Video"Records-keeping has gotten incredibly complex," notes Lybeck. "When I started doing this 15 years ago, most of our records were still on paper or microfilm, and you could see them in the filing cabinets. Today, probably 95 percent of the information is electronic, which can make it very hard to find." Electronic storage is cost-effective, of course, but creates its own headaches: as operating systems and other technologies evolve, there is no guarantee that records stored electronically will be able to be read in the future.
Adding to the complexity is the ever-growing reliance on E-mail, both as a source of communication and as a means of sharing files. Some data-retention laws and regulations pertain to E-mail because, as Lybeck notes, "much of the content can be considered a record that needs to be retained."
But E-mail can require a message-by-message evaluation. "You can have one message that says 'Do you want to go to lunch?' and another that details sensitive auditing issues, and they have totally different retention requirements," explains Cogar. "One can be deleted today, and the other needs to be kept" where it can be easily retrieved, possibly for years.
Find It Fast(er)
While no single technology offers a magic solution to the complex problems of records retention, a growing array of products addresses some facets of it. Storage-management software, document-management systems, data backup and recovery systems, and programs that classify E-mail content are all being marketed with a Sarbanes-Oxley or related regulatory hook. And while that may seem opportunistic, it doesn't mean it's off-base.
Guidant is using imaging and document-management software from Hummingbird Ltd. to meet FDA requirements to retain such information as patent data, design specifications, and quality-assurance information for a product's lifetime and for two years after it is retired. Guidant also has to retain records under EPA, Department of Labor, and IRS regulations.
One major advantage of today's records-keeping products is that they bring significant automation to processes that are usually manual. For example, previously when Guidant staffers filed a document, they had to fill out a form and send it with the document to a records center. There, someone would enter the data from the form into a database before filing the record. With five manual steps along the way, the process was time-consuming and error-prone. And despite all that, it was difficult to find specific data and documents. With the Hummingbird software, which was implemented in June 2001, employees fill out an online version of the form, and once documents are filed, there's a single point of access via the Internet for data queries.
The software supports Guidant's records-retention schedule for electronic and paper records, Lybeck says, so it automatically knows how long to keep certain information. By placing all these documents in an electronic repository, the system provides a handy way to keep information centralized, which is an additional benefit.
Boston Capital is in the process of implementing a close cousin of document-management systems, an enterprise content management system from Documentum, to manage the retention of all paper and electronic records associated with transactions, finances, and property information. The system manages documents, Web content, records, E-mail, scanned images, and other data. Companies can apply automated retention and destruction policies to any type of content. CIO Tom Gardner says Boston Capital, which for years has retained "everything" related to its corporate partnerships as a matter of course, is creating a formal records schedule to work in conjunction with the content management system.
CFO Teal says one of the things that drove the investment in the system was the rising cost of holding on to so much information, be it electronically or in paper form. In fact, there may be a dual role for the CFO in this regard: while the risks of fines should drive the creation of a corporate policy for records retention, the difficulty of calculating just what it costs to manage information today, versus what it might cost to address it in a more automated fashion, requires leadership.
The costs of data retention and records management are scattered across the organization, making it very tough to get a clear view. Someone at the top needs to insist that such work be done so that any future investments can be made in the proper context. And if cost savings aren't motivation enough, consider the risk of legal entanglements. E-mail, documents, and other forms of "reference data" can often become electronic evidence in court cases. Just ask the major Wall Street firms pilloried by New York State Attorney General Eliot Spitzer.
A range of "forensic computing" techniques can be brought to bear to ferret out data, but it's certainly cheaper to manage it better up front. Vendors see plenty of opportunity here, not only in services but also in new products. Later this year, for example, Austin, Texas-based RenewData will offer ActiveVault Enterprise, a software/hardware combination that stores E-mail and other data and includes a rules engine that helps companies locate all the disparate E-mail and documents relevant to a given query.
Given that judges have cited companies for failing to provide electronic evidence in a timely manner, data management is taking on new importance by the day. Almost any company may eventually be asked, "What did you know, and when did you know it?" If data-retention policies and the underlying technologies that support them are deficient, the (non)answer could be ugly.
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