by Ted Schadler

Symantec today announced its acquisition of MessageLabs, a 520-person UK-based email filtering and security vendor. Given the cost and hassles that information & knowledge management professionls (IKM Pros) have keeping email spam down to a dull roar and keeping viruses outside the firewall, this is a great move for Symantec. And now IKM pros with deep Symantec relationships have a simple choice: Keep email filtering on-premise (and pay up front and on-going) or outsource that annoying task to Symantec MessageLabs (and pay by the month).

My colleague Chris Voce and I have been doing research into the costs and challenges of on-premise email versus cloud-based email. (We'll publish a report in the next month or so with the details, but Forrester clients can contact us if they want to talk now about email in the cloud or the cost of email.)

A few things have popped out of the research:

  • Firms don't know what their email costs. It's easy enough to calculate the server and mail client costs, but the other costs — administration, server and software maintenance, email filtering administration, storage, data center operations — are usually swept under the carpet. When firms calculate a fully loaded cost per user, they will be shocked.
  • Email in the cloud is cheaper in many sitations. Once you calculate a fully loaded cost of email, it's easy to do the price comparison with hosted Exchange, Microsoft's Online Services, or Google. Depending on the number of users, the services required, and the efficiency of your IT organization, it is often cheaper to use cloud-based email for everybody. 
  • Email in the cloud is always cheaper for occasional users. Users that don't have big storage needs or require an installed email client can always be moved to the cloud. "Domain splitting" is the term of art for moving some users onto a cloud-based service like Gmail (which costs $50 per user per year for email, instant messaging, documents, and team sites). Try beating that price with Exchange/Outlook or Domino/Notes on-premise. But even hosted Exchange solutions are cheaper for occasional users.
  • "Hybrid" models are almost always a financial and opportunity cost win. Where Symantec (and MessageLabs) got it right is this: Keeping mailboxes on-premise and outsourcing email filtering (and possibly Web traffic filtering, IM filtering, archiving, and the like) is often cheaper and is always a good idea for freeing up IT's time. Since when is it a core competency to maintain the latest virus databases? Only for Symantec and MessageLabs.

The report will present a detailed cost model that you can tailor to your situations, market data from 50 firms and 10 email providers, and a deep analysis of the costs for different kinds of users and different company types.

I think that this is a smart acquisition by Symantec, even at 5 times revenue. Have another point of view or an experience with MessageLabs to share? Please let me know.