James Governor's Monkchips

Google Cloud’s expanding enterprise footprint and the rise of the 10 year deal

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Land and expand is the classic enterprise sales strategy. While normally used to describe the process of winning a customer and then expanding the scope of engagement over time, it can just as well be used to discuss sectoral wins. In light of that Google Cloud Platform (GCP) has had some notable wins lately, landing huge transformation deals in new geographies and bulking up in vertical industries. These are Big Deals, entrenching GCP presence in untapped markets. Enterprise companies are currently under more pressure than ever to transform their operations and need help to do so – Digital Transformation has a budget and CEO-level attention. GCP is evidently doing a much better job of moving up the customer org chart to tackle these opportunities since Thomas Kurian took over as Google Cloud CEO.

Recent deals also illustrate a wider industry change. Enterprise cloud is not really a pay as you go model any more– GCP has recently announced a number of ten year transactions including wins at Deutsche Bank, Mayo Clinic, and Sabre. Transformation isn’t a matter of buying cloud services. Multi-year commitments are becoming the new normal, which is of course how the enterprise works.

Groupe Renault in France, Telefónica in Spain, Deutsche Bank in Germany – these are all dramatic lighthouse wins in Continental Europe, which should encourage further expansion in the EU. All of these deals are interesting in different ways in terms of the structure of Google’s expansion.

The 10 year deal phenomenon was clearly heralded by the $10bn Joint Enterprise Defense Infrastructure (JEDI) win at the US Department of Defence by Microsoft at the end of last year. Of course AWS has long signed massive deals with enterprises in a host of industries – the “All In” announcements. So let’s consider the changing competitive landscape, and cloud company DNA.

Tech companies tend to see the world in very particular ways. At Amazon Web Services (AWS) the focus is Always Product – everything is in the service of the customer and thus of the product, with small teams organised to build compelling primitives. Microsoft has always been about Programs – build tools and platforms and then build world class programs around them. Google meanwhile has never really been about people, product, or program but rather the primacy of the Platform. At GCP everything has been in the service of the Platform. Sure it has programs, people, and product ownership, but Google is always Platform all the time.

AWS is Products, Azure is Programs, GCP is Platforms – these overarching organising principles shape engineering, staffing and go to market plans. They shape how the companies behave, their responses to customers, partners and competitors, the answer to every question.

However, and this is where I am going with this argument, GCP is clearly doing things very differently under Kurian. The platform is now at the service of the market rather than the other way around. The move to cross-platform with Anthos, and the new BigQuery Omni platform (BigQuery on other clouds – oh, my) are indicators of a deep change at work. Google Cloud is no longer the best Platform. Now the best Platform is the one that the customer chooses. Google Cloud today feels a bit like IBM under Louis Gerstner, where the System was no longer the center of gravity, but rather the software, the integration, the middleware and services were. This is a significant philosophical shift, which will fundamentally change how Google Cloud does business.

A related indicator – watch any of the go to market talks from Google Next OnAir and watch for mentions of legacy technology. SAP, Oracle, mainframe migration. Mainframes, mainframes, mainframes. Just watch the relish with which Thomas Kurian mentions supporting enterprise customers with AS/400 workloads. Legacy is just a reality of enterprise IT, and while digital transformation is going to require a lot of infrastructure modernisation, rehosting, and refactoring, this is all going to take time. Embrace, extend, modernise, then, perhaps, extinguish.

My colleague Stephen writes about the new (old) landscape – and the return of middleware, with lessons from tech history – here.

A year ago this past April, remember, Google announced Anthos. Anthos was interesting not because it was a Kubernetes-based platform for hosting applications – there were many such then and there are more today. What differentiated the platform was that it was a cloud-independent piece of middleware offered by one of the cloud vendors themselves. Historically, a core approach of cloud vendors to the market has been attracting workloads to their platforms via proprietary offerings.

With Anthos, Google inverted that model, taking the proprietary software platform and decoupling it from the underlying cloud. This is notable because it represented a change of strategy, as noted, but also because it’s a heavy lift technically. It’s much easier to get a platform stack operating in one environment than it is in multiple.

