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When Google CEO Sundar Pichai handed Diane Greene the keys to the company's fledgling cloud business three years ago, it was supposed to mark the internet company's arrival into enterprise computing.
For years, Google had struggled to get out of its own way in business software, hamstrung by a developer-centric culture that prioritized automation and fast, easy-to-use products over communication with business buyers and users. The huge profit margins in the online advertising business made it hard to justify loading up on expensive salespeople and marketing campaigns.
So while Google was dithering alongside a large group of also-rans, Amazon Web Services was running away with cloud computing. Microsoft deftly moved into second place by pivoting its traditional software licensing business to a subscription-based cloud-first model.
Greene was meant to change all that. She brought with her serious enterprise credentials as the co-founder and first CEO of VMware. In some sense, VMware helped kick off the cloud revolution by pioneering a technology called "virtualization," which allowed the operators of data centers to squeeze more functionality out of the server hardware they bought and maintained. Salesforce CEO Marc Benioff has said "there's no more successful female executive in Silicon Valley" than Greene.
Pichai wrote in his introductory blog post in November 2015 that "Diane needs no introduction." She would get her own dedicated sales team, pulling cloud software sales out from under the control of the core advertising business.
On Friday, that plan came to an abrupt halt when Greene announced that she will leave her post in January. Greene will be replaced by Thomas Kurian, who recently left a top executive role at Oracle, where he spent 22 years.
During Greene's tenure, Google increased its annual capital expenditures from $10 billion to over $13 billion, and went on a hiring spree — the cloud group has added more people than any other at Alphabet over the last two years. It got some key customer wins and built out several important functions for selling to enterprises, including professional services, training and marketing.
Despite all that, Google continues to struggle. People who follow the industry say it's a two-horse race between Amazon and Microsoft, with Google failing to keep pace in a cloud infrastructure market that Gartner expects to grow to $39.5 billion next year from $31 billion in 2018. In terms of market share, Google has yet to crack double digits.
"They figured out and monetized search like nobody probably ever will, but I don't think they care about the enterprise," said Tom Siebel, the co-founder of software company Siebel Systems, which Oracle acquired for almost $6 billion in 2006. Siebel, who has known Greene for about 15 years and is now CEO of cloud software company C3, said that when it comes to helping big businesses solve their infrastructure problems, "Google is just not a factor."
Greene put a positive spin on last week's announcement, saying that she was among the Google employees to interview Kurian for the job, along with Pichai and Urs Hoelzle, Google's eighth employee, who serves as senior vice president of technical infrastructure.
Greene also said that when she took the position in 2015, she told family and friends that it would be for only two years.
One big challenge for Google's cloud business has been an unclear direction, highlighted by tension between Pichai and Greene, according to former employees and other people with knowledge of their relationship who asked not to be named because of the sensitivity of the topic.
It's been particularly awkward because both executives are also on Alphabet's board. Greene has been a director since 2012, three years before Google acquired her software company, Bebop, and installed her to lead the cloud business. Pichai, a 14-year Google veteran, didn't join Alphabet's board until 2017.
Two former employees described a recent disagreement between the two over a controversial contract with the Department of Defense, dubbed Project Maven. After employees and outsiders called on Google Cloud Platform to cancel the contract, Pichai wanted to listen to the protestors, the people said.
Greene initially resisted these calls, however, as the project was both a lucrative deal and an important on-ramp to future government work, regardless of its effect on Google's reputation or employee morale.
CNBC requested comment from Greene, but Google didn't grant access. Google declined to provide a statement beyond Greene's blog post announcing her departure.
Eventually, the company decided not to renew the contract. Google then established "ethical principles" for the use of artificial intelligence, which forbids Google from developing AI for use in weapons but allows the company to pursue military contracts in other areas such as "cybersecurity, training, military recruitment, veterans' healthcare, and search and rescue." Greene and Pichai were in tight agreement when it came to the drafting of these principles, a person familiar with the process says.
Greene also provoked opposition as the cloud sales strategy evolved.
Tariq Shaukat, president of partner and industry platforms in the cloud business, told CNBC that representatives under Greene have increasingly been joining other Google teams, like advertising and maps, in potential customer conversations. "We're finding a lot of demand from customers and success with going in as one Google team," he said.
However, Greene's efforts to make other Google business partnerships contingent on some kind of business with the cloud unit frustrated other department chiefs, people briefed on those discussions told The Information.
Google's lack of big deals has puzzled analysts given how aggressive the major software vendors have been at opening their wallets to win in the cloud. In two of the year's biggest deals — IBM's $34 billion purchase of Red Hat and Microsoft's $7.5 billion acquisition of GitHub — Google was involved in talks but ultimately came up short, according to people familiar with the matter.
Greene wanted to buy GitHub but Pichai was less enthusiastic, unclear why Google would spend big money to get into the market for developer tools, said a person close to the business. Google's bid for GitHub, whose cloud software lets programmers collaborate and share code, came in at just under $6 billion, and it declined to raise the price after being told of Microsoft's offer, the person said.
