Enterprise Messaging Is Fertile Ground for Vendors

Enterprise Messaging Is Fertile Ground for Vendors<@VM>Understanding Enterprise Messaging<@VM>North American All Enterprise E-Mail Software Market, 1999-2004<@VM>Navy, Army Take Lead in Messaging Technologies

By Ed McKenna

Enterprise messaging systems that facilitate communication within organizations are getting a boost from new Internet and wireless technologies that are improving information sharing and carrying enterprise messaging to new levels of efficiency.

Government workers, whether at their desks or in the field, can conduct real-time meetings via instant messaging, plot work schedules with calendaring and use unified messaging to access e-mail, voice mail and faxes from a single source.

When you bolster these capabilities and applications with standalone enterprise
e-mail, real-time data conferencing and groupware, then these sometimes-compatible, sometimes-competing messaging and collaborative communications applications fuel a worldwide government and commercial market expected to reach $3.1 billion in revenue this year, according to International Data Corp., Framingham, Mass.

While some government organizations are taking advantage of these applications, most must first focus on replacing outdated e-mail systems with new groupware products that tie together working groups and staff. As agencies modernize their e-mail, they are using the added functionality of these groupware products to lay the groundwork for more advanced collaboration between colleagues and work-flow operations.

Government buying is boosting the fortunes of the groupware vendors. Groupware, the largest piece of the enterprise messaging market, is expected to reach $2.5 billion this year, said Mark Levitt, research director of collaborative computing at IDC. But market saturation is expected to reduce that total to $2.2 billion by 2004, he said, noting that most North American and European companies have already deployed systems.

Consolidation is further depressing the market, which is dominated by Lotus Development Corp. of Cambridge, Mass., an IBM Corp. subsidiary, and by Microsoft Corp. of Redmond, Wash. Lotus Notes/Domino controls 52 percent of the market, and Microsoft Exchange has 34 percent, he said.

For now, however, federal agencies remain fertile ground for these vendors.

"My sense is that the government market ... is still running behind the curve of what we are doing in the commercial market," said Tom Millea, Lotus vice president of North American sales, service and marketing. The company continues to migrate legacy systems, such as its own cc:Mail, to the Notes/Domino groupware product, he said.

In fact, the phaseout of cc:Mail, slated to be complete by the end of October, has spurred the pace of change at many agencies. The General Services Administration and the Interior Department's office of the secretary, for example, both migrated to Lotus Notes/Domino 4.6 late last year and are upgrading to Release 5.

"The reliability of our Internet e-mail is much higher," said Roberta Heintz, acting chief of technology services at the Interior Department. It also has made maintenance easier. "If we had a problem with one person's mailbox with cc:Mail, we had to shut the entire system down to fix it. With Notes, we can run maintenance on the individual's mail database, so a single problem doesn't impact the whole sector."

Some pockets of the organization had been using Notes for e-mail previously, said Paul Butler, team leader for GSA's groupware and messaging team. But now, with Notes standardized across the enterprise (which includes 16,500 users), the agency can better use the product's additional capabilities, such as calendaring and work-flow applications.

The fact that these organizations had been cc:Mail users gave Lotus a leg up when the upgrade decisions were made.

"We owned a lot of cc:Mail ... and were able to leverage that toward our purchase," said Heintz, estimating software licenses cost about $35,000, while the overall upgrade, including new servers and PCs, cost about $380,000. In all, the upgrade covered about 900 users. More than 50,000 Interior employees use Notes for messaging, Millea said.

Circumstances were different at the Army Corps of Engineers. When it decided to upgrade its systems in 1997, the approximately 42,000 personnel at 65 sites around the world were using five different commercial messaging packages, said Sam Bradley, program manager for the corps' E-mail Center of Expertise in Portland, Ore.

The corps selected Microsoft Exchange over Lotus Notes for the Defense Messaging System contract, because Exchange was about half the price of Notes on the original contract, said Bradley, noting that the prices have changed since.

