CIOs are giving online e-mail a close look. And the mega-vendors are desperate to get their attention.

[COVER STORY]

By Andrew Conry-Murray

-mail is hot again. Major vendors, from Microsoft and Google to IBM and Cisco, are vying to provide this venerable communications application. While Microsoft Exchange is the on-premises champ, e-mail delivered as an online service resets the competition, as customers large and small look to reduce costs and eliminate operational headaches. The competition has just started. Of the roughly 996 million business mailboxes worldwide, IDC estimates, only 2%20 millionwere software as a service in 2009. But when it comes time for companies to upgrade their e-mail, they must consider SaaS options. GlaxoSmithKline, Coca-Cola Enterprises, Panasonic, and the city of Los Angeles are among the jumbo accountstens of thousands of employeesthat have moved their e-mail to the cloud. Although Microsoft is the e-mail market-share leader on-premises, its betting that most customers will move to the cloud. Well look back in five years and say, Why would anyone run their own e-mail? says Tony Scott, CIO of Microsoft, whose 90,000 in-boxes run on the vendors own SaaS environment. Stephen Elop, president of the Microsoft Business Division, says half of the companys Exchange, SharePoint, and Dynamics CRM revenue will come from servicebased products within four years. E-mail can be divided into three categories: premises, hosted, and SaaS. SaaS is built on a multitenant architecture and delivered over the Internet. With a hosted service, the e-mail servers might reside on a customer premises and be managed remotely or operated off the customer premises, but each customer

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[COVER STORY] E-MAIL

gets dedicated servers and storage. SaaS e-mails market share doubled since 2007, IDC estimates. Fourteen percent of companies that use outsourcing have SaaS e-mail, our InformationWeek Analytics survey of 530 business technologists finds. Whats the draw of SaaS? First, companies can get substantial cost savings, as SaaSs multitenant architecture allows

pelling case to move to the cloud. The move saves the company about $10 per month per employee, Manesh says, which works out to about $1.9 million a yeara figure any CIO would be happy to bring to a budget meeting. At Blue Man Productions, which runs the popular Blue Man Group shows, the cost of maintaining e-mail servers for its 500 employees in five U.S. cities, plus

Well look back in five years

and say, Why would anyone run their own e-mail?
Microsoft CIO Tony Scott

for economies of scale. Second, companies dont have to sacrifice features or availability to get those savings. Third, IT departments can employ fewer people by handing over time-consuming and costly maintenance to a provider, and they can focus some of those people on more strategic tasks. Fourth, some companies find that SaaS e-mail makes it easier to give employees the mobile access theyre demanding, such as from home PCs. Why Now As you can see from our table on p. 24, SaaS e-mail providers offer services for as little as $3 per user a month. The recession kick-started market growth, as companies considered options that might have otherwise seemed too daring. Take Sanmina-SCI, a nearly $6 billion-a-year global contract manufacturer. Sanmina-SCI moved more than 16,000 employees from premisesbased Exchange to Google Apps as part of a company-wide push to reduce costs. We looked at servers, backups, personnel tied up in running things, says CIO Manesh Patel. When we ran that analysis and did the comparison, it was a fairly com20 April 26, 2010

Berlin and Zurich, ran into six figures, says company IT manager David Wharton. Switching to a SaaS-based Exchange offering from AppRiver cut the cost by a third, he says. Cost isnt the only reason to switch. Features, availability, and streamlined operations are also worth considering. And companies are finding they can give SaaS e-mail to a new level of employee, thanks to the lower cost and browser-based access SaaS provides. Microsoft says Starbucks, for instance, chose its SaaS offering to give certain employees in its coffee shops e-mail, while keeping its corporate e-mail on premises. After Delta Hotels & Resorts went to Gmail for 2,500 employees, it decided it could afford to extend e-mail to another 2,000 hotel employees, given Googles low cost. DMS & Associates, which provides accounting and administrative services to small businesses, relies on 35 subcontractors to serve clients. A year and a half ago, CEO Kimberlee Augustine had her subcontractors using free Gmail. However, because so much of the business relies on e-mailDMS makes payments for clients in e-mailshe wanted a secure archive of all messages sent and received by the companys contractors. So

