Outsourcing: Pros and Cons

Although a great deal of ink has been devoted to the topic of outsourced messaging system, the vast majority of organizations continue to manage their messaging system in-house. Here the cases for and against outsourced messaging from an economic perspective:

Why not to outsource? Outsourcing a messaging system can be more expensive than internal management in the following scenarios:

* Organizations that have a large number of messaging system users, typically in a range from 10,000 to 15,000 users. This is because the servers and other infrastructure elements in the system are typically fully utilized, reducing their per-user cost to a minimum. Further, large organizations can typically negotiate relatively low licensing costs on client software.

* Organizations that have an older messaging system, such as a file-sharing system like Microsoft Mail or Lotus cc:Mail, that have no plans to upgrade the system to a client/server system.

* Organizations that have relatively few IT initiatives planned or underway, such as the implementation of an enterprise directory, e-commerce system, or an extranet. In other words, if the IT department's primary task is messaging management, it can make economic sense to maintain the system internally.

* Organizations that provide full messaging client functionality to all of their users instead of providing full-client capability to infoworkers and Web-only access to other workers.

Why outsource? Outsourcing a messaging system can be less expensive in the following situations:

* Organizations of fewer than 10,000 users, particularly in organizations that have fewer than 3,000 users. It's often the case that smaller organizations have not fully utilized their messaging infrastructure resulting in higher per-user costs to provide messaging functionality.

* Organizations that upgrade their messaging system on more or less the same schedule as the vendors of their messaging system introduce upgrades. For example, the upgrade to Exchange 2000 requires a simultaneous upgrade in the operating and directory infrastructure - letting an outsourcer do this permits a faster and less expensive upgrade than doing it internally.

* Organizations whose IT departments have a full plate. Although messaging is mission critical in most organizations, it typically does not provide the same level of value to an organization as other initiatives, such as customer-facing systems. Think of messaging like electricity. It's critical to the proper functioning of an organization, but do you want to generate it yourself if you have lots of other projects that you need to get done?

* Organizations that want to reduce costs by providing no more messaging functionality than is required for a particular job function. While an organization can provide different levels of access to different types of workers through internal management, doing so can be more expensive than it's worth.

We will be running another of our mini-surveys in September to determine attitudes toward outsourcing. If you'd like to participate in that survey, and if your organization has at least 50 messaging users, you can sign up at the URL below.

Michael D. Osterman is the principal of Osterman Research, a market research firm that helps organizations understand the markets for messaging, directory and related products and services. He can be reached by clicking here.

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