Now with BigQuery, Google is doubling down on this approach, extending it beyond its GCP roots into other environments. This may weaken the argument for GCP compute at the margins, but it inarguably expands BigQuery’s addressable market dramatically.

We’ve spoken to some of Google’s biggest clients recently and they say there has been a striking change in GCP’s willingness to negotiate. A key word here is fungibility – which is to say the willingness to allow investments in one Google service to be applied to another. Historically that had been a sticking point for negotiations with customers.

But making long term bets on cloud platforms without fungibility makes no sense. You don’t sign a ten year deal, especially with a cloud company which is innovating at a furious rate, if you can’t expect flexibility about your spend and where it goes. Cloud economics tomorrow will not be what they are today. In three years they’ll be profoundly different. In ten years – well, the past is a different country, they do things differently there. A secondary advantage of signing and announcing ten year deals is that it telegraphs clarity about the future of the business, to the market and to other customers. Journalists love big numbers.

So let’s consider some of these deals, and start with Europe. One thing holding back Google Cloud in Europe had been reporting lines. Everything previously had to go through Google’s Santa Clara HQ, which was holding things back. Thomas Kurian changed this when he took over GCP, pushing out responsibility to the regions to simplify deal-making, operations and partnering. One of Thomas Kurian’s first major hires was Chris Ciauri as President EMEA, Google Cloud. Ciauri previously ran EMEA for Salesforce- he’s the definition of an enterprise heavy-hitter, and his contacts in major European firms are a huge asset.

So the Groupe Renault win.

Groupe Renault is touted as GCP’s first major deal in France. Location is important. If French companies see other French companies working with GCP it makes further deals easier. On location it’s also interesting to see Groupe Renault using the term “Industry 4.0” for its digital transformation in design and manufacturing. The term originated in Germany, and became a bit of a rallying cry there, but in this case it is touted as an approach by the French industrial leader.

A recognized contributor to Industry 4.0, Groupe Renault has been developing its own digital platform since 2016 to connect and aggregate industrial data from 22 Group sites worldwide (representing 76% of vehicle production) and more than 2,500 machines. This new partnership with Google Cloud aims, among other things, at optimizing Groupe Renault’s wholly-owned and independently operated industrial data management platform.

Google Cloud’s solutions and experience in smart analytics, machine learning (ML) and artificial intelligence (AI) will enable Groupe Renault to improve its supply chain and manufacturing efficiency, its production quality, and the reduction in environmental impact through energy savings.

The deal has a secondary component, which is perhaps no less interesting – explicitly calling out a training partnership to improve the digital skills of Renault employees. This is certainly not business as usual for GCP, but addresses one of the major challenges for enterprises globally – structured, scalable training in new technologies and methods. This approach brings GCP into the kind of territory pioneered by Pivotal Labs, and latterly taken up by Red Hat and its Open Innovation Labs.

Groupe Renault and Google Cloud plan to build a unique and scalable program to enhance Renault process engineering, manufacturing and IT teams’ skills via coworking, training and enablement sessions with the Google team. This program’s objective is to enhance a data-driven culture that is an essential part of Renault employees’ daily professional lives, in operational as much as in decision-making processes.

Renault’s Industry 4.0 approach makes for fascinating reading – particularly the focus on putting the worker at the heart of the process, which aligns with the lean approaches pioneered by Toyota. People and machines work together at a pace that suits them both. This is a cool modern automation story.

With the continuous increase in product customization to satisfy customer expectations and the presence of connected project managers, the 4.0 plant allocates the heaviest and most repetitive tasks to robots: handling unwieldy parts or part picking. This takes the strain off the operators who are thereby able to concentrate on tasks of greater added value, such as the quality of engine or vehicle assembly. The 4.0 plant has an essential component at its core: people!

A second major deal in France, with Orange, the telecoms service provider, including a joint innovation centre (people and place) was also just announced.

So about the Deutsche Bank deal

As in France, but more so, German companies take their queue from each other – so the Deutsche Bank win is significant. Deutsche Bank is an organisation under significant pressure. Revenue has been falling, and regulatory problems and fines continue to mount. HSBC uses GCP for anti-money laundering, which must have been a helpful reference in closing the deal. Deutsche Bank’s IT systems have been widely reported as outdated, which is not a good look for a bank in 2020, especially when revenues are under pressure.

