The pandemic has been good for Damson cloud. The Google Workspace app provider, founded by brothers finan and Donald Murphyhas seen its revenue increase by 270% since Covid-19 forced organizations to switch to remote work and rethink their technology.
Previously relying on subcontractors, the Dublin-based company claims to be recruiting staff and is on track to achieve a turnover of 5 million euros this year. The driving force is that enterprise customers are establishing long-term hybrid working practices and embracing cloud-based remote working.
CEO Fintan Murphy (39) set up Damson in 2005 as a traditional computer maintenance business after taking a break from studying computer science and economics at UCD. Donal Murphy (45), who worked in a publishing company, joined him later as director of operations.
The Murphy brothers had grown up as tech-savvy kids, with Fintan describing himself more as a problem solver with ambitions to start his own business (“I’ve always wanted to own a hotel for some reason”) and his brother as “the real nerd”. of the pair.
It was Donal’s idea to engage Damson in cloud software. The brothers sold their computer repair business, also named Damson after a tree in their family home, and started selling cloud-based business software in 2009.
“Our idea was that eventually you could buy a laptop for a few hundred dollars, so the idea of maintenance contracts wouldn’t really make sense,” Fintan recalls. “All software would also be on the web. That was the future and we should be committed to that. We always thought we wanted to sell technology that we believed in. We wanted to tell customers, that’s how we do it and that’s why we think it’s the best way.”
Damson started selling Google cloud products for businesses before a Google Partner Program existed in Ireland. “I remember seeing what was on offer in the US and thinking, ‘Oh, that’s really cool, I wonder when this will come to Europe,'” Fintan says.
The Google Business product was originally called G Suite and is now branded as Google Workspace. It is presented as an alternative to Microsoft 365 and offers more or less the same functionality. The product’s cloud-based collaboration tools include Gmail, Docs, Drive, Calendar, and Meet, plus a few non-essential additional new ones.
When Google announced its partner program for Ireland in 2009, the brothers were excited, knowing their company would have a business model to follow and sales incentives too. In the enterprise space, Google was an upstart, the David of Microsoft’s Goliath. At first, Google Cloud had just five representatives in the UK and Ireland, compared to around 300 at Microsoft.
With a business partner Rahim HiraniDamson Cloud Ltd was incorporated in April 2011. There were no quick wins – Fintan Murphy describes the early years of the business as “a real slog”, although trading improved from 2016 Winning clients included Zoopla, Brown Bag Films, Daft.ie and Confused.com.
Then came the Covid. In the year to February 2020, Damson Cloud recorded a net profit of €79,000. In the first year of the pandemic, the net surplus rose to €246,000. Year-end trade receivables rose to €384,000 in February 2021 from €229,000 a year earlier, and the Murphy brothers’ combined compensation rose from €174,000 to €194,000.
The Murphys have also kept their operating lows. The founders were the only people on the company’s payroll in 2019/20, and that figure rose to three as business ramped up with the onset of the pandemic. For the requested services, they purchased remote outsourcing talent.
Covid-19 forced companies accustomed to the on-premises server to quickly migrate to the cloud. Fintan Murphy explains that a big part of Damson’s role in the transition was to reassure customers that the change wouldn’t overwhelm them. “People are asking the same questions. Staff want to know what’s happening with their data and how the change will affect their productivity.”
When a business moves to Google Workspace with Damson Cloud, there are three steps to the process. The migration phase involves the analysis of the business, the impacts of the change and the training required. Next comes the security aspect, which encompasses logins, data loss prevention, and protections against phishing and ransomware. The final stage is transition, when Damson identifies how customers can take advantage of Workspace functionality with tools and custom coding.
Any individual or business can set up Google Workspace themselves. Google only sells the licenses, which are a one-time solution. From deployment to change management, you have to do it yourself using Google’s online guides.
Damson Cloud’s pitch to potential customers is that there are many hacks and shortcuts that can only be learned through experience. Fintan Murphy adds that Google uses outsourced support companies to provide first level support.
“This means that front-line support agents tend to have a low level of knowledge of Workspace,” says Murphy. “At Damson, our support engineers are just a click away. With Google, you’re unlikely to talk to the same support engineer twice.”
Another issue with customers new to Google Workspace is data migration. Murphy explains that when Damson migrates a customer’s data, the process takes weeks and can involve hundreds of thousands of emails and terabytes of shared drive data.
When it comes to pricing, there is not much difference between Google Workspace and Microsoft 365. The Microsoft product has four pricing tiers ranging from €5.10 to €18.60 per user per month, while the price of Workspace is €5.20 to €15.60. Some of Google’s products offer more storage than the Microsoft equivalent, but the challenge for Google is that everyone in the company is familiar with Microsoft productivity tools.
For Google, Workspace seems like a labor of love. For financial reporting purposes, Workspace is included in the Google Cloud segment, which also represents Google’s infrastructure and platform services. The division saw revenue growth of 48% to $19.2 billion in 2021, but still posted a loss of $3.1 billion, or $60 million per week.
In the annual report, Google said, “We incur costs to build and maintain infrastructure to support cloud services and hire talent. At the same time, our competitors are rapidly developing and deploying cloud-based services. The pricing and delivery models are competitive and evolving, and we may not achieve sufficient scale and profitability to achieve our business goals.”
Meanwhile, Microsoft 365 is a cash cow. It is grouped under the Productivity and Business Processes reporting segment, which also includes commercial Office products such as desktop application licenses, consumer Office and 365 products, as well as LinkedIn and Dynamics.
In total, the unit increased its revenue by 16% to $53.9 billion in 2021 and its operating profit was $24.4 billion. That eye-popping 45% profit margin indicates Microsoft’s incredible pricing power, despite Google chasing a piece of the stock.
Microsoft is maintaining its market leadership by ensuring that Google Workspace doesn’t undercut the price of 365, and 365 users can be grateful to Google and partners like Damson Cloud for preventing Microsoft from getting a total monopoly power.