One way Google has been successfully making the transition, she said, is by introducing each new product offering loudly, which has helped it get attention in the industry. "That's really key for Google to be taken seriously as a contender in the enterprise space," Grey said.

Also important for Google has been its strategy of releasing new products as betas, which don't have to be perfect and which help the company gain user feedback. "If they can convince the market that they're moving toward an enterprise-ready position and it's free, then enterprises will play and test and give more feedback," Grey said. "I think that's real smart on Google's part."

Grey also said she views Google Apps as a rival to Microsoft Corp.'s software as a service offering, Office Live, but not to its Office suite.

"It is a direct competitor to Microsoft at the Office Live perspective, but not from the Microsoft Office perspective," Grey said. "They are very different."

Office Live Basics is a package of Web-based services from Microsoft including domain names, e-mail and Web tools aimed at the SMB market, while more elaborate Microsoft Office Live Collaboration and Office Live Essentials versions are aimed at larger enterprises. None of the Office Live products include the applications of the widely used Office productivity suites.