Some people in the cloud group pushed for Google to pursue MuleSoft, which was acquired by Salesforce for $6.5 billion in March, but Greene wasn't interested, the person said. MuleSoft's software helps connect applications that are on disparate platforms. Google already owns Apigee, a MuleSoft competitor, which it purchased in 2016.
Red Hat and GitHub would have brought in large open-source communities that could have helped evangelize Google's cloud platform to developers inside companies, potentially leading to more adoption.
But they wouldn't have solved a deeper problem — how to start selling like an enterprise software vendor.
"Google just needs to buy a company that gives them a really good start building a global enterprise capability," said Frank Slootman, former CEO of cloud software company ServiceNow and Data Domain, which he sold to EMC.
Google is an engineering machine. It's the world's best-capitalized research lab, loaded up with Ph.D.s in artificial intelligence who are developing the technology that will define the future. People who aren't software engineers, including those in sales, can often feel like second-class citizens, according to former employees.
At the time Greene joined, Google had little infrastructure for selling into businesses, and that function was controlled by the advertising unit. Numerous people who have dealt with Google's cloud salespeople over the last couple years told CNBC that while AWS and Microsoft are geared toward serving customers and responding quickly to their requests, Google touts its own technology, selling what it thinks clients need.
Two former Google employees said that Greene was in a tenuous spot because, among Alphabet's top brass, there's little understanding for what it's like to sell to large businesses. Another ex-employee said one reason they left was because of Google's disconnect with customers.
One person who might have helped figure out what enterprises need was Diane Bryant, who joined as Google's operating chief from Intel's data center business in November 2017. Bryant spent 13 years at Intel and has a broad set of skills across finance, technology and cybersecurity. She was often discussed as CEO material. Bryant did not respond to requests for comment.
But Greene, who is considered a product visionary, has a reputation of being hard to work with dating back to her days at VMware, multiple people said. Jerry Chen, an investor at Greylock Partners who worked for Greene at VMware, said that his former boss "pushed her team to think bigger," and that while she challenged him, he became a better executive for it.
At Google, Greene and Bryant clashed almost from the beginning, according to people with knowledge of the matter. Bryant ended up with the limited roles of running support and information technology, two people said, and lasted only seven months at the company.
Still, Google made progress under Greene, winning at least pieces of the public cloud business from numerous companies, including Apple, PayPal, Etsy, Evernote, Fitbit, HubSpot, Shopify, Twitter and Zendesk.
"We went from people not even knowing that this was an area where Google had an offering, to essentially now, every time that people talk about cloud, they talk about the big three," said Alison Wagonfeld, Google Cloud's marketing chief.
Google is playing squarely into the emerging multicloud theme, vying to provide services to companies that don't want to be wed to a single provider. For example, Google has won business from some Amazon cloud customers, like Salesforce and The New York Times.
Benioff told CNBC that "Google is now an enterprise player, there's no doubt about that." He attributes that position to Greene and said that while Google needs to ramp up its hiring in sales to catch up with its rivals, "in many accounts, they've shown up extremely competitively."
But frequently you'll hear stories like the one told by Workday's David Clarke.
In 2016, months into Greene's tenure, the finance and human resources software vendor considered Google when it was picking out a preferred public cloud. But it passed and chose AWS instead. At the time, Google was in the early stages of commercializing its cloud, said Clarke, Workday's senior vice president of technology and infrastructure.
"They hadn't thought through all the operational, economic and practical requirements that companies, especially bigger companies, would have," Clarke said in an interview. He said that Google has improved since then and if he were making the decision today it would be "a close call."
Autodesk, which has used Amazon's cloud for years, turned to the Google cloud for one initiative in 2016. But the company stuck with Amazon for primary workloads, a person familiar with the matter said. And Zendesk announced an application-development platform last week but chose to launch it on AWS.
"If you analyze the depth of their [Google's] stack globally, for example, it's leaner than AWS can offer," said Mikkel Svane, Zendesk's CEO. "That's one example of where they [AWS] stand out."
In 2017, Google held just 3.3 percent of the overall worldwide cloud infrastructure market, according to Gartner Research. While Google picked up share from the prior year, it was still behind way behind AWS and Microsoft and trailed Alibaba.
It doesn't help that Google has become less transparent of late about the size of its cloud business. In February, the company said that between Google Cloud Platform and the G Suite bundle of productivity apps for businesses, it was generating more than $1 billion in revenue per quarter. But since then — nothing.
Kurian's hire is a clear sign that Google still recognizes the importance of capturing big dollars from enterprises as they move from traditional data centers to the cloud, and that it still has a compelling story to tell about how businesses can take advantage of Google's sophisticated technology.
There are big retailers and other large businesses that would rather not funnel more money to Amazon, leaving Google to compete with Microsoft for the bulk of those workloads.
In a note to clients on Sunday, Deutsche Bank analysts estimated that the Google Cloud Platform and G Suite will pick up $9 billion in revenue this year, up 30 percent from last year. Another former employee with knowledge of the business painted a less rosy picture, estimating that the full cloud business will book nearly $7 billion this year.
Regardless, as Greene said in February at a Goldman Sachs event, "It's pretty clearly early days."
— CNBC's Ari Levy and Alex Sherman contributed to this report.