The Software as a Service (SaaS) model for e-mail solutions is proving attractive for many customers and will represent 20 percent of the commercial e-mail market by the end of 2012, according to Gartner, Inc. In 2007, the SaaS e-mail market represented 1 percent of the commercial e-mail market.
Gartner analysts said that the impact of the SaaS model for e-mail will have direct and material consequences for traditional third-party product vendors, effectively cutting the addressable market for traditional third-party applications by one-fifth. However, by 2012, the move to the SaaS model for e-mail will create opportunities for new third-party applications.
“The lost opportunity to the traditional third-party market may be more than 20 percent because the earliest adopters of the e-mail SaaS model are small or midsize businesses (SMBs), which can represent up to 40 percent of the market when measured by the number of companies which are likely prospects,” said Matt Cain, research vice president at Gartner. “However, SMBs are less likely to buy third-party tools compared to larger organizations.”
According to Gartner, there are four general categories within the third-party community for e-mail services that will be affected to a greater or lesser extent by the move to the SaaS model for e-mail.
Applications Core to Running Premises-Based E-mail
Examples include disaster recovery, reporting, backup, spam and virus filtering. In this case, the need for most third-party management applications goes away in a SaaS deployment as the vendor provides all core level two and three help desk duties, supplies all required services for redundancy and recovery, provides all reporting options, performs all version upgrade functions, and protects the perimeter with its own spam and virus filters.
Applications That Extend the Core Services of the E-mail Platform
Examples include mobility, fax, archive and encryption. Most SaaS vendors offer archive and encryption services, although they may source them from a third party. Fax services can fare better; in some cases a native SaaS implementation exists, and in others, customer-side fax services will be integrated with a SaaS system.
Examples include PST management and e-mail efficiency add-ins. There will be no immediate impact on vendors that work on the client side of the e-mail SaaS equation because the present paradigm is for rich clients to access SaaS resources. The longer-term concern, however, is that the prevalent storage model will move from the client (PST) to a server side storage model — hence eliminating the need for PST management tools altogether — and the default access mechanism moves to the browser, away from "fat" client access. A continued market for e-mail efficiency add-ins is likely, but vendors would need to shift browser plug-ins.
Applications Needed for SaaS Implementations
Examples include premises and SaaS management tools and premises-to-SaaS migration tools. This is where the move to the SaaS model will create some new demands for third-party tools as companies look for tools that help them perform single seat management and provisioning of premises-based and SaaS services, known as a hybrid model. There are also opportunities for vendors to facilitate migration from the premises to the SaaS platform — an area ripe for exploration by third parties.
Mr. Cain said that other opportunities for third parties will be via acquisition by SaaS vendors, which will fill in missing platform gaps as has already been the case with Google and Postini, Cisco and Ironport, and Microsoft and Frontbridge.
There will also be an impact on the hardware market; 20 percent fewer on-premises e-mail seats will mean fewer sales opportunities for server vendors, and SaaS providers are likely to build their own servers and/or move to a single source model.
“To a certain extent, this winnowing of opportunities for third parties in the e-mail market has been under way ever since Microsoft’s Exchange 2007 incorporated features such as virus and spam blocking, voice mail and disaster recovery, which had previously been addressed only by third parties,” said Mr. Cain. “In many ways, e-mail is the "litmus test" for the SaaS model, disrupting a pre-existing set on on-premises-related businesses. We can expect similar third-party dynamics to occur in adjacent collaboration spaces, such as instant messaging and virtual workspaces.”
Additional information is available in the Gartner report “E-Mail SaaS Threatens Third-Party Vendors.” The report is on the Gartner Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=901912&subref=simplesearch.
Gartner, Inc. (NYSE: IT), is the world's leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.
Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We're trusted as an objective resource and critical partner by more than 15,000 organizations in more than 100 countries—across all major functions, in every industry and enterprise size.
To learn more about how we help decision makers fuel the future of business, visit www.gartner.com.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.