Getting The Most Out of Marketing

Morgan Stanley may have done more to promote e-mail archiving systems than any multimillion dollar advertising campaign could have.

In May 2005, a Florida judge ruled the bank should pay financier Ronald Perelman $1.45 billion, partly because it repeatedly bungled attempts to uncover e-mails relevant to a suit the Revlon executive had brought against it. Suspecting bad faith or even an attempt to suppress evidence on Morgan Stanley’s part, the judge told the jury to assume the firm had helped defraud Perelman.

There’s little doubt e-mail archiving rose to the top of the technology priority list at Morgan Stanley following that episode and probably careened onto the radar screens of many other institutions as well.

E-mail’s higher profile started gaining steam about three years ago when electronic messages became admissible as evidence in court. E-mail has since been used extremely effectively in several cases involving noteworthy defendants, from the domestic goddess Martha Stewart to the former Merrill Lynch analyst Henry Blodgett.

In today’s litigious society, “If you haven’t been asked yet to produce e-mail, you will,” says Robert Spurzem, senior product marketing manager at Mimosa Systems Inc., a Santa Clara, California-based provider of e-mail management systems. “Lawyers have been trained to ask for e-mail.”

Fear of having to undergo an e-mail discovery process related to a lawsuit is typically the biggest driver behind the purchase of an e-mail archiving system, says Mark Diamond, president and CEO of Contoural Inc., a Los Altos, California-based provider of business and technology consulting.

But there are other valid reasons as well.

Particularly in the financial services community, compliance is a big issue. The Gramm-Leach-Bliley Act’s directive that customer information be secured presupposes that electronic communication with clients will be safely storedu00e2u20ac”ideally in a central location, not left dangling in employees’ e-mail boxes. The Bank Secrecy Act, the Sarbanes-Oxley Act, and the USA Patriot Act also impose recordkeeping requirements that could apply to electronic communications.

In addition, there are plenty of regulations to be mindful of beyond those that apply strictly to financial service activities. For example, the Americans with Disabilities Act requires that personnel records of individuals who have been involuntarily terminated be kept for one year. Some of those records may be in e-mail form.

“There is no specific law that says, ‘Thou shalt archive e-mail,’” says Dale Windle, CEO of Decisive Technologies Inc. of Ottawa, Canada. “But,” he continues, “there are a lot of reasons to do it” related to auditing and accountability.

At the same time, important business increasingly is being conducted through e-mail. The medium is accepted as written confirmation of approvals, orders, and other transactions in 79% of organizations, according to a spring 2003 survey from Osterman Research, a messaging market research firm in Black Diamond, Washington. Typically, users store more than one-half of their critical business information in their messaging systems, according to Osterman Research.

And the volume of those messages is growing. Except for the most stalwart luddites, e-mail has become an essential form of communication for just about every office worker. Traffic has exploded from 5.1 million messages in 2000 to 135.6 million in 2005, according to Radicati Group, a Palo Alto, California-based technology and market research firm.

Managing all those e-mails has become a time-consuming task for employees. A 2004 survey from Osterman Research and Contoural found users spend a median of 60 minutes a week clearing and organizing their e-mail inboxes. That means an organization with 3,000 users will lose about $3.9 million in end-user productivity to e-mail management.

Archiving systems can relieve some of the pressures of e-mail management. They can ensure, for example, that an individual’s e-mail volume does not surpass a preset quota. Such quotas ensure that message stores do not grow so large they degrade server performance and seriously impact end-user productivity by preventing use of the e-mail system. Archiving systems automatically sweep away e-mails to a separate cache, ensuring users do not bump up against the quotas.

Despite the growing need, pulling the trigger on an archiving system will be tough for the typical community bank facing a tight budget. The cost of an e-mail archiving system varies widely, depending on the size of an organization and the features it seeks.

A basic storage management system could cost $15 to $18 per user, says Denise Reier, vice president of solution marketing in the enterprise archiving division of Hopkinton, Massachussetts-based storage systems provider EMC Corp. Tools to aid in searching archived files could push the price into the $40 to $45 per user range, she says.

