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Understanding the hosted messaging market

Experts claim that firms large and small can benefit from e-mail outsourcing, but one user said managed e-mail services have caused him nothing but trouble.

CHICAGO -- Industry analysts and outsourcing experts said that even though hosted e-mail services have their pluses and minuses, they can add increased security and productivity to many companies' messaging equations. However, for one user, those assertions don't add up.

The experts, who spoke this week at TechTarget's Enterprise Messaging Decisions conference, said the decision to go with a hosted e-mail provider depends largely on an enterprise's size and e-mail compliance needs.

Large companies usually find it more cost effective to manage e-mail internally, while smaller companies are often better off outsourcing the task and focusing on their core businesses, said Michael Osterman, president and founder of Osterman Research.

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Osterman explained that there are basically three types of hosted messaging. The first is on-premise hosting, where the entire messaging infrastructure is located behind the corporate firewall but is managed by a third party.

The second form of hosted messaging involves third-party companies that host their clients' messaging systems off site. "In this scenario, IT maintains a desktop infrastructure behind a firewall," Osterman said, "but all of the back-end messaging servers are located in [an outside] data center and managed by a third party."

The third form involves managed virus and antispam services. Osterman said that, in general, providers of these services manage e-mail, but the infrastructure is located behind the client's own firewall.

"It's generally cheaper to outsource certain messaging-related services, particularly in offices with less than 500 users," Osterman said. "While the cost advantages are less dramatic for larger enterprises, they can still be very substantial."

Matt Cain, senior vice president with Stamford, Conn.-based analysis firm Meta Group, said that one of the pitfalls of going with a hosted messaging provider is that there are often hidden fees, usually associated with protection against viruses and spam, and the cost of additional storage.

He said choosing the right e-mail service provider gets even more difficult when factoring in federal regulations, such as the Sarbanes-Oxley Act and Health Insurance Portability and Accountability Act.

"In situations where you're using a hosted service, you have to be extremely vigilant about what is going on from a storage perspective," said Cain. "You have to know what [the hosted provider's storage] tape rotation policy is, and that tape rotation has to be consistent with your internal records management policies."

Conference attendee John Murray, the coordinator of information services with the 1st Circuit Probation Court for the Southern District of Illinois, uses the hosted e-mail service provided by his local Internet service provider (ISP), Neon Internet Inc. In turn, Neon outsources the job of scanning incoming e-mail for viruses and spam to Redwood City, Calif.-based service provider Postini Inc.

Unfortunately, though, Murray said he hasn't had much luck blocking viruses or spam, and he is now considering the cost implications of either handling spam internally, or going with another provider. He said his problems are compounded by limited bandwidth and limited staff.

"I have had to rename four or five different accounts because Postini wasn't stopping spam," said Murray, who single-handedly takes care of the IT needs of 80 end users, spread out over 12 offices in nine counties.

Murray said that one of his end users was receiving 60-80 pieces of spam per day, so he decided to shut down her account for one week, hoping that her address would be removed from some spam mailing lists. No such luck, though.

"I had re-engaged her account for five minutes, and already she had 80 e-mails," he said.

Additionally, Murray said he is having a tough time dealing with viruses. Currently he employs a multilayered approach for handling spam. First, e-mail is scanned for viruses by Postini, and then it's scanned by his office's Exchange server with antivirus software from Bilbao, Spain's Panda Software. Most of the time, this method works just fine, but when it fails, it fails badly.

"Once a virus manages to get into the e-mail server, it can bounce in between our mailboxes without even slowing down," Murray said. "We've been scanning and scanning and scanning and sending out removal tools. I have a lot of issues with keeping all of my clients updated."

For now, Murray said there are a lot of questions he must answer before deciding how to handle the spam and virus problem.

"Do I have the hours to put into it myself," he asked, "or do I need to go with a different provider?"

TechTarget is the organizer of Enterprise Messaging Decisions 2004 and owner of the family of Web sites that includes

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