E-mail is now an integral component of just about every type of small business. Once used for internal correspondence, e-mail has become essential to keeping in touch with customers and suppliers. In some cases, it is a primary means of communication. But because it's so essential, managing it isn't easy. Deciding that a few AOL accounts aren't enough anymore is great; figuring out how to replace them can be more difficult.
About a year ago, Bradley & Parker Inc. still used an antiquated dial-up account to access the Internet. Only a couple of computers in the Syossett, N.Y.-based company's office had Web access, and only a handful of Bradley & Parker's 50 employees had e-mail access. The situation worsened when Lotus ceased supporting its cc:Mail software, which Bradley & Parker were using for e-mail. Bradley & Parker couldn't afford an IT staff dedicated to managing its e-mail, let alone the costs involved in maintaining the necessary equipment, so, like many small businesses it explored the option of outsourcing its e-mail.
Why Out Source?
Outsourcing e-mail to an application service provider (ASP) can keep costs down to less than $10 per seat per month. That alone makes e-mail outsourcing a highly attractive proposition, though there are other advantages.
"When you outsource to a Web-hosted messaging company, you enjoy a much lower total cost of ownership than trying to create and maintain your own," says Ed Dunbar, executive vice president of sales and marketing at USA.net, an e-mail outsourcing firm based in Colorado Springs, Colo.
This, of course is the same line every ASP uses. But outsourcing e-mail may make more sense than doing the same for financial applications, for example. And many people are used to letting an outside provider handle their personal e-mail. They understand the concept and trust that their correspondence is secure.
The Cost Barrier
"More insurance companies are utilizing both e-mail and Web connectivity to do business," says Wayne Nowland, Bradley's senior vice president. "In order for us to stay competitive, and keep our costs down, everybody needed e-mail capability available at their desks."
Under Bradley & Parker's previous arrangement, the company had to pay its e-mail provider for each message transmitted. To provide access for all of Whitmore's employees, a Microsoft Exchange Server license would cost $4,859, not including maintenance costs, plus about $800 a month to lease a T1 line.
Whitmore Print and Imaging in Annapolis, Md. had a situation similar to Bradley & Parker's--one dial-up account for its 50 employees.
"We looked into the cost of investing in a T1 line because we knew we were going to be moving a lot of files," says Anthony Smith, Whitmore's MIS manager. "But using something like a Microsoft Exchange Server for the size of our company, that's very expensive."
What To Expect
In addition to doing all the dirty work of starting up a system, outsourcers should keep up with technology upgrades. They also should provide scalable solutions to add as much functionality to an e-mail system as business needs grow. Furthermore, the service should provide a fixed monthly fee, so it's easier to budget and plan ahead.
Though the provider will handle the most difficult tasks, the business itself retains control over basic administrative functions such as adding and deleting accounts to the system.
"When you're smaller, you don't have one person who specializes in one thing," says Elaine Lennox, director of e-services at IBM Global Small Business. "By outsourcing e-mail you get that specialization of skills, but from someone else."
Another point to consider is Internet access. Most outsourcing firms only provide e-mail support. One of the reasons Bradley & Parker chose IBM WebConnections is that it provides both DSL connectivity and e-mail support. For many companies, however, separating e-mail and Internet access vendors is not a major issue.
"The advantage of one vendor is that you don't get any finger pointing when something goes wrong," Lennox says. "But you might do it separately if the only company from whom you could get DSL service was a local provider that doesn't do e-mail very well."
Outsourcing creates flexibility, but one should also consider how much control is relinquished to an outsider. If the outsourcer's system goes down, the customer is paralyzed until the provider fixes the problem. Handing over the reins also may mean a system's security is vulnerable.
IBM offers an interesting solution as part of its WebConnections service. The company installs its InterJet server in the office, storing all e-mails located on the network. With most outsourcing solutions, messages reside on your ISP's server.
"From the perspective of your internal e-mail staying internal, it's a little more secure," Lennox claims. "You should always think about whether your information is sitting locally on your network or up at your ISP."
But regardless of what solution is chosen, all external e-mail is routed through the Internet before reaching a network or an ISP. Hence, it is important to ensure an outsourcer offers SSL encryption, virus and password protection, and disaster recovery to protect all information.
Fringe BenefitsBR>In some cases, outsourcing may give companies more flexibility and creativity. A small business is free to include an automated response system for its clients, for example, because the responsibility of setting it up rests in the hands of the outsourcing service. USA.net's Dunbar says his company allows its clients to set up mailboxes just for customer service.
Nowland says one of the projects on tap for Bradley & Parker is the inclusion of automated forms on its Web site, allowing customers to complete them on line and submit via e-mail.
Anthony Smith of Whitmore Printing finds that productivity expanded tremendously since he decided to outsource e-mail.
"It has increased the level of communication with customers," Smith says. "Turnaround is a lot quicker."
It's also a good idea to find out what fringe benefits any outsourcing firm offers.
"We used to dial in directly to the mainframe," Nowland explains. "It was slow and costly. Now, since our network uses TCP/IP, Web Connections allows us remote access through the Internet. "
Prices vary among e-mail outsourcers. USA.net offers different levels of outsourcing options for retaining its commercial messaging service. What one would regard as the basic outsourcing solution costs between $3 and $6 per seat per month. At press time, the company also planned to offer a hosted Microsoft Exchange service in early 2001, including collaboration tools such as shared folders, group calendaring, and, eventually, instant messaging. That service will cost $28 to $30 per user per month.
Right now, Mail.com charges $5 per seat per month for a 10MB mailbox, scaling up to $23 per user per month for a 100MB mailbox. IBM's WebConnections service starts at $99 per month for business class e-mail, firewall security, and 24/7 support for up to 100 users. For $219 a month, IBM throws in DSL connectivity.
Finally, factor in the opportunity cost: Make sure the service frees up enough other resources to justify the price.
$5-$16 per user/per month