When the corps fully deployed Microsoft Exchange 5.5 late last year, it not only standardized the system but also cut e-mail delivery times from 20 to 30 minutes to two to three seconds, he said. To comply with standards in the past, the corps' Portland office had to reformat and resend all the mail sent from its 65 sites, he said.

"We are now cautiously moving to Exchange 2000," said Bradley. The corps has been testing the Windows 2000 operating system, which needs to be in place to deploy Exchange 2000, at Portland and 14 other sites, he said, adding that he expected that the system would be fully tested before the end of December.

A critical component of Windows 2000 and Exchange 2000 is Microsoft's Active Directory, which provides a centralized administration for all of the systems applications, said Wilson Pauldin, senior technology specialist with Microsoft Government Services.

IDC's Levitt predicted that Active Directory will play a major role in the enterprise messaging market because it makes it easier to roll out Internet or intranet-based applications. It also simplifies administration because "applications revolve around a single directory as opposed to each application having its own directory [as it did in Exchange 5.5], which is a huge headache for the IT managers," said Levitt.

Impact Innovations Group, Columbia, Md., has taken advantage of this technology to build its Unity collaboration portal, now being piloted by the Defense Department and intelligence organizations at U.S. Central Command at MacDill Air Force Base, Tampa, Fla., according to Pat Walker, Unity program manager within the intelligence sector at Impact Innovations.

The Web-based portal includes what the company calls team centers, which provide work groups with the communications Exchange 2000 suite along with other resources, such as Netmeeting and instant messaging.

Aside from the current site, which supports 50 to 100 users, the company expects to launch three more Defense Department-related pilots, said Walker, noting the initial pilot cost about $50,000.

Active Knowledge Group, Reston, Va., used earlier Exchange and Windows NT technology to build a similar collaborative Web portal for the office of the secretary of the Energy Department in 1998 for quality panels carrying out inspections for the international nuclear safeguards programs.

Designed to increase efficiency, cut travel costs and boost communication among members of these panels, the portal includes individual team sites, each password protected at several different levels and residing on an encrypted server, said Carol Willett, vice president for learning and innovation at Active Knowledge.

"The portal allows panel members to hold threaded online discussions, use Netmeeting, collaborate in real time on policy documents ... and share training material," she said.

Active Knowledge not only built and hosted the technology but also trained the users, some of whom needed fundamental computer and Internet education, said Willett, adding that overall the project cost under $250,000.

These advanced collaborative applications point toward future uses of these platforms to facilitate not just communications but also work flow. "The capabilities of these newer messaging systems enable that in a way that has not been possible before," said Susan Turpyn, director of Microsoft Business Development at Unisys Corp., Blue Bell, Pa. The company is helping some agencies to automate manual processes using the messaging platform as an underlying routing mechanism, she said.

An office within the Agriculture Department, for example, is crafting a system to facilitate the exchange of communications and forms between that office and farmers and other clients it serves.

Meanwhile, Bradley has set his sights on incorporating into the system the volumes of "unstructured data," such as computer-aided drawings, e-mail messages, spreadsheets, word processing documents and Microsoft PowerPoint presentations generated by the Army Corps of Engineers' projects. In that regard, he is interested in the Microsoft Tahoe product, now under development.

"That is not to say we are ready to go buy it on the first day, but our lab here is cued up [to test it] the minute we finish testing Exchange 2000," Bradley said.Enterprise messaging traditionally referred to the software that provides the electronic mail delivery system throughout an organization. It is now evolving to include advanced collaborative technologies, such as groupware products, and emerging technologies, such as instant messaging and unified messaging products.

Groupware is software tools that support groups of people working together on a project at different locations. It typically includes e-mail and scheduling and other collaborative applications.

Instant messaging is a tool that allows individuals to communicate privately in real time on the Web.

Unified messaging is a technology that allows e-mail, voice mail and faxes to be delivered to a single electronic mailbox.

North American All Enterprise E-Mail Software Market, 1999-2004

Total Users
(In Millions)
Comp. Annual Growth Rate: 7%

Source: International Data Corp.By Ed McKenna

As agencies modernize their messaging platforms, some are taking the lead in de-ploying emerging messaging technologies.

