CRN Exclusive: Google Channel Chief Gearhart On G Suite Price Hike, Value And Partner Differentiation

Google may have ruffled some feathers with the first-ever price hike for its G Suite productivity software suite. But value, not price, will drive successful G Suite practices, and the former has increased at a far-faster pace, the company's channel chief told CRN.

The challenge for channel partners isn't winning the race to the bottom in a margin-squeezing price war, but differentiating their practices, said Carolee Gearhart, who took the reins of Google's channel last July.

That's why Google has been adding to G Suite capabilities that enable partners to deliver differentiated solutions. The build-out of the collaboration platform has been a precursor to a larger push to offer solutions, including across Google Cloud Platform, that "deliver a more complete value story to the customer," Gearhart said.

[Related: Google CEO: Channel Will Be Investment Focus In 2019]

Numerous upgrades in recent years to the pioneering Software-as-a-Service offering are girded by an "underlying ethos of collaboration and customer value and innovation," Gearhart said. Google wants partners "to continue to drive differentiation, specialization."

G Suite (previously called Google Apps) has expanded its capabilities in more than a decade on the market. The Basic SKU now contains five separate apps, and more than a dozen G Suite services have been released in that time. The platform has expanded storage and been infused with artificial intelligence and security, she said.

While Google saw those upgrades as justifying a higher price, the Mountain View, Calif.-based cloud provider tried to be thoughtful in its approach to implementing it, Gearhart told CRN.

That approach included a multi-month process of consulting with its largest partners about details, positioning and messaging, she said.

Two Google partners—one in Europe and the other in North America—told CRN that most customers understand the motivation behind the price hike, and they're more concerned about how those products continue to transform their businesses.

Michael Walther, managing director at Wabion, a Google partner based in Germany, said Google did a good job of informing partners of the upcoming increase with enough time to think about their strategy and provide customers plenty of notice.

The increase of 20 percent for month-to-month G Suite Basic and Business subscriptions might sound high, but in the context of so many years of product upgrades without any pricing change, it's entirely reasonable, he said.

"Ten years ago, customers paid the same as they do now, and mostly got an email system," Walther told CRN. "Now you get a compete communication platform."

Walther said none of his customers responded to news of the price increase by saying it was too much or threatening to walk away from the product.

"If you have good communication and can explain to customers why it's happening, they will understand," he said.

"Obviously, the economics and price to the customers is an extremely important part of the relationship," said Jason Lee, a founding partner of Chicago-headquartered Google partner Maven Wave.

"Anything like this has to be properly positioned and understood by the customer. We certainly don’t take it lightly from that standpoint," Lee told CRN. But the price increase has been structured, prepared and coordinated, empowering partners to address customer concerns right away.

And customers are choosing G Suite not based on price, but because they want ongoing innovation that's "connected to the DNA of this new cloud culture," he said.

Customers are highly attuned to the value conversation, which is at the forefront of the mission they're pushing in their organizations, Lee said.

Economics is always important, but "we're getting a much more-focused value conversation than a price conversation," Lee said. "That was the nature of the discussion about the reason of the price increase as Google approached us in the channel."

Value gains are driven by feature inclusion to the platform, he said, and a continuing focus on security—two things of heightened importance to the customer.

"A collaboration platform is a journey," Lee said. "These things are not built overnight and there's never an end to them."

He added: "It's not a commodity journey, but about how to transform the organization."

Even at a higher price, Google is confident G Suite "is still super competitively priced and incredibly sticky," Gearhart told CRN.

And partners are the main focus of Google's strategy to bring that product to market, as well as the larger solution-oriented approach to its entire cloud business, said the channel chief.

Google's channel is in a prime position to thrive from G Suite because the product isn't supported by an internal professional services organization. The cloud giant overall only has a "tiny, tiny professional services organization," Gearhart said.

"We want partners to be differentiated to make sure they really know this space, deliver a great app to customers that really solve their needs," she said.