Microsoft Corp."s new Live Communications Server 2005 (LCS), which will offer expanded instant messaging compatibility with popular IM software when it"s released in December -- has enterprise IM users and vendors eyeing new opportunities for more secure messaging at work.

When used with a special connectivity pack, the new LCS application will allow more secure interaction with users who run the most popular free IM clients -- Yahoo Messenger, AOL Instant Messenger (AIM) and Microsoft"s MSN Messenger. Instant messages sent using LCS 2005 will be secure, encrypted communications, allowing business users to more safely communicate with users of the free IM clients, said Taylor Collyer, director of server marketing at Microsoft.

Secure IM for business has become important because "people don"t want their corporate secrets leaking out the back door via IM," he said.

Graham Lawlor, chairman of the New York-based Financial Instant Messaging Association (FIMA) and the program manager of IM at Deutsche Bank AG in New York, said the new interoperability promised by LCS 2005 is a "pretty fundamental and sea change in the industry, especially coming from a company like Microsoft."

"It will allow the richness of enterprise IM," which has more security and usability features than the free IM clients, to meld with the widespread user base of the free IM community, Lawlor said. "This kind of theoretically allows you to have the best of both worlds."

Deutsche Bank uses secure, enterprise IM heavily in its business.

FIMA was created in 2002 to pressure vendors into standardizing IM software for compatibility, security and other business IT needs. FIMA includes representatives from Bank of America Corp., Citigroup Inc., Credit Suisse First Boston LLC, Deutsche Bank, J.P. Morgan Chase & Co., Lehman Brothers Holdings Inc., Merrill Lynch & Co., Prudential Securities Inc. and UBS Warburg LLC.

Some FIMA members have been beta-testing LCS 2005, Lawlor said, and most are at least investigating the product for possible future use.

"Over the last five years, (IM) has become business-critical, especially for businesses in sales and trading," he said.

Mike Miller, director of support services at newspaper and television conglomerate Media General Inc. in Richmond, Va., said IM usage at his company is still small, with only about 100 people out of some 8,000 workers using an IT-endorsed IM system. Those workers use the free AIM client, with added security, logging, management and control features provided by IM Manager software from Waltham, Mass.-based IMlogic Inc.

Miller has looked at enterprise IM systems, but with just a small number of users so far, Media General hasn"t yet seen the need for more elaborate and costly systems, he said. "If there was a bigger use of IM, we might look at (enterprise IM) more seriously," he said.

Genelle Hung, an analyst at The Radicati Group Inc. in Palo Alto, Calif., said the enterprise IM business is gaining attention beyond security and message logging due to increasing interest in the "presence" that IM provides. That"s because it allows workers to quickly "see" who is available and online through IM technologies, she said.

"It"s definitely picking up in terms of enterprise IM," Hung said. "Enterprises across the board are realizing that (free) IM is not good enough" for businesses. Some still aren"t ready for full-fledged enterprise IM packages, though, and are using the free IM clients with management tools from vendors such as IMlogic, Akonix Systems Inc. and FaceTime Communications Inc.

Joe Wilcox, an analyst at Jupiter Research in New York, said corporate interest in enterprise IM has been accelerated by growing regulatory requirements for message logging and concerns that that public IM networks are inherently unsafe for businesses.

"(It"s) moving into the "must-have" category," Wilcox said. "For some retailers, I could see how it could be very beneficial, but I wouldn"t say it"s "must have,"" he said. "But where there are people sitting at desks and co-workers (are) on another floor or in another city ... the "must have" increases dramatically."