United takes flight with outsourced Web-mail

COLORADO SPRINGS - The world's largest airline last week announced plans to replace its aging client/server e-mail system with a Web-based service from USA.Net. This groundbreaking deal may presage major changes in how large companies provide e-mail to their workers.

The five-year outsourcing arrangement between United Airlines and USA.Net - hailed as the largest ever - initially involves 20,000 seats but is expected to grow to more than 100,000 seats as the airline's entire workforce gets wired.

The deal is also certain to catch the attention of established corporate e-mail vendors Microsoft, Lotus and Novell as they continue to further Web-enable their products in response to the fledgling e-mail outsourcing industry, which also includes Critical Path in San Francisco and Mail.com in New York. While these newer e-mail hosting companies already manage millions of e-mail boxes for consumers and smaller businesses, until now they have not cracked the enterprise market. United is the first large corporation to opt for a Web-based messaging service as its primary e-mail solution, say industry watchers, who predict that others will follow soon.

"This is the biggest deal involving a company handing over responsibility of hosting employee mailboxes to a third party," says Mark Levitt, research director of collaborative computing at International Data Corp. in Framingham, Mass. "It's a sign that the hosted e-mail market is not just a business model being thought about . . . but is something that's actually happening."

John Street, president and CEO of USA.Net, says his company has several more enterprise deals in the works. "We'll have a couple other deals coming this quarter and quite a few more coming in the early part of next year that are as large as the United deal," he claims.

The two companies would not disclose the financial terms of the deal. But USA.Net usually charges around $5 per mailbox, per month, terms which would mean $1.2 million per year for United's initial 20,000 users and more than $6 million per year for all of the company's employees.

United currently runs Hewlett-Packard's OpenMail software on two servers in its Chicago data center and provides e-mail service to 20,000 of its management personnel. Most end users access their e-mail through Microsoft Outlook.

The company's mobile work force, including its pilots and flight attendants, cannot access the OpenMail system. One of the drivers behind United's decision to migrate to a Web-based service was to provide e-mail access to all its employees from anywhere in the world over the Internet.

"If you look at our mobile work force, they don't have very effective means to communicate with their management," says Nirup Krishnamurthy, director of business systems development at United's Information Services Division. "This provides a whole new avenue for them, and it eliminates a lot of paper."

Web-based e-mail is ideal for companies such as United that have so many mobile workers, says Steve Robins, a senior analyst with the Yankee Group in Boston. "The United deal hits the sweet spot for outsourced messaging because it deals with people who are not sitting at their desks all day long, but people who need to have access to information on the road," he says. "It wouldn't make sense for these people to have client software on a laptop to use to log on to an e-mail system."

By outsourcing its e-mail, United also will save money and free up IT staff to work on other projects.

"One of the things we've been thinking about is: What is our core competency?" Krishnamurthy explains. "United Airlines has always been - within the travel industry - at the forefront of trying to take advantage of technological innovations to improve our business. We see this deal as one more step in that direction."

United officials say they chose the USA.Net service for its reliability and scalability. USA.Net will provide its Enterprise Messaging service, which includes encrypted mail sessions, junk mail blocking, virus scanning, e-mail forwarding and calendaring. United's staff will handle administrative functions, such as setting up mailboxes, but USA.Net will provide round-the-clock customer service.

United will begin moving its OpenMail users to the USA.Net service early next year.

Web-based e-mail is not for everyone, says Paul Hoffman, director of the Internet Mail Consortium. "United is making a tradeoff of features vs. scalability and ease of use," he says, pointing out that client/server e-mail systems offer more features and tighter security. "I think there's plenty of market for both types of products."

However, if many enterprises migrate to Web-based e-mail services, that could mean problems for the established e-mail software vendors. This deal "shakes the ground that both Lotus and Microsoft live on everyday," says IDC's Levitt, pointing out that United could have bought the Notes/Domino or Exchange/Outlook platforms instead.

Lotus officials minimized the concern, noting that they are adding features to Domino that will make it a better solution for outsourcing.

"At the top of the list for the next release of Domino is to make it more accessible in hosted environments," says Ed Brill, senior product marketing manager for Domino. He adds that Lotus also is "making it easier to access Notes Mail remotely," as a way of competing against Web-based e-mail services.

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