Pushing the Envelope
Adecade ago, workers who wanted computerized communication with their cohorts were likely to sign up for MCI Mail or similar offerings. Despite its heritage as an outsourced service, however, today E-mail is one function that most companies seem unwilling to leave to others. “And yet,” argues Scott Chasin,
chief visionary for USA.Net, “E-mail is an application like any other, and one that is more easily outsourced because there are well-established standards.”
Chasin and his competitors are working hard to drive home that message, and with some success. Companies as large and diverse as American Express Co., United Air Lines Corp., and Circuit City Stores Inc. have all signed contracts with outsourcers to provide E-mail to thousands of employees, and most analysts say the approach is even more appealing to small and midsize companies.
The benefits of outsourced E-mail are similar to those of other forms of technology outsourcing: better reliability, lower cost of ownership, and the ability to focus internal staff on more important tasks. A bevy of communications standards makes it relatively easy to provide Web- based E-mail, or to host proprietary systems off-site. And vendors are touting prices as low as $5 per mailbox per month, whereas internally supported E-mail can cost hundreds to thousands of dollars per user per year, according to The Radicati Group Inc., a Palo Alto, Calif.-based consultancy.
Therefore it’s not surprising that companies that specialize in outsourced messaging services, including USA.Net, Critical Path Inc., Mail.com, and others, are experiencing triple-digit revenue growth. Traditional outsourcers such as IBM Global Services and Compaq, as well as most telcos, are also pursuing the market. Yet, despite the advantages and the competition, fewer than 5 percent of large companies currently outsource their messaging, according to David Ferris, research director at Ferris Research, in San Francisco. “It absolutely makes sense to outsource it,” he says, “and five years from now it will be common.”
A Top-Line Boost
For that to happen, says Ferris, vendors must do a better job of understanding the market. “Most are out there selling purely on cost savings,” he says, “but customers are more focused on reliability, security, and predictability of costs.”
In fact, some companies view outsourcing as a way to boost top-line potential. For instance, Circuit City recently gave thousands of its sales associates access to Web-based E-mail from Critical Path (www.cp.net), in an effort to improve training and communicate details about sales promotions more effectively. The Richmond, Va.-based electronic- products retailer hopes that more information will result in more sales.
Using an E-mail outsourcer on a limited basis appears to be the method of choice for many companies, and is “a great way to get comfortable with the idea,” says Maurene Kaplan Grey, senior research analyst at Gartner Group Inc. And companies do seem to be getting more comfortable. A Gartner survey conducted in late 1998 found that 73 percent of respondents wouldn’t outsource any component of their messaging systems. Eighteen months later that figure had dropped to 56 percent. One major inhibitor, Grey says, is security. “There is so much intellectual property in e-mail,” she says, “that companies are hesitant to outsource.”