Instant Messaging Standards: Keeping It Simple

By Maria Trombly | Securities Industry News | Mar. 31, 2003

It's an instant messaging case of extremes. While the free-swinging AOL IM users are sending unencrypted messages willy-nilly across the public Internet, others are locked behind virtual stockades, using enterprise-based or community-based IM solutions that only allow them to talk to other employees. Someday, all this confusion will go away and the world will have standards-based instant messaging, so that a user of any given system will be able to send messages to the users of any other system. That's how e-mail evolved, and there's no reason to expect anything less from IM.

For Wall Street users, this evolution won't come a minute too soon, as Securities and Exchange Commission regulations are requiring companies to track and archive all their electronic communications, including instant messages. That can be hard to do if your firm uses a vendor with one proprietary IM standard, your partners use another, and employees are secretly using public services like AOL IM and Yahoo! Messenger.

Fortunately, the industry has finally come up with a standard, called Simple, and some IM big names have jumped on the bandwagon, including Microsoft, IBM and Reuters.

Approved by the Internet Engineering Task Force, Simple is a variant of SIP (Session Initiation Protocol) and stands for SIP for Instant Messaging and Presence Leveraging Extensions. It's modeled on the universally accepted e-mail standard, SMTP (Simple Mail Transfer Protocol).

According to Paul Ritter, an analyst at Yankee Group, support by Microsoft, IBM and Reuters will make Simple the industry standard and vendors will have to embrace Simple by 2004 or become irrelevant. But widespread adoption of Simple-based IM systems won't become common in the enterprise this year, he said, as most companies are still developing policies and plans for instant messaging that they will implement in late 2003 or early 2004.

Armonk, N.Y.-based IBM, a leading Simple adopter, is a big player when it comes to enterprise-level instant messaging, with its Lotus Sametime product. According to the company, eight of the 10 largest financial services institutions have opted for Sametime. Although Sametime is not specific to Wall Street, the company said financial services firms make up a disproportionately large share of its customer base.

"No communication tool has ever evolved far without evolving based on standards," said Jeremy Dies, offerings manager for real-time collaboration at IBM.

But Dies said it might take a little while for all the public IM players to start opening up their systems. "When it comes to Microsoft Messenger, Yahoo and AOL, it's against their business model to support standards because it breaks down their community," he said.

Public IM systems also don't provide the functionality that Wall Street firms require, like security and archiving. Enterprise IM systems do and, moreover, their business models don't require closed communities to the same extent that public IM systems do.

Microsoft has just released a beta version of its enterprise IM product, code-named Greenwich that is also based on Simple. Eventually, it's likely that enterprise IM systems will replace all other alternatives for business use, with public IM relegated to the same status as free Web-based e-mail clients like Hotmail.

Reuters IM, for example, which only officially launched this past October, already claims more than a quarter-million registered users. Like IBM's Lotus Sametime, Reuters IM is based on the Simple IM standard and soon, in theory, users of the two products will be able to send instant messages to one another.

Like enterprise IM systems, Reuters IM offers archiving, presence awareness and a guarantee that the person at the other end is who she said she is, not a hacker trying to trick you out of confidential information.

"One of the reasons we wanted a public, open protocol was to allow for interoperability," said Glenn Wasserman, chief designer for Reuters Messaging. "Many of our customers in the financial service industry already have an enterprise solution like Lotus Sametime or Microsoft Exchange. We're already working with customers to build gateways to run between Reuters Messaging and other messaging products.

"If instant messaging was as standards-based and interoperable as e-mail is today, with all the security and logging, then we wouldn't need to be providing our own hosted application," Wasserman added. "We do realize that when Microsoft releases its own version, some of our customers will buy that solution and implement it internally. But the fact of the matter is that we are years away from having the kind of interoperability we're used to with e-mail now."

Until that point, to help make Reuters Messaging more useful, the service is available on the Web for those who aren't Reuters customers.

Jim Lenz, co-managing director and SVP at Bridge Trading, said if all the instant messaging vendors used a common standard, "it would be much better in the long run." Until then, he said, Lenz is using Reuters Messaging. "I'm comfortable using Reuters because of the security issues. One of the nice things about it is you actually know who you're talking to. I'm not that keen on the AOL version, where anyone can sign up to be anybody."

Lenz started using Reuters IM last summer, and it is now on the desks of all the traders at his firm. "They use it on a daily basis," he said. "It's expanded much quicker than anyone thought it would."