The Navy, for example, has begun implementing instant messaging on its ships, while the Army's Military Traffic Management Command is using unified messaging. Some smaller government offices are using standalone e-mail systems.

Although the investments largely have been modest, some messaging initiatives already have yielded substantial benefits.

Whether this translates into increased revenue and earnings for messaging software companies is unclear.

"We're optimistic about [using] instant messaging ... but not overly optimistic about the revenue opportunities," said Mark Levitt, research director, collaborative computing at International Data Corp., Framingham, Mass. He noted that 99 percent of instant messaging uses today have not had any direct revenue connected to them.

For the standalone enterprise e-mail market, the good news is that IDC shows it growing from 94 million last year to 130 million users in 2004. The bad news is the rate of that growth plunges to 1 percent at the end of that five-year period.

The bright spot is unified messaging, which allows e-mail, voice mail and faxes to be delivered to one electronic mailbox.

"There has not been a lot of uptake yet, but that will change over time," Levitt said. Although it has been around for a while, it has been viewed as difficult to deploy and primarily as a luxury, he said.

With many organizations wrestling with information overload, "a single system for all our messages is becoming ... more and more valuable to a broader range of users," and it has become easier to deploy, he said.

This optimism is more than reflected in a recent Pelorus Group study projecting that worldwide revenue for unified messaging will jump from $145 million in 1999 to $6.3 billion by 2004, a compounded annual growth rate of 112 percent, according to Blair Pleasant, director of communications analysis, Pelorus Group, Raritan, N.J.

The Navy's interest in instant messaging was sparked by a pilot project in April 1999 using Lotus' Sametime product on the Navy's John C. Stennis Battle Group. The system provided privacy not found in radio communications, allowing for frank, in-depth conversations between tactical officers on the different vessels and the admiral on the carrier with the commanding officers of the various ships, said Navy Lt. Commander Mike Houston.

The system really earned its stripes this year when it was pressed into service as the primary means of communications for two days on a ship that lost voice communications while taking part in anti-smuggling operations in the Persian Gulf, Houston said.

Maintaining communications between vessels and the Fifth Fleet command is critical for coordinating actions and obtaining legal advice while monitoring shipping traffic for potential violations of the United Nations embargo against Iraq, said Houston.

The cost of the pilot was about $500,000, which was borne by Lotus Development Corp. The system is slated to be deployed on the balance of the fleet over the next two years, said Houston.

This program now will be funded by the service and managed by the Space and Naval Warfare Systems Command, he said.

Science Applications International Corp. is crafting a pilot project using Washington-based Bantu Inc.'s Web-based Internet messaging application for one of its Defense Department customers with a very mobile work force, said Steve Brown, deputy division manager for SAIC's strategies group.

"They travel to some fairly remote areas, and I am looking at ways we can enhance their ability to collaborate with their counterparts here in the states," he said.

The Army's Military Traffic Management Command has been using a universal messaging system from Active Voice, Seattle, since last May, said Jim Pickett, telephone manager for the command in Alexandria, Va. The new system, which is working with Microsoft Outlook, is the command's primary voice mail system, with almost 900 users.

"You can attach voice mails as e-mail attachments and send them to anybody, even if they aren't in your voice-mail system," he said.

Ipswitch Inc. of Lexington, Mass., is looking at the federal government as a key customer for its Microsoft NT-based iMail e-mail server. Specifically, the company has targeted small to mid-sized government offices with 50 to 1,000 users, said Frank Days, vice president of product marketing.

Many of Ipswitch's government customers experience sticker shock when they shop for systems such as Exchange, he said. Ipswitch offers a less expensive, simpler alternative for those just looking for e-mail and not all the bells and whistles of the groupware products, he said.

The product costs about $1,000 for 250 users, less than a third of a similar sized groupware implementation. The product has attracted several buyers from offices within federal agencies, including the departments of Health and Human Services and the Interior, said Al Ortiz, the president of Source Diversified, Laguna Hills, Calif., a reseller of Ipswitch products.

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