The realisation that application service provision (ASP) isn't the model that will drive the next great software and services revolution is beginning to sink in for the investors and entrepreneurs that were so sure it would happen.
Whereas companies have in the past financed new technology-oriented initiatives through borrowing, the current climate requires funding through savings. ASPs have a lot to offer in helping this happen and nowhere is this more compelling than in the field of e-mail services.
Most big companies spend more than £10 per person per month in providing e-mail services to their staff. Small and medium- sized enterprises (SMEs) fare worse - they spend as much as £50 per person per month on e-mail servers and support staff costs. Contrast that with the cost of a typical ASP-based e-mail service at less than £3 per person per month.
This means there is incredible growth in e-mail traffic. When it comes to the Internet, most hockey-stick shaped graphs are to be treated with scepticism, but this one is real. It is being fuelled not only by wider uptake, but also by a change in the way it is used.
There is a big "cc" culture in many offices. Plain text is out. The same message sent in Rich Text or HTML format is, on average, 10 times bigger. Blanket e-mails with big attachments are still widespread.
In a previous post I sat between the marketing department and the IT services group. On the last Friday of every month I'd hear the marketing team put the finishing touches to their newsletter, see a 1Mbyte file arrive in my inbox, and wait for the mounting sounds of panic from the other side of the partition as the company servers and inter-office networks hit a 1.2Gbyte-sized log-jam.
Viruses are also a problem for e-mail managers, but in an unexpected way. Melissa did cause some damage where it breached corporate networks, but by far the biggest cost was in the traffic and storage of the millions of e-mails sent out by well-meaning people warning their friends of the potential danger.
Those e-mails are still incurring a cost for companies that, for legal or audit reasons, have to store and archive all correspondence. In less strictly regulated businesses modern customer relationship management applications dictate that near-immediate access to all transactions with customers must be available, which includes e-mails. The result is a storage requirement of several Terabytes.
So, why are companies reluctant to outsource their mail and reduce the costs of an ever-growing problem?
Security is an issue for some. Most e-mail ASPs don't support encryption or digital signatures making the authentication of e-mail senders tricky. There have been a few notable stock market upsets caused by spoof e-mails that have raised awareness of the issue. Reliability and resilience to attack is a concern. Size limitations on mailboxes and penalties levied for heavy traffic can also be off-putting or hard to forecast. The biggest challenge is simply taking the leap of faith that moving to outsourced mail requires.
The shift is already happening by the back door. Mobile workers are setting up their desktop computers to forward their office e-mail to a Hotmail-type account so they can access it world without having to dial into their office network. These free mail accounts are effectively ASP e-mail services funded by advertising revenue, but if you read the fine print of the usage policy there may be strings attached.
The storage of mail on third-party servers might compromise the security of corporate data by legally entitling other parties to inspect it or even part-own intellectual property contained within it. For many users, however, the convenience far outweighs the risk.
In conclusion, smarter e-mail handling services are required. ASPs are best placed to come up with compelling solutions to the ever-growing traffic, storage and user mobility challenges. Doing so would bolster their competitive advantage over incumbent corporate applications like MS Exchange and the staff needed to maintain it.
The following would help reduce costs and increase performance for e-mail users:
- Automatic detection and centralised publishing of blanket e-mails
- Enforcement of time-expiry on messages sent to groups of people
- Detection and filtering of virus-related messaging
- Automated mail screening
- Intelligent routing to response agents
- Standards-based interfaces for integration of messages with corporate workflow systems.
There is an economy of scale in buying storage services and an economy of scope in the functionality that can be built and offered to many different businesses that in combination put ASPs in pole-position for offering e-mail solutions. The solutions are getting better all the time, but what will it take to make you switch?
Patrick Bossert is head of e-strategy, comms and content sector at KPMG Consulting
This was first published in May 2001