When global staffing firm Adecco Group began an effort one year ago to consolidate and outsource its five data centers into one, Dave Bossi came to the realization that moving the data center would also move three separately managed Microsoft Exchange e-mail servers of different versions and a fourth legacy e-mail technology—with potentially huge disruption to 10,000 e-mail users. Bossi, the North American vice president of IT, thought this might be an opportunity to rethink the company’s e-mail strategy. “E-mail tends to get lost in the mix. It becomes an afterthought,” Bossi says. Unless, of course, something goes wrong.
Bossi’s case for outsourcing broke down like this: If Adecco moved the e-mail servers to a separate outsourced provider, the e-mail systems would be unaffected in the event of any trouble (like network overloads) at Adecco’s data center. Having a dedicated e-mail provider also makes administering e-mail accounts, managing servers and handling frequent software patches more efficient and less dependent on other data center resources. It shifts the responsibility for malware protection to a specialist—and eliminates the need to manage anti-malware appliances. CIO Alwin Brunner liked Bossi’s logic. Adecco is consolidating its four e-mail platforms into one, which is hosted by USA.net (separate from Adecco’s outsourced data center that IBM manages).
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Today, Bossi and Brunner say they’re very happy with the performance and lower cost of e-mail outsourcing. For example, Adecco cut its e-mail administrator staff in half to three people and repurposed much of the physical infrastructure to other projects, saving thousands of dollars and eliminating the need for future equipment purchases.
Like Adecco, an increasing number of large enterprises are deciding that e-mail is mission-critical but is plain-vanilla enough to be outsourced, says Mark Levitt, vice president of collaborative computing at IDC, (a sister company to CIO’s publisher). The proliferation of malware is also pushing the trend, says Don DePalma, president of consultancy Common Sense Advisory. Now that spam accounts for more than half of all e-mail messages, many businesses are looking to outsource message filtering because the internal burden has gotten too great. This is often the first step a company takes toward eventually outsourcing the entire e-mail burden.
Smaller Firms Lead the Way
Small companies—those with fewer than 100 employees—have gotten the jump on outsourcing e-mail, IDC’s Levitt notes. More than half of all small-business e-mail accounts are now outsourced or under consideration for outsourcing, according to a recent IDC survey. Lack of IT resources tends to drive small companies toward outsourcing much of their IT operations, and e-mail has gone along for that ride.
The Arthritis Foundation is a case in point. Four years ago, “we were spending all of our time keeping the systems running, not bettering the foundation’s goals,” recalls VP of Strategy Management and CIO Marla Davidson. “We realized we could get a lot more depth from our staff by using a managed service provider for those operations,” she says. Outsourcing also reduced the risk of failure: “We had just one e-mail admin, so if that person was on vacation or got sick, we would just hold our breath,” she says. Now, the foundation gets 24/7 coverage it didn’t have before.
“Our costs declined and our service levels improved. Plus we get more disciplined management and better security,” Davidson says, letting the foundation now support some Sarbanes-Oxley rules that it couldn’t afford before. (While not obligated to follow them, executive management saw several as beneficial governance approaches, she says.)
Originally, Davidson outsourced all IT operations to one vendor. But after several years of seeing the systems actually outsourced, it became clear that some, such as e-mail, could easily be handled separately. “We now view Exchange as a commodity service. It’s OK to be separate,” Davidson says. So when the foundation asked for bids to take on the outsourcing as part of its contract renewal two years ago, she separated e-mail into its own RFP to open up more competition.
Examples of E-Mail Outsourcers
Among the vendors offering e-mail outsourcing, many are local or regional providers serving the small-business market, which led the adoption of this approach. However, a growing number of firms also serve midsize and large enterprises. Those that deliver Microsoft Exchange hosting include 123Together.com, Apptix, AT&T’s USi division, Connectria, Intermedia.net, Orange Business Services, Rackspace, USA.net and Verizon Business.
Providers of IBM Lotus Notes hosting include Connectria, Prominic.net and Riverwatch. For enterprises that are willing to move away from the established e-mail applications (Exchange, Notes and Novell GroupWise), Google recently began providing a business-class version of its Gmail service.
Many providers also offer remote monitoring and management of internal e-mail servers, for enterprises that want to keep ownership of e-mail systems onsite. Examples of those supporting midsize and large enterprises include AT&T USi, Azaleos, Cognizant, Connectria, Dimension Data, Hewlett-Packard and IBM.
