Instant Messaging Joins the Firm

With the immediacy of the telephone and the written record of e-mail, instant messaging is no longer just a handy way of chatting online. It is fast becoming a secure and flexible tool for business.

Since its modest beginnings in the early 1970s, the Internet has always supported some form of “instant messaging” to offer online users a virtual face-to-face meeting. On the earliest university networks, Unix buffs could “ping” colleagues at UCLA, MIT or a dozen other colleges, then initiate a “chat” session once they knew their colleagues were online. By the early 1990s, Internet service providers (ISPs) such as Prodigy, CompuServe and America Online (AOL) released basic point-and-click “applets” as an easy way to use their proprietary instant-messaging networks.

Then, in 1996, ICQ (“I Seek You”) arrived. Created by four Israeli programmers, ICQ was a free instant- messaging client that let anybody with Internet access converse in real-time, regardless of their ISP. Put simply, an AOL“newbie” could then correspond with a CompuServe veteran or, for that matter, anybody with any Internet connection. Thanks to ICQ, AOL and others, instant messaging penetrated home and office computing swiftly. But until recently, it served mainly as a tool for trading flirtatious banter, swapping gossip or scheduling sundowners.

Now, a handful of firms—several start-ups and a few industry stalwarts—are transforming instant messaging into a legitimate and valuable commercial business. There are now instant-messaging encryption algorithms for ensuring the safety and confidentiality of communiqués between financial institutions. There are things called “trusted partners”, which guarantee that the person sending an instant message is, indeed, the doctor, lawyer or stockbroker he or she claims to be. Firewalls have been developed to protect instant-messaging networks from hackers, and dedicated servers keep a running record of all chit-chat in case the auditors come knocking. There is even software that permits instant messengers to share graphics, photos and documents.

Companies have begun to take these new features seriously. According to IDC, a technology research firm in Framingham, Massachusetts, businesses will spend $133m on instant-messaging applications this year and more than $1billion by 2005. And whereas today only 30% of firms officially sanction some form of instant messaging on their networks, analysts expect corporate adoption to skyrocket in the year ahead.

One of the first to benefit is expected to be Lotus Sametime, an instant-messaging add-on for firms that already license Lotus Notes and its related networking software. Lotus Development, a business unit of IBM, is positioned to reap handsome profits as corporate-wide instant messaging takes hold. A survey from Osterman Research of Black Diamond, Washington, found that when making the switch from free instant-messaging networks—such as those of Microsoft or Yahoo!—to an encrypted and secure “enterprise” product, two out of three companies choose Lotus Sametime.

But Lotus's entrenched position does not worry Leo Schlinkert, boss of Communicator Inc in White Plains, New York, which focuses almost exclusively on providing 128-bit encrypted instant-messaging services for financial institutions. He points out that Lotus users are not necessarily contained within corporate firewalls. And when it comes to discussing details of, say, confidential share portfolios, that is not good enough. Mr Schlinkert, who formed Communicator in 1999 as a spin-off from Salomon Smith Barney, a stockbroking firm, believes that instant messaging is indispensable to brokers, traders, and their clients. But it has to be more reliable and secure.