Tough sell for e-mail outsourcing

If you listen to some proponents of e-mail outsourcing you might think it won't be long before most corporations start ditching their messaging servers. Hand that IT headache off to an outside contractor, they say, and you'll save a bundle of money and untold staff time.

Listen to a lot of e-mail managers, though, and you'll wonder what the outsourcing fuss is all about.

Reality lies somewhere in between, of course. There is no denying the recent growth and potential of e-mail outsourcing, or the fact that most administrators continue to eye the option with more skepticism than signed contracts.

The providers and proponents of outsourced e-mail services have enjoyed a steady stream of press attention in recent months. The naysayers, however, who are not hard to find, remain largely unimpressed.

"You lose control of your e-mail environment to some extent," says George Taylor, a network analyst at Black Hills Heath Care Network in Spearfish, S.D. "If your e-mail provider's system dies, you're at their mercy. If you own the system, you can control how fast it gets fixed."

This is a common theme among the antioutsourcing crowd. "Loss of control" is a difficult psychological hurdle to overcome, says Julian Smith, IS director at Thompson & Co. in Memphis, Tenn., an advertising agency. "All of us technical types like to be in control."

Although the outsourcers contend that their highly focused e-mail expertise and strict service agreements should allay these concerns, Taylor and Smith say they cannot envision their organizations making the leap into outsourced e-mail any time in the foreseeable future.

They may be missing out on significant benefits, at least according to the outsourcers and their backers among e-mail industry analysts.

A research report by Creative Networks, Inc., of Palo Alto compared the costs of maintaining 5,000 Microsoft Exchange seats in-house with the costs of outsourcing that same network to Compaq. The latter is almost 50% less expensive, according to the research house. The report was funded by Compaq, which provides Exchange messaging services through its recent acquisition of Digital.

Claims of savings of that magnitude and more are regularly bandied about by e-mail outsourcers, whose ranks include USA.Net of Colorado Springs, Critical Path and Fabrik Communications of San Francisco, dotOne of Salt Lake City, AllegroNET of Dayton, Ohio, and Electric Mail Company of Vancouver, British Columbia.

In addition to such savings, the outsourcers tout a variety of other benefits:

predictable costs that make budgeting easier and more reliable.

the outsourcers, not customers, test and implement software upgrades.

users get the kind of scalability and up time that solo organizations are often unable to provide.

These purported benefits are hardly secrets to most e-mail administrators, but they have yet to be swayed in large numbers. With everybody's business and network needs being different, so, too, are the reasons cited by those who are resisting the outsourcing trend.

"I've wondered whether this movement would hit the e-mail world, and for a lot of companies, it probably makes sense," says Dave Byrkit, e-mail administrator at ITT Avionics in Clifton, N.J. "In our case, e-mail is bundled with our general client/server support, and no one has suggested outsourcing any of that."

Like a number of administrators interviewed for this story, Byrkit has reasons specific to his business to explain his lack of interest in outsourcing.

"Being a defense contractor, we have security issues that would eliminate outsourcing [e-mail] to just any general service provider," he says. "We would require a service tailored to our defense business."

Issues that may seem small to the outside observer can tip the scales in favor of keeping e-mail in-house, according to naysayers.

"Because of the physical size of some of the graphics files we receive, we need to have control over our mail system," says Smith of his ad agency. Some Thompson & Co. users get e-mail attachments of more than 100M bytes.

"We have tried the FTP game," he says, "but most of the animators and freelancers [we deal with] don't know how to do this."

Small to mid-size companies are the most likely to outsource their e-mail today. Experts predict these companies will continue to present fertile soil for the outsourcers, although, even here, there is no guarantee of a mass transition away from in-house e-mail.

Ray Pasley, supervisor of network services at Kansas City Power & Light Co., keeps his organization's e-mail flowing with one full-timer and a couple of helping hands. When weighing those limited costs against the uncertainty of an outsourcer delivering on service promises, Pasley says he "comes down on the side of keeping e-mail functions and systems inside."

Then there are the concerns that don't appear on a balance sheet.

"I believe one of the big drawbacks to outsourcing is the lack of personal attention users will receive," says Smith. "Users, as well as the company, become a number, which can hurt service."