In late 2019 Reuters reported that Deutsche Bank planned to spend $14.2 billion on technology by 2022. Potentially rich pickings for GCP, and frankly a great competitive win in a competitive bid situation against AWS and Microsoft Azure. Another Reuters article in February this year contained this intriguing quote:

In the revamp, Deutsche is looking for a partnership that would be bigger in scope than work the tech companies have done for other banks in the past, one of the people with knowledge of the matter said.

You can see why all of the Cloud companies would be interested. Deutsche Bank needs to undergo a massive transformation to modernise its systems and make them fit for purpose.

So about Telefónica.

The announcement was a little light on detail at this point but GCP is opening a new Spanish region in collaboration with Telefónica, using the telco’s data center facilities, collaborating on 5G technology, and co-selling cloud solutions to private and public sector organisations. This deal will help GCP to significantly increase its European footprint, accelerate its global infrastructure buildout, and eliminate Spanish data sovereignty concerns. Working with a third party is going to create some interesting operational challenges for GCP though – in areas such as security and renewable energy. The announcement says nothing about renewable energy or off-setting. Google data centers are normally incredibly tightly managed, built out by Google from end to end.

With the future opening of this new Google Cloud region in Spain, customers will benefit from the integration with Telefónica’s communications and cloud services, and will have the opportunity to use Google Cloud products with low latency and high performance while also having the option to store their applications in local public cloud servers.

Designed for high availability, the region will have three zones to protect against service disruptions, and will launch with the standard set of Google Cloud Platform products, including: Compute Engine, App Engine, Google Kubernetes Engine, Bigtable, Cloud Storage, Spanner, and BigQuery. This investment will facilitate enterprises and public administrations to fully unleash the potential of cloud computing based on Google Cloud’s AI technologies, while maintaining the highest cybersecurity, data residency and compliance standards, in particular those with specific data storage requirements.

Microsoft announced a similar deal in February to locate its own Azure infrastructure in Telefónica data centers, though in that case the Spanish company is also standardising on Microsoft 365. Someone at Telefónica definitely made their commission for 2020. That has to be one huge data center. AWS had announced its own Spanish Regions plans in October 2019, to be open by 2023. It will be interesting to see which of the cloud giants company opens its local Spanish region first.

And so to Sabre.

Another ten year deal, Sabre has long been at the heart of the global travel industry – it is the booking system behind pretty much all other booking systems. Sabre has been claiming it will migrate from IBMs specialist Transaction Processing Facility (TPF) mainframe platform since forever. Perhaps with the new GCP deal it finally will. One striking aspect of the signed deal is that GCP is also going to bring assets to bear from the Google ad business, in rethinking how Sabre interacts with its customers. This could mark yet another profound change for Google, and it’s a smart move by GCP, becoming more strategic to Alphabet as a whole, taking Google’s core business into the heart of customer transactions. The deal announcement talks about platform migration, engineering collaboration, including business leaders from both parties.

Sabre, which launched in 1960, revolutionized the travel market with the industry’s first semi-automated flight reservation system. Since then, Sabre has evolved into a broad technology platform that manages more than $260Bn worth of global travel spend annually, supporting a wide range of travel providers, such as individual airlines, hoteliers, agencies, travel aggregators and more. The 10-year-strategic partnership between Google and Sabre will enable the travel provider to improve operational agility while developing new services and creating a new marketplace for its airline, hospitality and travel agency customers.

“This is a really exciting time for Sabre, our customers, employees and other key stakeholders. For decades, Sabre has made travel easier for people on the go and within the industries that serve them,” said Sabre President and Chief Executive Officer, Sean Menke. “Today, we embark on a new transformational journey with Google. As our preferred cloud provider and broader strategic partner, Google Cloud will help to accelerate our digital transformation and ability to create a new marketplace and critical products and systems focused on our customer needs for decades to come.

The announcement includes quotes from Menke, Thomas Kurian, and Alphabet CEO Sundar Pichai. This is no small win. After the year the global industry has had, everyone in the sector is going to need a lot of help.

