Shooting instant messenger to top of channel agenda
The second in a two-part focus on e-business reveals that IM is no longer just the property of the people.
When you look at the carnage of the dotcom boom, it's safe to say that the internet has been an angel to some and a demon to many.
In many cases 'e-commerce' has been a badly abused blanket term used to flog any online service or application that relates to business.
A lot of money has been spent and wasted on ill-conceived e-commerce plans and dodgy 'next big thing' technologies. So much so that the market has become a bit jaded with the next revolution in online marketing, advertising, sales or communications.
Ten years ago, people were told that online video conferencing was just around the corner and would revolutionise business-to-business communications for everyone. Well, you wouldn't want to be holding your breath, would you?
That said, there are some online applications that are allowing companies to leverage the money they have already shelled out on a web infrastructure. Two of those are instant messaging (IM) and web services.
Web services describes an XML-based piece of software that represents a business service or function accessible over the internet by another application, regardless of platform.
This can include applications such as an online train timetable or a parcel-tracking service which the provider can allow trusted partners and customers to access.
Being platform-independent means that no one has to know what kind of software the other is running in order to have limited access to the web service on offer.
he market is definitely going to be big. Researchers such as Gartner have estimated that web services could be worth as much as $30bn by 2005.
But right now, and even though most of the big players are behind a coherent standards push, web services are still evolving with lots of pilots but few large, enterprise roll-outs.
Something that is happening right now, though, is IM. Most people are aware of IM in the consumer space, with freeware IM tools from service providers such as AOL and Yahoo.
In their millions, people are using IM to catch up with friends wherever they are, in real time. Most IM tools are free and consist of a small client on your PC that alerts you when friends or people on your private 'buddy list' go online.
Knowing when someone goes online is often referred to as 'presence'. Then, using small windows, you can 'chat' interactively via text, as well as swap files. More advanced features on some tools allow for IP telephony.
Until relatively recently, IM has been a consumer phenomenon only, with a massive worldwide audience. However, the business sector is the place that is buzzing at the moment.
Ferris Research has predicted that the number of IM users within businesses will double in 2003 to 23 million worldwide, up from 10 million at the end of 2002.
The analyst has forecast that, by 2007, there will be 182 million business IM users and that market value will rocket from $133m in 2002 to almost $800m in four years.
IM watchdog Osterman Research recently found that in 102 UK companies with more than 1,000 employees, nearly 93 per cent said they are either using or expect to use IM on their networks in the near future.
By this year, Gartner has predicted that 70 per cent of enterprises will have some sort of IM client running, whether they are aware of it or not. By 2005, it believes that half of companies will be using enterprise-level rather than freeware IM clients.
More optimistically, Gartner thinks IM will surpass email as the key means of electronic communications between consumers. Now, while taking email's crown seems a bit far-fetched, there is no doubt that businesses are getting IM savvy.
"In smaller businesses, IM has arrived by stealth, somewhat more so than in larger firms," said Jim Moffat, UK market manager at IBM's software group.
"The IM market is taking off like wildfire. Right now it's doubling year on year. It looks very much like the market was for email 10 years ago, but it's actually beating those stats."
Neil Laver, Microsoft's desktop group marketing manager, said: "IM has largely grown out of the user space and most of it arrived via the backdoor just like email and, if you go back far enough, PCs too.
"However, most organisations now want a bit more control over it, and leading-edge companies are looking at it as a serious tool for collaborative working and communicating with colleagues and customers.
"It will be as common a business tool as email but will not replace it. I see IM as a way of adding value to email."
Control seems to the first priority of many companies, since freeware IM tools present a far greater risk to IT security than email.
The main drawback is the lack of logging and tracking, which makes knowing what exactly people are swapping over IM virtually impossible to control.
Hackers in the US have already seized on the opportunity, using IM's ability to sidestep firewalls to drop malicious files into companies' networks.
"Because most IM tools are still consumer-based, it's all unregulated," said Russell Zientek, director of professional and technical services at Unipalm.
"Companies can run into a lot of issues with employees sharing files they shouldn't and, because there's no logging facilities, there is no record of conversations."
Allan Poot, European regional sales director at IM vendor Ipswitch, said: "The growth in the market so far has been driven by employees rather than businesses, but businesses have decided to formalise it.
"They don't want their staff chatting to the whole world. The logging ability is key, because some institutions have legal requirements to record all written transactions and conversations.
"With our product you log things for up to 10 years without additional back-up. A side effect of logging is that employee awareness that their IM traffic can be read helps to keep them in line."
Laver said: "Some companies don't mind that their IM tools have no tracking capabilities, but those in the government and finance sectors have to comply with laws, so they must have the advanced logging features.