she moved the contractors from Gmail to Rackspace Email, a bare-bones SaaS offering that gives her administrative access to all company messages. I can peek at whats going on, get a sense of the tone between the accountant and the client, Augustine says. I dont read all the e-mail, but I keep an eye on it, and I couldnt do that with Gmail. Blue Man Productions Wharton says the AppRiver service, which uses Outlook, makes it easy to provision and deprovision users, including those with mobile devices. This feature is essential because many employees, particularly those involved in producing shows, dont have desks; they live on BlackBerrys and iPhones. When the hiring notice comes out, in 10 minutes we can create an account, download an in-box, and hand them a BlackBerry as they walk in the door, he says. The service provides a higher level of business continuity. Under its old system, all Blue Man offices except in Las Vegas relied on the mail servers in New York. If those servers went down or power went out, so did mail service for six of the companys seven offices. In addition, email latency was a problem. Some users have 40,000 messages. When you have an in-house server and an in-box with that many messages, then Outlook and BlackBerry would crawl, Wharton says. Now, he says, overall performance is substantially improved. More Than E-Mail Market competition is increasingly for a collaboration suite that goes beyond e-mail. Microsofts Business Productivity Online Suite includes e-mail and other services, such as SharePoint online and Web conferencing, starting at $120 a user per year. IBMs LotusLive Notes service bundles e-mail, calendaring, and instant messaging, starting at $108 a year. The Google Apps suite, at $50 a user per year, wraps e-mail with Googles browserbased word processing, spreadsheet, and presentation software, which alinformationweek.com

[COVER STORY] E-MAIL

lows document sharing and simultaneous editing. This larger collaboration challenge is what IT leaders are really trying to solve. Circle Global, a manufacturer and reseller of textiles, recently moved its 75 employees from a POP-based e-mail provider to WebEx mail, a SaaS-based product from Cisco that includes PCbased and mobile e-mail. Circle Global also uses the WebEx meeting software. The Cisco e-mail and collaboration software package costs the same as the POPbased e-mail alone, says Brock Nunn, Circle Globals head of marketing. Sanmina-SCI CIO Patel says that cloud-based providers are continually adding features. People can work in small groups, work asynchronously, have the information captured and make it searchable, and make it selfservice so IT doesnt have to get into day-to-day management, he says. In the long term, that will be a much bigger benefit than immediate cost savings. A SaaS model lets vendors add features without the old upgrade cycle that required putting code on machines. IT manages can just decide whether to allow a new feature on their domain. Why Companies Say No To SaaS Would-be customers must weigh the downsides to SaaS, and some conclude theyre too great. Forty-one percent of companies already using some SaaS have no plans to use SaaS e-mail, our November 2009 survey on SaaS found. The biggest concern is around security and privacy risks from letting a provider operate your e-mail infrastructure. The servers and databases in a providers data center are subject to the same external and internal threats that your own infrastructure faces, whether its a cybercriminal exploiting an OS flaw to steal data or a cloud vendor employee getting access to your e-mail. Companies considering SaaS e-mail must satisfy themselves that the providers physical and logical security and operations practices are at least as good
22 April 26, 2010

What Are Your SaaS Plans?

Delivered CRM 9% HR and recruiting 11% Web presence 12% E-mail 14% 31% 33% 38% Planned for delivery within 18 months 50%

Data: InformationWeek Analytics SaaS Survey of 131 business technology professionals at companies using SaaS, November 2009

as their own. In addition, many SaaS e-mail providers will themselves partner with other SaaS companies to offer services such as archiving, encryption, spam and malware filtering, and so on. Thus, the security and privacy risks can extend across multiple providers, each of which may have varying levels of operational proficiency and security expertise. Companies may also have concerns around compliance. Organizations in highly regulated industries such as pharmacueticals or finance may be less inclined to move e-mail off-site due to concerns that the provider will fail to meet complex requirements. Some may 50% worry that the provider wont provide sufficient levels of data protection in terms of backup and archiving to preserve critical mail in the event that the providers primary data center experiences a disaster or emergency. Companies also must know they can get their data out of a cloud vendor, if the relationships sours or the vendor gets out of the SaaS e-mail business. However, compliance concerns havent proven insurmountable: Major pharma companies GlaxoSmithKline (with Microsoft) and Genentech (with Google) are using SaaS e-mail, for example.