Spurzem of Mimosa puts the price of a system at $30 to $60. Diamond of Contoural estimates the total cost of ownership at $25 to $75 per user.
There are ways to keep archiving expenses to a minimum, Diamond says. “In our opinion, it depends on how you save it,” he says.

Most e-mail resides on big, expensive disks known as primary storage, which can cost $200 per person per year, he says. Primary storage allows quick access to stored documents, but may be overkill for some companies. In reality, most documents are rarely accessed after their first few weeks of life.

“Often companies are overpaying because they’re keeping everything on primary storage,” Diamond says. He recommends a slower form of storage known as nearline, which costs one-half to one-tenth as much as primary, depending on how it is configured.

Pointing out that e-mails tend to be replicated up to 10 times throughout an organization, Diamond also recommends using a system that automatically eliminates duplicate copies. This move saves on storage, he says. “A good e-mail archive can decrease e-mail storage costs by 70%.”

Organizations have done an about-face in their attitudes toward storage in recent years. Decreasing storage costsu00e2u20ac”at a rate of about 35% a yearu00e2u20ac”led many to consider it a cheap commodity. More recently, however, the amount of data being stored, as well as the cost of managing it, has grown even more quickly, making storage the most expensive component of an information technology budget, Diamond says.

Given the impact that storage has on cost, a messaging system that offers flexibility in the type of storage media that can be used is essential. Other key requirements, according to a 2004 report from Osterman Research and Contoural, include the ability to archive messages only from certain addresses (to avoid archiving unnecessary content, such as spam), the ability to index all content (for easier retrieval), and controls to ensure the archived data is tamperproof. To comply with privacy laws the system should provide an audit trail of who has access to the data and when it was accessed. A full-featured archiving system also should require little or no involvement from end users.

Perhaps more important than technological considerations is having a well-reasoned strategy for how the archiving system should be implemented. Many companies err in believing an archiving system is the sole responsibility of the information technology group or the legal department. Actually the legal, compliance, audit, finance, business units, and technology groups all need to be involved. “You really need to bring all of these groups together,” Diamond says.

One point of contention is likely to be whether e-mails should be automatically deleted. The legal department may want to delete them to remove the risk of incriminating e-mails popping up as evidence. The compliance department, meanwhile, will probably want everything saved. Similarly, the technology group may push for eliminating e-mails to save storage costs, while employees, who tend to use their e-mail in-boxes as personal filing systems, are likely to reject that approach.

Contoural has found that a policy of automatically deleting e-mails tends to backfire. Employees generally respond by finding creative ways to hang onto important e-mails, for example by storing them in personal mailboxes or storage devices, or e-mailing them home. “Deletion drives e-mail deeper into the IT cracks of an organization,” Diamond says. “It makes them that much harder to find, and the discovery process that much more expensive.”

Allowing users to selectively store e-mails also is a questionable policy, according to the 2004 report from Osterman and Contoural. Even after extensive training, end-users will likely have different ideas about which e-mails need to be stored. Consistency will be difficult to achieve, requiring a fair amount of auditing, often by the legal staff, to ensure the policy is being followed.

The emerging best practice is to save more versus less, says Contoural’s Diamond. The save-more policy is especially helpful when confronted with regulations, such as Sarbanes-Oxley, that are not very specific about which documents need to be saved and for how long, he says. Saving more largely eliminates the risk of a company being accused of hiding something. In addition, it trains employees to exercise restraint in their e-mailing.

The worst thing an organization could do is to ignore the interests of the various groups that need to be involved in setting the archiving policy. “It’s better to have no policy than a policy no one follows,” says Diamond. What is as equally important as having an effective policy, is communicating it to all employees.

Knowledge that archiving exists may be a company’s best defense against inappropriate e-mails. “If you’re smart, the policy will drive good behavior, not cover it up,” says Diamond. |BD|

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