"They need to be assured that they are doing everything they can to stay legal. Companies that are worried can just turn it off. It's just another piece of software after all."
Turning it off, though, is the last resort of a company with no idea of IM's benefits, especially considering how easy it is to implement.
For businesses, IM represents a whole new way of communicating with colleagues and, just as important, suppliers and customers. Phoning and emailing are essentially blind communications technologies because you never know if the person you want is on the other end.
IM alerts you as soon as someone on your list gets online, which makes communications immediate and saves a lot of time. Rather than waiting half a day for a response to a simple question, the response can be immediate. It's this 'presence' side of IM that has everyone most excited.
Zientek said: "Presence awareness is the key. We use IM in the UK and other offices, but before we did, one of the biggest problems we had was not knowing which technical support people in our German centre were around at any given time. Now, IM tells us when they are there and we can get hold of them immediately."
According to Poot, IM is less intrusive than a telephone call and more urgent than an email. "It allows you to get an almost-instant answer from people without really disturbing them.
"Also, when working collaboratively it's very easy to add people to an IM conversation, since they can read what's been said already and catch up very quickly," he said.
Moffat added that IBM studies had found that it takes about four phone call attempts to reach who you want. "IM lets you know if the person you want is online when you need them," he said.
Recent studies are also showing that IM can save companies money by reducing the amount of their phone and email traffic.
While these are not rock solid return-on-investment figures, there is a growing amount of evidence that suggests IM can cut phone costs, simply by allowing people to get hold of who they want on the spot.
"Osterman Research said in a recent survey that 81 per cent of companies using IM reduced their telephone bills by an average of 14 per cent," Poot said.
These savings can be expected to increase as the IP telephony features in many IM tools are put to use. Since most companies pay for their internet bandwidth in advance, using IP telephony represents no extra cost for voice traffic.
"Companies can justify their own return on investment by looking at what overseas calls cost," Zientek said.
"IM lets you open up a text chat or, in some cases, an IP telephone call. The latter is not as prolific, but as more firms move to IP phones this will be a big benefit."
While IM can be used to greatly enhance communications within an organisation, many are looking at IM to bridge the support gap that exists with online customers.
Those selling goods online have found the lack of an immediate support system for shoppers is a major problem.
Gartner has found that frustrated customers ditch potential purchases online because they cannot get a quick answer to a simple query. IM is seen as the solution, because many shoppers who are already online can't use the phone.
No one is saying that rolling IM out in call centres will be achieved easily, but it represents the only viable solution to shopping cart abandonment.
Since many have already spent a fortune to have an online presence, IM is a good way of maximising existing investment.
"On websites you can have a chat centre instead of a contact for the call centre where queries can be routed to the support person via text and an answer returned in real time," Moffat said.
"Just look at how many call centres there are in the UK and you see a whole new market for resellers, approaching them with a way of creating an interactive way to support online customers."
Most agree that resellers have a lot to gain from selling IM solutions.
According to Poot, the bundling opportunities are ample with these products and the margin is good too.
"We introduced our IM product to the UK in February and the response has been strong from customers and resellers.
"There are 42 new resellers interested in selling the product, and right now, the UK represents one-third of our European sales," he said.
Moffat added: "IM is good for resellers as long as they view it as a solution to help companies to sort out their communications.
"They are supplying a way to let business people meet each other regardless of location. It's also a good tool for resellers to stay in touch with their own customers."
Zientek said: "Being a new market, it is not yet commoditised, so there will always be a consultative sell. There is lots of room for value-added services and, if you are providing Jabber products, there is some development work involved."
Who's who in instant messaging
There are essentially three instant messaging (IM) segments. By far the largest is made up by the freeware IM tools from the big four: AOL, Yahoo, MSN and ICQ. It is these tools that have sneaked into companies by the backdoor.
Next come the enterprise IM (EIM) tools, designed with inbuilt security and advanced logging features. Here, Lotus Sametime (about to be renamed Lotus Instant Messenger) is king, with Microsoft Exchange also featuring.
The free XML-based Jabber IM platform is also proving increasingly popular in the EIM space, with big-name investors and users that include Intel, AT&T and France Telecom.
Newer players such as Ipswitch are also making noise, coming in with less expensive but secure EIM solutions.
Finally there are the offerings from companies such as Akonix and IM-Age that allow firms to use freeware IM tools by controlling the client and offering companies some form of security and logging capabilities.
The landscape is about to undergo some serious earthquakes this year, though, as the lines blur.
Freeware giants such as AOL and Yahoo have already launched enterprise versions of their IM tools.
Microsoft is readying its Real-Time Communications Server 2003 Standard Edition for the third quarter, and is pumping hundreds of millions of pounds into winning the EIM war.