Uptime is a concern. If a providers e-mail goes down a total of nine hours in a year (equivalent to 99.9% uptime), employees might not gripe, if theyre isolated and quickly resolved. But if an outage lasts an hour, or you cant get clear answers about whats wrong or when it will be fixed, that wont fly. Integration and authentication also can be challenges for companies trying to link SaaS e-mail systems to on-premises systems. (See p. 25 for more.) Theres also a question of disruption versus return. While SaaS can deliver cost savings, some CIOs find its not worth the retraining and change if their e-mail system is fairly modern. For them, SaaS wont get consideration until it comes time for an upgrade. The Outlook On Outlook While companies are turning to SaaS providers for e-mail, many arent ready to give up Outlook as the local client. DMS & Associates retained Outlook as the e-mail client, in part because its contractors are familiar with it, but also because CEO Augustine likes its calendar functions. Circle Global had considered Google Apps but decided on a provider that would support Outlook because it had other Microsoft applicainformationweek.com

[COVER STORY] E-MAIL

tions in house it wanted to sync with Outlook, most notably Microsoft Project Server. It integrates Outlook task assignments into each users Outlook client, says Nunn. He couldnt sync Project Server with Google Apps. Microsoft will keep pushing those integrated hooks. With its upcoming SharePoint 2010, companies will be able to display employee profiles, like an inhouse Facebook page, alongside e-mail messages so you can see thumbnail photos of every person copied on an e-mail. Microsoft will lose some customers, though. Sanmina-SCI moved off Outlook to the browser-based Google Apps user interface. Early on, we were leaning toward leaving Outlook, but there are some features and functions of Google that dont work with Outlook, so we decided to go entirely with the Web-based interface, says Patel. Sanmina-SCIs standard browser is Firefox. The browser-based UI does lack some functionality, such as the ability to drag and drop files or cut and paste items, Patel says. Browser technology isnt where it needs to be, he says. Were looking forward to HTML5 to provide a more robust interface. But, he says, the UI has generally worked well. Microsoft Alternatives Cisco only recently laid out its plans for WebEx Mail, trying to displace Outlook with a browser-based client. Called Cisco Inbox, the product promises features (due later this year) to make it easier for users to organize their e-mail, and it puts e-mail at the center of collaborative environments. Cisco plans to include what it calls topics, which will let employees arrange e-mail by subjects such as a team, event, or project. Instead of standard folders, topics will live in a bar on the main screen just like individual email messages. Cisco Inbox will go a step further by letting people add content to a topic other than e-mailIM chats, video files, and .WAV-based voicemails. An employee will be able
24 April 26, 2010

to invite colleagues to view a topic. Cisco plans to integrate Inbox with collaboration sites, so people logged into their mail client and, say, LinkedIn can post messages to LinkedIn by sending e-mail. Cisco expects to initially support Skype and WebEx IM. Cisco may face the hardest road of the Microsoft challengers. Though dominant in network infrastructure, with strong security and voice/video cred, the vendor has very little track record as a service provider. WebEx gives it experience with the technological challenges of scaling up a quality service, but it will have to work to convince customers that it has the collaboration and services depth. Cisco launched WebEx Mail in November but declines to say how many in-boxes it provides customers. Then theres a little company called IBM. Trying to revitalize its Lotus messaging brand, its pushing LotusLive, which bundles SaaS-based e-mail, IM, Web conferencing, and file sharing. Companies can choose a hosted version of Lotus Notes or go for a browserbased e-mail client with iNotes. IBM this month showed off integrations of LotusLive with Salesforce.com data, Skype voice-over-IP calls, and UPS delivery data. For instance, the Salesforce integration adds a LotusLive tab to a persons Salesforce.com interface, to launch meetings and share and edit documents. The companys marquee deal so far is the 100,000-seat win from Panasonic in January. Googles pricing seems to be the biggest force of change in the messaging market. With its free consumer version, many people have used Googles browser-based e-mail interface before enterprise adoption. Bundling e-mail and a productivity suite puts price pressure on Microsofts giant e-mail and Office franchises. But Google, which gets 97% of its revenue from advertising and wont say how many paying business e-mail customers it has, still is learning the enterprise IT market. With

