Cloud and SaaS driving enterprise email seats

Tuesday, 4 October 2011 00:02 - - {{hitsCtrl.values.hits}}

By the end of 2014, penetration of cloud email and collaboration services (CECS) will stand at 10 percent and will have passed the “tipping point” with broad-scale adoption under way, according to Gartner, Inc.

Although Gartner believes that the time is right for some enterprises — particularly smaller ones and those in industries with long underserved populations such as retail, hospitality and manufacturing — to move at least some users to CECS during the next two years, analysts warned that readiness varies by service provider and urged caution.

“Ultimately, we expect CECS to become the dominant provisioning model for the next generation of communication and collaboration technologies used in enterprises,” said Tom Austin, vice president and Gartner fellow. “However, it is not dominant today, it will not be the only model, and it will take a decade or more for the transition to play out. Right now, the list of reasons to move to CECS is long, as is the list of reasons to avoid it.”

Consequently, Gartner is lowering its short-term projected adoption rate for CECS. Analysts predict that most enterprises will not begin the move to CECS until 2014 when growth in the market will take off, before levelling off in 2020 as it exceeds 55 percent.

Gartner has pushed out the point at which it believes that 10 percent of the enterprise market will use cloud-based or software-as-a-service (SaaS) email from year-end 2012 to year-end 2014. Analysts said organisations are moving more slowly than anticipated for three primary reasons.

“The first is asset inertia. Organisations seek to extract maximum value from their investments in email and switching early can be like trading in a 2-year-old, low-mileage automobile. Secondly, senior IT managers are much more focused on strategic initiatives that help them to grow or transform their enterprise’s business and moving to cloud-based or SaaS email services is generally viewed as a cost-saving move rather than a strategic initiative.

Finally, the practical realities of the vendors’ CECS offerings, when examined up close, are sometimes less compelling than the glossy stories they tell,” Austin said.

While most enterprises that have adopted CECS appear to have moved everyone to CECS, closer investigation reveals that they often retain small, dedicated, on-premises systems to maintain greater control over the content created and consumed by C-level executives — whose communications are almost always subject to legal and regulatory scrutiny at semi-regular intervals.

“There are several reasons why enterprises might not want to be ahead of the curve on CECS, not least the perception that early adopters pay a premium in terms of acquisition cost, and that by waiting the organisation can avoid paying an ‘early adopter premium,’” said Austin. “However, cloud-based collaboration services appear to be forward priced and, while we do expect the cost of CECS to follow a cost-learning curve, the motive for much of the investment in CECS appears to be cost reduction.

Thus, if CECS otherwise makes sense for an enterprise, it would be far better off proceeding now, while requiring that the CECS supplier guarantees to continue to reduce prices as prices in general fall in the market.”