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E-mail outsourcing: Your questions answered

Jan 26, 20046 mins
Enterprise Applications

* Reader responses to outsourcing e-mail

I recently wrote about my company outsourcing our e-mail to an application service provider.  This topic must be on the minds of some of my readers because I received quite a bit of mail when the article ran.  This follow-up article addresses some of the questions and comments that readers sent me.  To help answer your questions, I spoke with Eric White, principal of Utopia Systems, the company we use for our outsourced e-mail.

Reader:  Our IT shop has always looked at alternative methods to do business and may consider doing the same.  I’m curious as to how many locations you have and the total number of mailboxes your company uses.  We have 18 locations spread across the U.S., Canada and Puerto Rico, with about 1,200 mailboxes.

Linda:  My firm is quite a bit smaller than that, with about 15 mailboxes in all.  We have one main office, but several employees work from home or the road.  Location doesn’t matter, however, since we can conveniently access our mail from anywhere via VPN or Web access.

Eric:  This is the perfect type of organization for an outsourced e-mail solution because they are geographically dispersed.  Over 50% of Utopia’s customers have offices that are geographically separated.  As Linda hints, we have already invested in a solid remote access system that supports users from all over the world.  We chose our Internet provider due to that fact that it guarantees low latency (better responsiveness) worldwide.  Our standard Exchange Server configuration supports 2,000 users and we offer a secure Web-based administration system.

Reader:  I agree with your view that small companies generally don’t have IT resources for systems such as Exchange. However, I am curious if your company has any security concerns. For example, does Utopia keep its servers and staff “in-house” or does it, in turn, outsource to another company? And, with the growing offshore trend, is your company concerned about content security (i.e., who sees your company’s e-mail and other information)?

Linda:  No, we are not concerned about security.  If anything, we feel we have better security with an outsourced solution than we had when we hosted the e-mail ourselves.  We are too small a company to have dedicated resources to support applications such as e-mail.  We always felt like we could be missing something, like a critical patch.  Indeed, the factor that led us to outsourcing is that a virus took down our in-house Exchange Server and kept us locked out for a week.  Microsoft Exchange Server is a complex beast, and you have to nurture and care for it far more than we have the resources for.

Eric:  We are more conscious of security than most other companies.  As a result, we employ the latest technology for firewalls, intrusion detection, monitoring, security auditing and applying the latest patches from Microsoft.  The customers benefit from all of this directly.  Internally, no customer has access to any information other than his own.  We manage all of our own “stuff,” from the servers, to Exchange and our network, all the way to our Internet provider.  If something is wrong, we know about it and can take action. Many providers do outsource and customers should be aware of this.  It definitely makes a difference from a (quality of) service level perspective.

Reader:  Your testimonial for outsourcing Exchange said that it only cost “a few dollars per month,” so I looked at the pricing on the Utopia Web site.  For my institution, with 10,000 Exchange mailboxes, the suggested pricing was $25,000 per month per 2,000 users. This works out to $125,000 per month, or $1.25 million per year, to have Utopia outsource my Exchange environment.  My annual cost for internally supporting for Exchange is in the neighborhood of $250,000 per year. 

Our internal solution utilizes higher end server hardware and a number of other benefits including automated account provisioning for incoming student classes.  Of course, the Utopia site said it would offer volume discounts, but on the surface, my cost is one-sixth of the pricing [Utopia has] published.  As your article indicated, the outsource path is not for everyone.  It seems to me that the outsource path may work best for small and midsize businesses.  We’re at a level of scale that allows us to dedicate 2.5 [full-time equivalents] to administer our Exchange environment.  As much of a pain as it is to maintain, institutions like mine do save a considerable amount of money by simply managing e-mail internally.

Linda:  With such a large number of users, it probably is more cost effective to maintain the systems in-house.  Remember, I was suggesting that outsourcing e-mail is good for small and midsize companies that can’t afford dedicated resources to support their systems.

Eric:  One of the cost advantages small and midsize organizations have when using an outsourced e-mail solution, is the provider has economies of scale, and can provide service at relatively low costs, for large numbers of users.  Large organizations already have this advantage, so there should be other reasons to outsource other than from a pure dollars standpoint.  Many organizations have had to make personnel changes, shift resources, or appropriate resources for business-critical projects.  Applications that are considered the “plumbing” are viewed as business critical, but not strategic in nature.  This makes messaging a viable candidate for outsourcing.  In addition, when you are talking about thousands of users, the cost to the customer would be addressed using an entirely different cost model.

Reader:  I have a one-word suggestion for you: GroupWise. I have a client with about 350 to 380 users on a single GroupWise server, and the time their system administrator devotes to managing their entire e-mail system is less than one hour a week. They have never had a virus infection or a breakdown in five years. Microsoft Exchange? Now that’s a poorly designed piece of junk… Even if you outsource it, you’ll still be paying way too much for e-mail service.

Linda:  We had been talking for a while about getting back onto GroupWise, a product we used until about 1995.  Before we could make the move, however, our Exchange Server crashed and getting on another Exchange host was the fastest way to get us up and running again.  Literally, it took less than half a day to get our accounts set up and our old e-mail transferred over.  We may still plan to move to GroupWise if we bring e-mail in-house again.

Eric: GroupWise is a very stable environment for e-mail and scheduling, and can be low maintenance; however finding the expertise available to support that environment is becoming more of a challenge.  Exchange is more scalable at the high end (thousands of users) than GroupWise on single server.  The reason why most viruses are targeted towards Exchange and Outlook is because they have the largest installed base of users worldwide.

Linda Musthaler is vice president of Currid & Company.  You can write to her at