its latest word processing and spreadsheet upgrade, it dropped the ability to use the programs offline, giving customers a months notice and saying it will work on bringing it back. Google says offline isnt a very popular feature, but enterprise customers tend not to like those kinds of road map surprises. All these vendors are going after more than just e-mail. Their goal is to control a customers entire messaging and collaboration stack while also promising to relieve the IT operational burden. The shift from the premises to the cloud takes away some of Microsofts home court advantage and creates opportunities for players new and old to grab market share. Companies still cant live without email, but its clear many can do without running the hardware, software, and storage that on-premises e-mail requires. CIOs are increasingly comfortable with SaaS and hosted alternatives. Of course, companies considering SaaS e-mail must do their homework to choose a financially viable provider that can meet their uptime and feature requirements. But no CIO should do an e-mail upgrade without at least considering SaaS.
Write to Andrew Conry-Murray at acmurray@techweb.com

SaaS E-Mail
Price per user per month (100 mailboxes) Mailbox size Price of encryption,per user per month SLA (credit penalties vary)
informationweek.com

Buyers Guide To SaaS E-Mail

By Michael Biddick

More companies than ever are

considering e-mail as a service, but the options arent easy to sort through. Cost per user per month might seem like the overriding criterion, but adding options such as encryption can shoot up the price. Some vendors might not offer key features you need. Thats why we created this buyers guide. Our requirements are that the service is provided to users via a Web browser, theres no hardware on the customer premises, and the service runs in a multitenant environment. Heres what we learned from the 10 vendors who responded to our buyers guide questionnaire.

tives. Some providers, such as Rackspace, also provide a client license such as Outlook or Entourage, so these costs also need to be considered. Storage From 1 GB to unlimited space, the vendors vary greatly in terms of how much storage they offer. This could be another big driver in the price, as some providers charge considerably for additional storage. E-mail archiving plays a big factor, toothe ability to archive e-mail and the pattern of storage your company requires will play a large role in the costs of the different providers. More qualitatively, look closely at how usable the search functions are and how quickly information can be retrieved from the archive. Synchronizing To Smartphones While all providers can do this synchronization, its another cost driver and it can vary based on the smartphone you use, as well as the provider. Rackspaces syncing, for example, varies greatly by the service: $10 per user per month for BlackBerry (on top of the fees from your mobile provider), $3 for Active Sync, $15 for Good Mobile, and $19.95 for Apptix. We actually switched from BlackBerry to Windows Mobile because of the high cost of syncing feesalmost equal to the cost of the mailbox.

The value, however, can be tremendous. Keeping messages and calendar invitations synchronized across a highly mobile workforce is a key time saver for us, and its crucial in some environments. Exit Strategy SaaS might not work out for you. Or the vendor might not deliver. So, as with any cloud service, before you get in you should know how youll get out. For example, with the Google service, you can take your content with you and export all mail from Gmail (via POP or IMAP), or just forward your mail to any other service, at no cost. In our environment, all e-mail is synchronized with desktops or laptops, which has several benefits. We had someone with a complete disk failure, and within 30 minutes, they had a new machine, connected to the shared e-mail service, and the mail replicated. Critical folders, including in-box, were there instantly, and the others took a few hours to sync almost 2 GB of data. For moving to another service, the configuration would work the same way: Each employee would be configured to connect and sync to the new service. At the administrative level, we have seen problems with corporate-wide exports and imports. In addition to the sheer size of the data involved and

Price SaaS e-mail gets in the door because its cheaper. But youll need to factor in a lot of add-on charges for most vendors to get an apples-to-apples comparison. Fully loaded, most businessclass e-mail comes in at around $12 per user per month for a Microsoft Exchange service. Simple POP3 e-mail accounts will be a lot less, some only $1 per user per month. When comparing SaaS ROI to onpremises, look at all of the hard onpremises costs, such as hardware, software licenses, staff support, and client licenses. Put a price on lost productivity from outages and any gain from shifting IT staff to more valuable initia-

