E-mail is leaving the building - Company Business and Marketing

With e-commerce, portals and knowledge management, often there is not enough IS staff to go around.

At Ohio-based Dayton Aerospace, the staff prides itself on delivering leading-edge senior management consulting and technical services--not e-mail. "The time I spend working on e-mail," accounting manager Tony Griffin says, "is time I don't spend working on accounting systems, which is my primary job."

So Griffin, who found himself frequently pulling double duty as the network administrator, last year turned to an Internet messaging services provider (MSP) for help. The vendor designed an outsourced solution for his Novell GroupWise system that promises to regulate costs, add help-desk support and maintain the necessary hardware and software. Concerns about security and reliability also were addressed.

"I knew it didn't matter whether the e-mail server was at the end of the hall or across town," Griffin says.

Studies show that organizations like Dayton Aerospace are becoming more common, as e-mail's role in day-to-day business--along with its cost and complexity--increases. According to an industry report by the Gartner Group, an international high-technology analyst, 40% of companies (65% for midsized corporations) will contract with an outside supplier to manage at least some part of their e-mail budgets by 2001. The North American market alone for outsourced messaging services could be worth $2.6 billion.

"E-mail outsourcing," the study's author wrote, "has moved from idle curiosity to serious consideration."

Recently announced outsourcing deals by United Airlines and Ford Motor Co., and new statistics from Fortune 500 and Forbes 100 companies, reflect that trend. Creative Networks, Inc. (CNI) says its latest figures show that e-mail outsourcing has climbed nearly 14% during the first quarter of this year vs. the second half of 1999. The consulting firm's IT market research survey concludes that the number of companies managing their e-mail systems internally has dropped from 95% to 81.5% during the same time frame.

"Organizations are finding they need to do e-commerce, portals and knowledge management, and there is not enough IS staff to go around," says Mike Osterman, a CNI analyst. "Messaging does not provide the same return on investment anymore."

Gartner Group's Joyce Graff agrees, calling e-mail an overhead service. "It's an essential piece of overhead," says Graff, the vice president and research director for electronic mail, "but it's not bringing money in the door."

As a result, Graff says, both young and established organizations are signing outsourcing agreements to ensure they have the latest messaging technology to communicate effectively with their clients, associates and business partners. The benefits have proven real over time, and clients are free to focus on what they do best.

"It's part of an organization's effort to focus on its core competency," she adds. "Instead of worrying about maintaining the e-mail system, it can focus on cool ideas."

Increased system reliability is another reason companies look beyond their in-house IT staff, Graff says, equating email with the telephone. Service uptimes of 85%, acceptable two years ago, are no longer.

"Today, people have little tolerance for e-mail being down," Graff says. "We expect dial-tone service, and we expect our messages to get there lickety-split."

Few companies, though, have the technical or financial resources necessary to deliver on that expectation. Software and equipment are expensive and/or difficult to integrate, and skilled IT workers come at a premium in a tight labor market--if they are available at all.

Companies have instead turned to outsourcing companies, which can leverage the power of the Internet and increasing bandwidth to create economies of scale--offering affordable, secure, fully scalable and feature-rich solutions. Where procurement and deployment of an in-house system for several thousand users will typically take months to complete, a similarly sized outsourced solution can be operational in just days.

At the same time, e-mail outsourcing is not an all-or-nothing proposition, requiring clients to either relinquish control or use a preferred e-mail program (e.g., Microsoft Exchange, Lotus Notes and Novell GroupWise) and its related collaboration services. Rather, companies can take a flexible, a la carte approach if they choose, and offload only the components that make sense, given their IT budget and staffing issues.

For example, Bryan Cave LLP, a top U.S. law firm with offices internationally, decided to outsource its e-mail firewall to a company with demonstrated antivirus expertise, after an encounter with malicious code last year.

"That incident definitely got us motivated. We have one million messages a month, so it's very important that we catch viruses before they do any damage," says Robbie Lewis, the firm's e-mail administrator. "Outsourcing allows us to keep our IT staff smaller, and we can operate more efficiently."

Outsourcing also proves attractive for organizations that need to provide e-mail access for remote or distributed users, or companies that have completed an acquisition or merger and need to integrate new users operating on different platforms. Firms wanting to add fax capabilities, collaboration services, content filtering (for inappropriate attachments, offensive/threatening language) and spam blocking to existing e-mail systems--without the expense of additional hardware, software or IT personnel--are similarly drawn to outsourcing.

Another incentive is there are no upfront costs to deploying an advanced messaging system, complete with Web-based administration tools and state-of-the-art security protocols, or lengthy testing and evaluation procedures. Clients simply pay a monthly fee, typically on a per-mailbox basis, once the service is established.

Because e-mail outsourcing is something of a nascent industry, there are some caveats. The most important: choose an e-mail outsourcing vendor with solid messaging experience and industry expertise.

Simply contracting with an Internet services provider or applications services provider may not be the best decision if they do not specialize in messaging, have experience in serving the corporate market, or have the capabilities to understand your business needs beyond the basic or the obvious.

For these reasons, companies that have already successfully incorporated outsourced solutions do not report cost as the crucial factor in making the outsourcing decision. While cost was a factor cited by companies interviewed by CNI for a recent study, it ranked seventh out of eight messaging-system attributes. Rated higher were adherence to industry standards, ease of administration, the vendor's reputation and scalability. Only 52% of respondents ranked cost as "extremely" or "very" important, compared with 98% for system uptime.

"Uptime, not cost, is by far the most important attribute from a messaging system," Osterman says. "Organizations are realizing that the cost of a messaging system isn't just the sum of the checks they write to buy and operate a messaging system. Instead, they're realizing that downtime is an important consideration--and they're willing to pay more to avoid it."

Fallon is vice president of Mail.com Business Messaging Services, New York.

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