When the employees at Avnet Computer Marketing want to send an important message to colleagues or customers, they don\u2019t necessarily reach for a telephone or e-mail. More often than not, the information is typed into an instant messaging (IM) application. "You can just bounce a couple of lines across to somebody and get an answer," says Dave Stuttard, vice president of application solutions for the Tempe, Ariz.-based computer products distributor.IM software, long favored by gossipy teenagers, is now donning a suit and showing up for work. The software, popularized by programs such as AOL Instant Messenger, Microsoft\u2019s MSN Messenger, Yahoo Messenger, ICQ and IRC, is being adopted?albeit often reluctantly?by a rapidly growing number of enterprises. "I think you\u2019re going to see IM use grow much faster than e-mail use," says Michael Osterman, president of Osterman Research, a technology research company in Black Diamond, Wash.ComScore Networks, a Reston, Va.-based audience ratings company, estimates that the number of work-based IM users rose 10 percent during the first six months of 2002, reaching 17.4 million active users. "The same services that people have early-on adopted for use at home, mainly for social reasons, are now catching on at work," says Max Kalehoff, a senior manager at ComScore.Unlike e-mail, IM can deliver messages directly to a recipient\u2019s desktop, where it\u2019s likely to receive immediate attention. The technology can also be used for customer support and to simultaneously send messages to dozens or even thousands of users.Yet as IM software enters the business mainstream, many CIOs are concerned that IM will open yet another door through which hackers can crawl. They also worry that IM will sap productivity. Meet the PlayersDespite the questions, IM\u2019s popularity has drawn a variety of vendors into the field. And their easily downloadable tools often appear at enterprises that have yet to adopt a formal IM strategy. "Most of the IMing at work is done through the big-brand instant messaging services," says Kalehoff. Osterman notes that enterprise adoption of IM technology is lagging far behind employee demand. "Only about 30 percent of companies have established a corporate standard for IM," Osterman says. On the other hand, he notes, about 85 percent of companies have some level of IM activity.Capitalizing on the fact that their products already contain an IM-type technology, conferencing and collaboration software vendors such as Groove Networks and Lotus Software are also entering the field. Lotus, which sells Sametime collaboration software, has already gained a solid foothold in the enterprise IM market. "Among organizations that have actually established a standard, about 60 percent have established Sametime as the standard," says Osterman. Unlike consumer IM software, Sametime provides several enterprise-class management and security features, such as integration with corporate directories and encryption.Also entering the field are numerous pure-play IM startups, such as Bantu, Ikimbo and Jabber. These companies hope to beat the competition with IM multimedia messaging tools that span multiple platforms.A World of PainThe thought of employees flinging unencrypted messages through public networks, however, is enough to give almost any CIO the willies. The idea that external IM senders may be able to toss viruses and other types of destructive code into an enterprise is at least equally chilling. Although most enterprise-grade IM software offers some type of security mechanism, primarily encryption, many consumer-grade products?the kind brought in by employees without the IT department\u2019s knowledge?don\u2019t. "One of the problems with traditional consumer-grade clients is that they can open a hole in the firewall," says Osterman. "Then you have a path for viruses and malicious codes."Compatibility problems also plague IM. With a universal standard lying somewhere in the future, most IM products can\u2019t display messages from competing systems. "[AOL IM] is a popular service in some departments, and MSN is popular in other departments," says Kalehoff. "The problem is they don\u2019t talk to one another."As if IM\u2019s security and compatibility traps weren\u2019t enough, CIOs must also worry that the technology will eat into productivity. After all, repeatedly pausing to answer messages and swat nuisance IM pop-ups isn\u2019t a great way to focus. "You can specify that you\u2019re busy, but you have an extra step not to be disturbed," says Osterman. Employees are also likely to use the technology to chat with family and friends. "This is something that could be used as a time waster," says Osterman.Many businesses also deal with IM\u2019s legal implications. This is particularly true in the financial industry, where Securities and Exchange Commission regulations require securities companies to record and log both IMs and e-mails. Although most enterprise grade IM products, such as Sametime, provide archiving capabilities, many financial industry CIOs would simply prefer to skip the complex job of tracking individual IM pop-ups. These CIOs have either banished IM from their organization or limited its use to purely administrative functions. "We\u2019re not really communicating dollar figures or anything like that," says