This story appeared in the December 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.
January 7, 2005 -- (WEB HOST INDUSTRY REVIEW) -- As service providers seek to broaden their range of services, adding revenue streams and increasing the attractiveness of their offerings, a common first step is hosted email services, an obvious necessity to customers of Internet services such as Web hosting.
The most popular email, messaging and collaboration service in use by small to medium size businesses today is Microsoft Exchange Server. Microsoft (microsoft.com), aware that many businesses don't want to invest the resources neccessary to deploy and maintain Exchange servers in-house, offers a licensing program that enables application service providers to host Exchange services for their customers.
According to some of the many service providers already offering Exchange as a hosted service, the platform requires a certain degree of sophistication from a provider, but the rewards can be well worth the added attention. Microsoft is working to make it easy for hosting providers to get involved in the email supply chain, and there are a variety of partnering options for a Web host looking to define its role in the delivery of the service.
"Microsoft currently offers a Hosted Exchange 2003 solution, which provides tools for provisioning, monitoring and reporting for service providers interested in offering hosted Exchange," says Jeff Hagins, chief technology officer of Sterling, Virginia-based Apptix (apptix.com).
Apptix has been a Microsoft Gold Certified partner for Application and Hosting Services since 2001, and is one of five such Microsoft partners worldwide. The gold certification program for ASPs means the provider has met certain quality standards, including ISO-9000 and Information Technology Infrastructure Library.
The company works with a wide range of service partners, including telcos, hosting providers and Internet service providers, enabling them to offer application services on demand. Apptix counts among its partners Bell Canada, MCI, Excenture, NTT/Verio, Level 3 Communications and Sabbas.
"Hosted Exchange is a great first step for providers that want to enter the hosted application market," says Hagins, "because of the strong demand for hosted Exchange, a solid ROI and value proposition to the end customer and a great initial service offering to build upon with additional application services."
For end users, the value of using Exchange 2003 as a service lies in reduced and predictable costs, increased reliability, availability and the capacity to easily stay current with updates and upgrades. Customers can also select from add-on services such as antivirus and anti-spam protection and mobile access using cell phones, PDAs and Blackberry devices.
Apptix bills itself as a software and service company focused on the on-demand application services marketplace and has built a platform called TECOS for management of delivered services.
According to Hagins the company was one of the partners that worked with Microsoft to help the vendor understand the technical issues with previous versions of Exchange that informed the development of Exchange 2003 and Outlook 2003.
"When Microsoft released Exchange 2003 last year," he says, "it represents a solution for Microsoft that really is now ready for primetime as a platform for offering an on-demand or a hosted Exchange service." Andover, Massachusetts-based Web hosting provider NaviSite has more than 10 years experience delivering messaging solutions and says it was first to market with Hosted Exchange 2003.
"Exchange 2003 is the first version of Exchange that was designed to 'host' or consolidate well with features like the cached mailbox," says Cheryl Yetz, senior director of Messaging Services for NaviSite (navisite.com), which targets the mid to large enterprise market.
If an organization wants to move from Exchange 5.5 and does not have an Active Directory infrastructure, says Yetz, it is not required to build one if it goes with a hosted model for Exchange.
"All companies today are using email, and Exchange gives us something else we can sell to just about any of our customers. Many companies are finding it difficult to manage their own messaging systems. Hosting Microsoft Exchange is a benefit to our existing customers in other areas and sometimes an entry point with a new customer into hosting with us," Yetz says.
The outsourcing of email services provides a savings to customers, says Matthew TenHulzen, director of outsourced services for Williams & Company Communications Inc. (willexchange.com), headquartered in Sioux City, Iowa.
"There are no up-front costs," says TenHulzen, "just a low monthly fee. Our clients get to enjoy the productivity and collaboration benefits of Exchange without having to implement and maintain an Exchange server in-house."
The Williams & Company service includes server and network monitoring, security and software updates, hardware maintenance and back-end management, which allows customers to focus on their core business activities.
"We provide multiple methods of access to the clients' email through Outlook clients as well as Web-based access through Exchange Servers Outlook Web Access," says TenHulzen. "Having Web-based email allows our clients to connect from any Web browser to view their email, calendar and contacts."
Williams & Company, a Microsoft Certified Partner, has been in business since 1929 and has been providing IT consulting services since 1983.
Intermedia.NET was one of the first companies in the ASP market to offer Microsoft Exchange services, says Alex Yevelev, director of sales and marketing for the New York City-based firm.
"We recognized a niche market that wanted the additional features of Exchange, but did not want to build the infrastructure," Yevelev says. "Similar to Web hosting, our customers were able to get a reliable and quick solution without all the upfront time and costs usually associated with IT deployment."
A large part of Intermedia.NET's client base operates within IT services and consulting, professional services, financial or media industries.
"More specifically, small to medium-sized businesses find our solutions very attractive because they do not want to exhaust their limited resources on supporting email," says Yevelev. "They understand that outsourcing Exchange services allows organizations to focus on their core business functions while still gaining a sophisticated IT infrastructure."
Exchange services offer quick reliable solutions that reduce customers' overall costs, and the mobility of accessing email for multiple locations is a critical advantage in business communications, he says.
Intermedia.NET has developed a software tool called HostPilot Control Panel for managing solutions it provides. The provider says it delivers upgrades and security, freeing up the customers' workers to better communicate and collaborate on projects.
All four providers say they see a continued demand for hosted Microsoft Exchange among companies that consider the service vital to their business operations.
Yevelev's comments seemed to typify the feelings of providers about the potential Exchange holds for their companies.
"We are able to promote a leading edge technology to our existing customers," he says, "without the need for extensive investment since this was already in place. Likewise, it has helped us exponentially grow as a company and differentiate ourselves within the industry beyond Web hosting."