The Mayo deal

The Mayo Clinic is one of the most storied institutions in clinical healthcare and research. Here again we see a 10 year commitment to GCP. Google’s reputation in AI/ML, and it’s excellent record in security are obvious reasons to foster a deep collaboration. As with many of the deals outlined above, location matters. The cloud is great, but place is important when it comes to people. The creation of a Google Cloud office near the clinic, to foster closer collaboration stands out there.

In addition to building its data platform on Google Cloud, Mayo’s world-class physician leadership is partnering with Google to create machine-learning models for serious and complex diseases. Eventually, Mayo Clinic hopes to share these models and other joint solutions with caregivers across the globe to improve healthcare delivery. Mayo also looks forward to exploring additional points of collaboration with Google Health in the future.

As part of our partnership, Google will be opening a new office near Mayo Clinic’s headquarters in Rochester, Minn. Working alongside Mayo Clinic’s world-leading medical experts and researchers, we look forward to bringing Google Cloud’s data analytics and AI engineering capabilities to the forefront of patient care.

This post is not intended to be a comprehensive summary of all Google Cloud’s recent wins, but rather to illustrate significant changes in its engagement model, or models, reflecting broader industry wide-changes. The infrastructure and processes may be increasingly Cloud Native, but rumours of the demise of enterprise IT have evidently been much exaggerated. Business models that worked in 1993 are perhaps not so different from those today. Get close to the customer, dig in, be flexible, throw some bodies at the problem, run on third party platforms if necessary, do what it takes, make big promises, offer compliance, upside and reduced cost, rinse and repeat.

I also find it notable how important place is – in 2020 we’re all about remote work. Many of these deals explicitly talk about coworking in joint innovation centers.

Google Cloud’s revenues grew 43% in Q2 2020. It is now within striking distance of Youtube in those terms. The Cloud footprint is expanding.



disclosure: AWS, GCP, IBM, Microsoft Azure, Red Hat and VMware are all clients.


  1. Wonderful article, thank you!

    1. thanks for the kind feedback Tracy. I really appreciate it.

  2. What a great article. Beautifully insightful in such an ever changing landscape

  3. One of your best analyses ever, thank you good sir!

  4. Very insightful into how GCP is helping customers transform, working more like a strategic partner versus just a service provider.

  5. Excellent article James! Extremely relevant case studies that illustrate how GCP’s shift in strategy has better aligned them with the long term transformational initiatives enterprise customers are making.

  6. ” say the willingness to allow investments in one Google service to be applied to another…”

    Any details from GCP customers about how negotiations for GCP credits work into what some of them spend in Google’s massive Adwords Program by their marketing divisions? Some Corporations spend ‘hundreds of millions’ annually with Google on advertising….how does this affect their GCP contracts?

    1. Frank – that is a great question i would i currently had better insights into fungibility across adwords. one for me to keep out for data about. thanks for the question.

  7. Increase of 43% in Q2 2020 is just amazing and what about Q3 so far, anyway thanks for the sharing.

  8. […] plan. One of the best things you’ve done to demonstrate you’re serious about the cloud space is sign public 10-year deals with large banks and other enterprises. A veritable tie to that decision is hiring […]

  9. Great article James! I love the insight about how different public clouds organize and prioritize around different principles: AWS is Always Product, GCP is Always Platform, and Azure is Always Programs. Now, I think this is spot-on for AWS and GCP, there are pretty clear examples of this. But I’m not sure I grasp how Microsoft prioritizes building programs. Could you provide some concrete examples of how this works in practice?

    1. so Microsoft. consider the way for example it began Ignite as a conference series then massively expanded it. from a few cities to tens of cities in a short space of time. Or its understanding that winning with Teams was a sales compensation problem as much as anything else. even in the olden days, this was the play…. Office was a marketing program, a bunch of separate programs sold together, rather than an integrated platform. Microsoft wins with marketing programs, sales programs, ecosystem programs. it properly resources these programs and is generally remorseless in executing on them. When it wanted to rebuild its developer relations program for the cloud it brought back Jeff Sandquist, initially to fix docs, but then gave him a budget that meant he could staff dev rel with absurdly good people, hiring at above market rate.

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