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Reports say SaaS email archives not ready for prime time

The latest Forrester Wave research says that hosted email archiving products aren't taking off as fast as their on-premise counterparts in the enterprise.

Two new reports from Forrester Research said hosted services for email archiving aren't taking off in the enterprise, especially not as compared to on-premise software offerings.

The reports, The Forrester Wave: Message Archiving Hosted Services, Q1 2008 and The Forrester Wave: Message Archiving Software, Q1 2008, conclude that on-premise software is the most popular choice for archiving, while calling hosted offerings "not quite ready for prime time.

"Despite the fervor surrounding eDiscovery and the heat in the message archiving software market, interest in message archiving hosted services remains contained to financial services companies under regulation," the hosted services report said. "While some companies do some 'sniffing around' in terms of how hosted message archiving could benefit them, they stick to on-premise software."

One reason for this, according to the hosted services report, is latency in accessing off-site

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archived messages and searching them for e-discovery. The report said accessing archived messages can take hours or even days. Another thing slowing adoption is the fact that most of the hosted services are relatively new. "Only now are the message archiving hosted service providers beginning to shift their strategies to address broader archiving, e-discovery and retention management needs," the report said.

Vendors included in the message archiving software report were Autonomy Zantaz, CA Inc., EMC Corp., Hewlett-Packard Co., IBM, Open Text Corp., Quest Software Inc. and Symantec Corp. The hosted services report evaluated Autonomy Zantaz, Global Relay Communications Inc., Iron Mountain Inc., LiveOffice LLC and Microsoft.

"We found that Autonomy Zantaz leads the pack with strong search functionality and vision for its services," the hosted archiving report reads. "Global Relay Communications is an up-and-comer that, with more resources, can provide a viable alternative, while Iron Mountain, LiveOffice and Microsoft need to build out support for more advanced retention management and e-discovery features in order to remain competitive."

The software report also ranked Autonomy Zantaz at the top, with Symantec's Enterprise Vault a close second, but added, "both have work to do on [long-term] product and company strategy."

Vendors question results

MessageOne Inc. vice president of marketing Paul D'Arcy said he didn't know why his company's services, which are rebranded by Iron Mountain and SunGard, weren't evaluated as part of the hosted services report. After the report's completion, Dell Inc. acquired MessageOne for $155 million, and according to the report's author Barry Murphy, vendors qualifying for the hosted services study had to have at least 95 users and multiple deployments in the "double-digit terabyte range." He said MessageOne's product didn't fit the criteria at the time the research began last July -- D'Arcy disputed this.

D'Arcy also questioned the response-time factor cited by the report. "Most of our subscribers have actually increased the performance on their search -- there might be a slight difference in latency like a 10th of a second vs. a 12th of a second, but I've never heard [of] that [being an issue] as part of a sales cycle," he said. D'Arcy claims one large company is currently in the process of deploying MessageOne to improve performance after two on-premise products had failed.

"You can't point to one deal as statistically significant," Murphy responded, adding that he spends most of his time on customer inquiries about archiving but estimated only 2% of the inquiries are about hosted products.

Iron Mountain vice president Karen McPhillips questioned the assertion it lacked integration with Stratify or didn't offer advanced features. "Forrester was accurate in terms of the product they chose to cover," McPhillips said. "The problem is that it's just one in a full portfolio where we also offer a full discovery and data management suite, both of which are interoperable with Stratify."

"Iron Mountain does have the components," Murphy said. "But Stratify is still run as an independent business without a large amount of common customers [with other Iron Mountain products] … they have a finite amount of time to get moving in this market and show they can compete in the digital world."

SMBs could change the equation

Other analysts' recent research has differed from Murphy's on some points. According to data published by IDC analyst Laura DuBois, for example, hosted services comprise 40% of an overall email archiving market that reached $477 million in 2006 revenues. DuBois did not respond to requests for comment as of press time.

"I'd say I agree with [the reports] about 80%," said Brian Babineau, an Enterprise Strategy Group analyst. "Some companies that are offering archiving as a service are having some success, like MessageOne and LiveOffice." Babineau said that MessageOne, along with Autonomy Zantaz, have figured out how to do stubbing for storage management, which sets them apart from the pack.

One area where most of the vendors and analysts agreed is that the bulk of growth in this market has yet to be seen, and many in the market anticipate that the most growth will come from small and medium-sized businesses (SMB) later this year. "Archiving has about 10,000 installations combined between outsourcers and on-premise products," Babineau said. "We've seen it go from 25% penetration to around 36% penetration. Once it gets to be around 50%, you get into small and midsize businesses, and those are going to be the ones looking at outsourcing."

For the most part, Murphy agreed with that. "I still see big enterprises going down the software path, but as the federal rules tether out to the SMB market, you'll probably see hosted products build out more features," he said. "At this point it's still hard to say for sure whether SMBs will trend one way or the other."

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