Incoherent e-mail infrastructures are costing large banks millions

by Mark Vernon | May 31, 2001 7:00:00 AM

Tags: Mark Vernon, Financial Service IT Newsletter

Takeaway: A recent study finds that the majority of IT directors in the financial services industry can't adequately calculate their total costs for e-mail. Mark Vernon tells you why you should re-evaluate your current e-mail infrastructure and get a handle on how much money you might be wasting on inefficient administration and multiple service providers.

When e-mail first appeared on the scene, the financial services sector was more cautious about adopting it than most industries. Security was a particular fear. But the deployment of e-mail was irresistible, and now banks use e-mail, and instant messaging, as freely as any other industry.

Along with the obvious benefits of e-mail, there are also the costs�particularly those associated with the risks to which e-mail exposes the organization: liability due to identity theft or information leaks, hacking, viruses, employee misuse, system failures, etc. But mostly, the costs are accepted as inevitable, and are often overlooked; e-mail has so transformed the convenience, reach, and flexibility of business communications that its implementation is regarded as a no-brainer, and all money that is spent on its maintenance is necessary.

However, a new survey suggests that banks should take a more critical and analytical look at their e-mail infrastructure costs. Over three quarters of IT directors in financial services firms in the United States and Europe do not know, or cannot calculate, the total cost of ownership (TCO) of their current message management infrastructure. The survey, conducted by Market and Opinion Research International (MORI) on behalf of BT, says that this is despite the growing reliance on electronic communication channels.

"Electronic messaging channels are now considered viable media for taking orders, sending approvals and contracts, and discussing sensitive financial issues," says Chris Hughes, marketing director, financial services, BT Consulting & Systems Integration. But with all the money that is being spent on messaging systems, is anyone really looking at whether it's being spent wisely?

Discovering e-mail TCO is the first step to reducing costs

Financial services organizations are taking the threat of spam, virus, and denial of service attacks seriously to avoid any disruption to their business; they are also keen to ensure compliance with corporate governance regulations. The survey points out that while these threats need to be dealt with, enterprises should manage these challenges based on a clear understanding of the cost of their current infrastructure.

The issue is well illustrated bywork BT did with Raymond James Financial, one of the largest financial services firms in the United States: "We are absolutely inundated with e-mail," said Gene Fredriksen, vice president of information security for Raymond James Financial, in BT's case study report. "More than 100 million e-mail messages a year come through our servers to our more than 100 facilities around the globe. So, not only did we want virus protection, we needed a centralized, enterprise-wide approach to storing e-mails." BT provided virus protection and message archiving-services that not only saved millions of dollars in potential damage, but also saved in overhead costs because they were able to take a rationalized, enterprise-wide approach, Fredriksen estimates.

Unlike Raymond James' centralized approach to e-mail management and security, most banks use multiple suppliers to provide software and services to support messaging: over half use more than one supplier and almost one in five use more than four different providers. This makes it almost impossible to assess TCO, let alone minimize the risks.

For this reason, most IT managers see that there is a clear advantage in having a single point for e-mail management: it simplifies the implementation of policies for individuals and groups; it provides one user interface to centralize administration; it lowers the cost of control; and it speeds up the response to incidents.

"Limited understanding of TCO in current messaging environments suggests that organizations should look more closely at their current, complex, messaging set-ups," continues David Axford, senior research executive at MORI.

"The results from this survey provide a valuable insight into the messaging challenges that are shared by financial services organizations across two continents," adds Ray Stanton, global head of BT security practice. "It is clear that a comprehensive secure message management solution can help ease the pressure on many organizations' messaging infrastructures."

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