AppRiver $12.95 Unlimited Included 100%

Apptix $8.85 2 GB $6.95 100%

Cisco $5 5 GB Included 99.9%

GoBeyondIT $12.95 5 GB $10 100%

Google $4.17 7 GB $2.91 99.9%

IBM $3 1 GB Included 99.9%

Intermedia $12.60 25 GB Partial,included 99.999%

Microsoft $5 25 GB $1.88 99.9%

NaviSite $5.95 1 GB $2.25 100%

Rackspace $12.50 2 GB Partial,included 100%

April 26, 2010 25

[COVER STORY] E-MAIL

folder structures, we see inconsistent results from the tools designed to help do this. Some will create a Data folder that places all folders in a single structure, and deconstructing this can be time consuming. Conventional backup and restoration is another option, again at the individual user level. Recently, we eliminated our e-mail backup policies, relying on the SaaS providers backup. This saves us bandwidth and time, as our backup provider is also in a cloud environment. Most of the providers offer full backups with redundant storage for all online mailboxes. The Interface User interfaces vary greatly. We use Outlook on the local machines and the Web client occasionally. While the Web interfaces can mirror much of the functionality within the local client, there may be minor differences, and some things seem faster in the native client. The administrative interface is probably where youll want to spend the most time. Its where youll do all of your configuring of mailboxes and administer accounts, as well as monitor usage and billing. For companies that like to monitor or take control of employees e-mail accounts, some services allow duplicate messages to inbound and outbound accounts, hidden from the user. Its potentially useful with terminated employees under difficult circumstances. The activity can be logged for auditing of what administrators do with the account. Some features, unlike conventional premises-based e-mail servers, cant be disabled, so companies need to be aware of what theyre getting. Encryption And Security All the vendors offer some level of encryption, most by partnering. Cost and type of encryption vary greatly, so be sure to spend a lot of time in this area if encryption is important to you.
26 April 26, 2010

Get This And All Our Reports

Become an InformationWeek Analytics subscriber: $99 per person per month, multiseat discounts available. Subscribe and get our report on software-as-a-service e-mail at informationweek.com/analytics/saasemail This report includes actionoriented analysis, including our vendor-comparison table. What youll find: > Comparison of vendor offerings by price, antivirus, SLAs, and more, in downloadable Excel format for your use > Analysis of how to factor this vendor data into your decisionmaking criteria TLS tends to be included, whereas AES is usually an additional fee. The level of sophistication that vendors offer also varies greatly. Explore how encryption is provided, and ensure that additional software isnt required on the client for those apps to work. Microsoft, for example, uses Voltage for encryption, providing a Webbased interface that means no added software on the desktop. The other security area to consider is authentication. Generally, authenticating a SaaS e-mail application against

Active Directory means your provider would need to integrate with your Active Directory; most dont. Without that, the SaaS provider maintains user names and passwords. Most companies will be reluctant to give a SaaS provider integration access into Active Directory. Many wont do it, since caching and gaps in access to the domain controller may cause security and access problems. In terms of wide-scale enterprise adoption, the issues surrounding Active Directory are a big barrier for SaaS providers. Overhead Even when e-mail is delivered as an online service, theres still IT overhead associated with managing the accounts and any group or alias lists. In some cases, these are centrally located and internal IT teams can create different types of administrators, but they may not be exactly the type of profile you need. For example, its impossible with some services to let someone create accounts but not delete them, or create aliases but not accounts. When it comes to SaaS e-mail, youll have to adjust some of your policies to gain the benefits of the shared infrastructure. Just be careful which compromises you make. I saw one organization that had about a dozen people as administrators of its SaaS e-mail, just so they could manage group and alias lists. From a security perspective, this isnt a good option. However, as a user and administrator of SaaS e-mail, I can say the experience has been positive. The savings from the hardware, software, and maintenance burden far outweigh any cons. As providers incorporate more features, more companies will expand their SaaS footprints.
Michael Biddick is president and CTO of Fusion PPT, a consulting and IT services firm. You can write to us at iweekletters@techweb.com.
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