,
but political tensions with the U.S. present obstacles.
China is a market where Google has a difficult history. In 2010,
Google pulled its search engine out of the country over the
censoring of search results. When plans to resume work in China
surfaced in 2018, they drew internal backlash, causing the company
to abandon the effort.
"Until we see further progress in ongoing discussions between
the U.S. government and Chinese government, we're waiting," Mr.
Kurian said. "We haven't made that decision yet."
Cloud computing has become one of the hottest markets for tech
companies as corporations shift more of their IT budgets to renting
data storage and number-crunching capacity rather than buying their
own hardware. Gartner estimates companies will spend more than $260
billion on cloud services this year, up more than a third from
2018.
Within Google, the cloud business has been growing in
importance. The cloud generated 5.5% of Alphabet sales last year,
or $8.9 billion, up from $4.1 billion, or 3.7% of total sales, two
years earlier. Alphabet only began separately reporting cloud sales
in the last quarter, further highlighting the growth push.
Mr. Kurian's changes have led to tensions within Google's cloud
ranks, where engineers had largely worked unencumbered by
deadlines, according to current and former employees. Engineers
were often more focused on projects they deemed interesting, former
employers said, rather than what customers were wanting. That meant
such features as databases and identity management -- which didn't
excite employees but were prized by corporate buyers -- were
neglected, former employers said.
Under Mr. Kurian, said a former Google Cloud engineer, "we have
to build stuff we can sell. People weren't used to having
that."
Mr. Kurian also upset some sales people when he shifted their
compensation plans by lowering their base pay but offering more in
bonuses for the deals they secured, former employees said. Google
declined to comment.
Over the past year, the changes at Google Cloud have been
noticeable to partners and customers, said Christian Rast, global
head of technology at KPMG International, which teamed up with
Google Cloud in mid-2018 before Mr. Kurian joined. Mr. Rast said
Google Cloud has a better understanding of how to work with big
legacy enterprises than it did in the past.
Google has a history of offering consumer products in the cloud,
providing services such as email, documents and spreadsheets as
well as selling storage and computing services to outside
customers. But it began to pursue enterprise contracts with big
business more formally in 2015. At the time, Google's cloud
business was led by Diane Greene, a veteran of the
enterprise-software world and co-founder of software provider
VMware Inc., now majority-owned by Dell Technologies Inc.
Early progress was slowed when Ms. Greene was unable to get
backing for some acquisitions to help expand in the cloud, people
close to Ms. Greene said. Ms. Greene couldn't enlist Chief
Executive Officer Sundar Pichai to meet with GitHub executives to
close a deal. Google lost out to Microsoft, which agreed in 2018 to
buy the coding-collaboration site for $7.5 billion in stock, with
Microsoft CEO Satya Nadella's support.
Ms. Greene left Google in January 2019, replaced by Mr. Kurian.
Since joining from Oracle, where he spent two decades in areas
including product development, Mr. Kurian has said his priority is
making the cloud business more responsive to corporate customers,
which are the biggest cloud spenders.
Under Mr. Kurian, Google bought the data-analytics firm Looker
for $2.6 billion. This past week the company announced it was
buying, for an undisclosed amount, Cornerstone Technology, an
IT-services company that helps companies shift their work to the
cloud.
Late last year Google set up a "customer success" team to help
customers achieve their objectives on the company's cloud service,
said John Jester, Google Cloud vice president for customer
experience, who leads the effort. "We weren't focused on the
enterprise at the level we needed to be," said Mr. Jester, who
joined from Microsoft.
Google has picked up some marquee customers. Riot Games Inc.,
maker of the popular online videogame League of Legends and owned
by the Chinese tech giant Tencent Holdings Ltd., is moving its data
analytics from Amazon to Google Cloud because of the sophisticated
tools Google Cloud offered, people familiar with the move said.
Google's cloud effort under Mr. Kurian has also encountered
challenges. Google teamed up with the second-largest health system
in the U.S. to collect detailed information on 50 million American
patients, sparking a federal inquiry and criticism from patients
and lawmakers.
Despite the layoffs in other parts of its business, Google Cloud
continues to bolster its sales ranks. At the end of 2019, Google
Cloud had 1,500 sales people, and by the end of this year, the
group plans to double to 3,000 sales people, according to a person
familiar with company's plans.
--Robert McMillan contributed to this article.
Write to Aaron Tilley at aaron.tilley@wsj.com
(END) Dow Jones Newswires
February 22, 2020 10:14 ET (15:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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