Making Your Case
The case for outsourcing e-mail has been harder for enterprise IT to make, IDC analyst Levitt notes. “It’s not easy to hand off; it’s as core to IT as you can imagine,” he says, with a lot of resources and expertise already invested. That investment acts as an anchor that keeps the e-mail servers and administration in-house. However, as large enterprises consider consolidation, system upgrades or large outsourcing efforts, it makes sense to consider an e-mail outsourcing strategy at the same time, Levitt says.
“We wonder why we didn’t do it sooner,” says Tom Roets, vice president of IT at Sonic Automotive, a national retailer. A year ago, the company had two e-mail systems: Microsoft Exchange at its corporate headquarters and Ipswitch IMail for its national sales and dealer offices. For years, managing those systems had been a growing burden. “We spent a lot of time on patches and monitoring the platforms. We spent seven days a week keeping up the mail systems,” says Chris Maritato, the national director of IT. But there were many fears to overcome. “We have to be compliant with Sarbanes-Oxley and have disaster recovery,” he notes. Then there was the fear of such fundamental change, Roets says: “When you’re faced with 11,000 people in the field, that’s a lot of angry people if there’s a hiccup.”
But by last year, another pressure was bearing down on Roets and Maritato. “We could not reliably support 11,000 people the way we were doing it. The user satisfaction scores were going in the tank,” Roets says.
So the company decided to both consolidate its two e-mail platforms into one (Exchange) and outsource e-mail, to Verizon Business. “We did a pilot for 30 days,” Roets recalls, before committing to the switch. To be safe, “we also put the most mission-critical people at the end of the transition,” he adds. Within four months, the transition was complete.
Not only did the management headache disappear while costs stayed about the same, but also, e-mail service actually improved, Roets notes. Rather than rely on one e-mail administrator to manage user accounts, Sonic could now rely on its whole help desk staff to do so, using a management portal provided by Verizon that didn’t require the expertise that the previous setup did. This let Sonic redirect a staff member to other IT needs to meet strategic business objectives, Maritato says.
Although there were some fears about having e-mail data hosted outside the company, Sonic performed a security assessment on Verizon that showed “there was no additional risk to outsourcing,” Roets says.
Adecco’s Bossi and the Arthritis Foundation’s Davidson came to the same conclusion. If anything, Davidson believes security is higher when outsourced, because an outsourcer can leverage its knowledge across all clients, which means it can be more capable and efficient than any individual client could. “They do security monitoring that we could never do,” she says.
A Few Caveats
Outsourcing e-mail at large companies can work, as the experiences at Sonic and Adecco show. But it does require careful strategic planning because of the integration between e-mail and other applications that may exist, notes IDC’s Levitt.
“You need to understand how your e-mail system is being used before you do a consolidation or migration,” echoes Bossi. When consolidating his four e-mail platforms, Bossi found real differences among user groups. Some frequently use features like public folders, for example. “You need to understand all of that to transmit the right requirements to the outsourcer,” he says.
You may also have some custom integration with other enterprise systems, such as order-taking systems, which get their input from e-mail, Bossi notes. For organizations that aren’t ready to make the leap to complete outsourcing, there’s an interim step: Have a managed service provider remotely monitor and control the e-mail servers in-house, says IDC’s Levitt. IBM, Hewlett-Packard and other consultancies have long offered this service.
Still, outsourcing e-mail will not work for everyone. The city of Seattle’s CISO, Michael Hamilton, has contemplated migrating his e-mail to an outside provider, but decided against it due to several challenges. The toughest one is the city’s use of Novell’s GroupWise e-mail server, which very few outsourcers support, he says. Another challenge is the high level of heterogeneity among city agencies, many of which have very specialized requirements. The police, for example, don’t want their data stored offsite, for security and privacy reasons.
But Hamilton did outsource his e-mail anti-malware operations to Postini to get that burden off his plate.
Enterprises considering e-mail outsourcing should think expansively, recommends Wu Zhou, a senior research analyst for network lifecycle services at IDC. As voice and data technologies merge, e-mail will morph into or become part of a unified messaging platform, she says. “Find the partner that can not only provide cost-effective outsourcing of e-mail but also work with you to grow the functionality.”
It makes sense to anticipate other e-mail needs when you outsource, agrees Adecco’s Bossi. For example, mobile messaging at Adecco is today split between Palm Treo and Research in Motion BlackBerry devices. But his outsourcer supports Microsoft gadgets too. So if and when his users want those devices, he’ll be covered. And he can let someone else handle the details.
Galen Gruman is a frequent contributor to CIO.