Robert Stabile, senior technology officer at investment company J.P. Morgan Partners in New York City.In fact, given the strong likelihood of technical and management headaches, CIOs at all sorts of organizations would simply like to exile IM technology. Many already have. According to Osterman Research, 22 percent of companies block IM traffic from their network.APL, a 12,000-employee containerized shipping company based in Oakland, Calif., put the hammer down on IM when employees began installing consumer-grade client software on their desktop. "We started to see that it was eating up bandwidth; we started seeing file transfers via instant messaging," says Van Nguyen, APL\u2019s IT security director. After determining that IM was more of a convenience tool than an essential business application, Nguyen and senior managers pulled the plug. "We have implemented a corporatewide security policy to disallow instant messaging clients?period," he says.On the Other Hand...While banning client software is an easy way of dealing with IM\u2019s problems, the move may also prove shortsighted. Many enterprises that have adopted IM are beginning to appreciate the technology\u2019s potential to actually boost productivity. Adopting a formal IM strategy also lowers the likelihood that employees will sneak in less secure consumer-grade products.At Avnet Computer Marketing, about 500 employees use IM for a variety of tasks. In one pilot project, for example, customers can use IM to contact technical people at the company. The software also reduces the need to place costly international phone calls. It\u2019s too early to tell just how much money IM is saving, Stuttard says, but he\u2019s sure that the technology is having a positive effect on the bottom line. Stuttard says that when all is said and done, the company hopes to reduce its number of voice mails and e-mails, while providing faster turnaround on decisions.IM\u2019s cost savings potential hinges mostly on how the technology is used. "If it was used primarily as a replacement for long-distance calls," says Osterman, "then the savings in telephone charges could be substantial in a large organization." Similarly, if the technology serves as an e-mail replacement or supplement, "there could be some savings in disk storage and related requirements," he says.As time goes by, even Nguyen is contemplating a return to IM?but only under tightly controlled conditions. "We\u2019re looking to internal instant messaging servers," he says. APL\u2019s planned approach would place IM activities into an encrypted, VPN-type environment that would encompass only employees and selected external parties. "If it\u2019s a business requirement, definitely we would allow external partners to communicate with us," says Nguyen.IM IntegrationAs IM becomes a deeply ingrained technology, messaging functions are likely to begin popping up inside all sorts of business-oriented applications, ranging from word processors to accounting applications. "For example, you might see a future version of Microsoft Office that contains IM functionality," says Osterman. (Houston-based Advanced Reality already offers tools for adding collaboration to any application.)One possible Microsoft strategy would be to add IM support to .Net Server, its latest server operating system. Code-named Greenwich, Microsoft\u2019s IM software will provide a variety of multimedia tools to connect users in real-time. "Greenwich envisions building on core presence capabilities to deliver IM, voice, video and data collaboration as a standards-based, extensible real-time communications solution," says Bob O\u2019Brien, group product manager of Microsoft Windows .Net division. In the meantime, Yahoo has announced the release of its corporate instant messenger, which will include the capability to integrate with corporate directories and some applications.Increasing enterprise adoption of IM is also likely to lead to new uses for the technology. Avnet\u2019s system, for example, allows technicians to communicate with customers on particularly difficult problems. NEC Solutions\u2019 Visual Systems Division, an Itasca, Ill.-based display products vendor, is using IM software to directly assist customers. "They can instant message their customer support rep and get the information they need instantaneously," says Fran Horner, director of the division\u2019s service sales group. The company\u2019s IM system even has the ability to transmit diagnostic software and fixes directly to a user\u2019s desktop.Ultimately, enterprise IM will span an array of platforms, allowing users to conveniently contact people anytime, anywhere: on a desktop PC, PDA, mobile phone or other connected device. Several vendors, including Bantu and Jabber, already provide software with a multiplatform capability.Still, for all of its powerful potential, instant messaging also presents a darker possibility. Avnet\u2019s Stuttard is one of a growing number of business executives who are pondering the technology\u2019s marketing potential. "You\u2019ve got a channel now to send information and messages to a captive audience every day," he says. "That\u2019s very exciting because that\u2019s real target marketing?you\u2019re literally hitting every one of your customers every day."Ladies and gentlemen, welcome to the world of IM spam.