United Messaging ~ Ready…Set…Outsource!

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Product Background

Steve Layne founded United Messaging in May of 1999, with the sole purpose of providing dedicated and focused outsourced electronic messaging services to the corporate market. United Messaging started with seven employees with a first round venture capital funding of $5 M (USD) and has grown to over 102 employees with a second round venture capital funding of $31 M (USD).

United Messaging is the only Application Service Provider (ASP) to offer a dedicated e-mail service. United Messaging's offerings include Internet Mailbox Service (POP/IMAP) starting at approximately $2 per seat, per month and for collaborative messaging options, UM offers Microsoft Exchange Server accounts starting at $12.50 (USD) per seat, per month and will be offering a Lotus Notes solution by the end of the 2nd Quarter of 2000 (Probability 85%). Pricing for the Lotus Notes offering has not been released, however we expect the offering to be priced by the end of the 1st Quarter of 2000 (Probability 80%).

While United Messaging may be the only dedicated messaging ASP, they are not alone in the outsourced messaging services market. UM's primary competition comes from Critical Path, USA.net, Mail.com, and IBM Global services. Secondary tier competition comes from companies such as Digex and EDS; additional competition from major players such as AT&T, MCI, and Microsoft cannot be ruled out.

The ASP market is in its infancy and will take approximately 2-3 years to mature and have a noticeable impact on the internal operations of corporate Information Systems (IS). The corporate collaborative messaging market consists of greater than 175 Million client seats with the Lion's share held by Lotus Notes Domino and Microsoft Exchange with install bases greater than 50 Million seats each. We believe that within a 3 year time frame, the outsourced corporate messaging market will capture 25% of the existing install base, which sizes the ASP Messaging market at 47.5 Million Seats (Probability 70%). We further believe that due to the nature of United Messaging's dedicated focus, they have the potential to capture as much as 3.25% of the ASP messaging market, thereby ultimately hosting approximately 1.75 Million corporate mailboxes (Probability 60%).

Product Strategy and Trajectory

United Messaging has decided to focus strictly within the messaging arena. United Messaging has started with two offerings, an Internet Mailbox Service and a Microsoft Exchange Service, with Lotus Notes general availability expected within the next quarter. By focusing strictly upon messaging, United Messaging is able to build a robust messaging infrastructure. United Messaging has assembled a messaging backbone infrastructure which has raised the bar in uptime, allowing United Messaging to guarantee a Service Level Agreement (SLA) of 99.5 % (*scheduled maintenance does not affect SLA accounting).

United Messaging is utilizing IBM servers coupled with Network Appliance Filer storage systems. The design of the Network Appliance Filer allows "snapshots" of the messaging server's databases "on the fly". The system can take a "snapshot" of an 80GB database in 45 minutes while the data store is in use, with estimated restore time of 2 hours. The additional hour and a quarter is a result of restoration process and integrity checking. Given the disaster recovery scenario and the SLA agreement of 99.5%, the configuration allows for one outage per month.

United Messaging plans to host multiple small organizations and up to 3,000 users per Microsoft Exchange server. UM is able to do this through several components, first the high-speed disk storage coupled with beefy servers and a software component called "Mpowered Office Solutions" from a Canadian company Aliant. The "Mpowered Office Solutions" enables United Messaging to affordably provide full Exchange services for smaller organizations with less than 500 seats and provide direct customer administration and instant billing updates for all organizations.

The "Mpowered Office Solutions" segments the Microsoft Exchange containers and address book views to allow multiple organizations to reside securely on one machine. If sharing a server is not your cup of tea, United Messaging is flexible and will accommodate a users request for dedicated hardware, however the price point will increase.

Product Strengths

  • Dedicated Focus on Messaging.

  • 24 X 7 Support structure with 15 dedicated technical support professionals.

  • Strong Hardware from, IBM NetFinity, Sun, and Network Appliance.

  • Availability and Reliability with a 99.5% SLA Guarantee.

  • Competitive pricing packages, always compare pricing to other messaging ASPs such as IBM Global Services, Digex, and AT&T to ensure a best cost scenario.

  • Flexibility in Offerings - will customize upon client request.

  • Technical Expertise of Messaging Engineers: Technology Evaluation met with United Messaging Engineers and found them to be bright, efficient, well trained, and enthusiastic.

  • Disaster Recovery Procedures: have been configured for a maximum outage of 2 Hours.

  • Anti-Virus Control (Included in cost).

  • Anti-Spam Control (Included in cost).

Product Challenges

  • Name recognition. United Messaging must push forward an aggressive marketing campaign to create brand awareness.

  • Immature Messaging Outsourcing Market. The ASP market is relatively new. It will take time to capture and address the fears and concerns of Network Managers and Executives.

  • Fixed and Stable Pricing Structure. United Messaging is a fairly new startup and has not set a fixed pricing structure across the board. The lack of a solidified pricing structure allows a potential client greater bargaining power when attempting to execute an outsourcing contract.

  • Support team has not been "Production Tested". United Messaging has approximately a dozen clients, which do not fill enough seats to test the support organization. The support team has received adequate messaging training and we do not expect serious support issues to arise. However, as United Messaging grows, so must their support organization.

  • Lack of a "Brick-Level" backup and restore system to allow individual mailboxes to be restored.

  • Training New Hires given the speed of United Messaging's growth.

Vendor Recommendations

United Messaging main problem is simply name recognition, no one knows who they are. UM must step up their marketing efforts through a combination of Internet Advertising, Introductory Pricing offerings, and Trade Show Presence. UM has the foundation poured to take the messaging ASP market by storm, but visibility will be a serious roadblock if not addressed immediately.

As with any new or startup organization, the non-technical policies and procedures behind their offering is yet to be finalized. With three offerings; POP, Exchange, and Notes, a definitive pricing structure must be set. (Of course, customization will always impact price points)

The 15-member support team has not been production tested with large call volumes; we recommend drills to prepare for the future. If United Messaging blows the messaging ASP market open, their help desk will be swamped with calls ranging from questions such as " How do I use a BCC: Field?" to "Help, I just deleted 3 months of work". UM will also need to increase the number of dedicated on site support personnel to a ratio of 1000:1.

User Recommendations

If you have decided to outsource your collaborative messaging, take a look at United Messaging. They have the infrastructure in place to guarantee availability and the scalability to meet the needs of any organization with a need for electronic communication. United Messaging is priced competitively within the ASP market and has adequate funding to ensure financial viability for at least 3-5 years, by which time the ASP market will have exploded.

Users will be able to negotiate better deals with United Messaging through several channels.

  1. If your intention is to outsource a large number of client seats (>500) you should be able to drive down the per seat cost on a monthly basis by up to 20% (Probability 70%).

  2. If you want to outsource for an extended contract, regardless of the number of seats you should be able to drive down the per seat cost by 20% (Probability 70%) on a monthly basis.

We have found that organizations consisting of greater than 500 users will pay more for an outsourced messaging system rather than hosting their own messaging infrastructure. Organizations under 300 users will benefit from reduced financial costs and the minimization of administrative headaches. As mentioned before, United Messaging is not the only ASP offering messaging, and competition will be tough, however they're focus and direction leads us to believe that United Messaging should be evaluated when looking to outsource messaging.

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