VideoTwo years ago, Gary Loveridge had a sudden realization — the bad kind. As general counsel for Sutter Health, a nonprofit health-care network, he realized that the way his organization handled growing volumes of E-mail posed a risk. Sutter Health is a highly decentralized group with 40,000 employees spread across Northern California. Hundreds of thousands of E-mails flow daily across multiple systems, and back then, the only formal copies were stored on hard-to-search backup tapes that were regularly overwritten. In an industry rife with lawsuits, that was a problem. And without an easily searchable E-mail archive, discovery was extremely labor-intensive. "I looked at the costs involved in trying to respond to subpoenas, and it seemed it was going to be extraordinarily expensive without a new system," says Loveridge.
Sutter Health is now rolling out a new program that will automatically capture and store E-mail in a centralized, nonrewritable repository that can be explored using a powerful search engine. From a risk-management point of view, CFO Bob Reed says the $1 million investment was a no-brainer. "We live in a very litigious society, and it's obvious to me that as a high-profile organization we will have lots of lawsuits," says Reed. "This seems like a pretty straightforward way to lower those costs."
From Wall Street to Silicon Valley, companies in a wide range of industries have seen E-mail emerge as critical evidence in legal and regulatory matters. Motivated by those concerns and the desire to improve data-storage and retrieval capabilities to enhance internal operations, companies are formulating new policies and investing in electronic records management (ERM) technologies to tackle what can be a dauntingly complex chore. Gartner Inc. says the market for E-mail archiving technology grew 104 percent last year, and Forrester Research puts the compounded annual growth rate for records-management software at 159 percent from 2002 to 2006.
The concept is hardly new: as core IT competencies, storing and finding data have long loomed near the top of the list. But changes in the way business is done necessitate a fresh approach. Electronic information continues to mushroom. A University of California, Berkeley, study found that 92 percent of all new information is stored in digital format.
E-mail, the most troublesome source of electronic records, is growing not only in volume but also in business importance. In a recent survey conducted by the Association for Information and Image Management, 70 percent of respondents said they use E-mail to negotiate contacts, and nearly half use it to respond to formal regulatory inquiries. "Today businesses regularly execute contracts with a click, amend them with a voice-mail message and breach them with a blog," says Randolph Kahn, founder of Khan Consulting Inc., which specializes in compliance, policy, and legal issues related to information management.
At the same time, recent regulations have upped the stakes. Sarbanes-Oxley and the Health Insurance Portability and Accountability Act (HIPAA) both include fines or prison sentences for mishandling certain types of records. Violations of retention rules from the Securities and Exchange Commission, the National Association of Securities Dealers, the Federal Drug Administration, the Occupational Safety and Health Administration, and myriad other federal and local bodies also carry stiff penalties.
Regulations are influencing records-management practices even at exempt organizations. For the Church Pension Group, a nonprofit organization that manages the pensions of Episcopal Church employees, Sarbanes-Oxley has been a factor in its decision to set up an ERM program. CFO Daniel Kasle knows it is only a matter of time before a similar law is passed for nonprofits. And, he says, "even if there were no new law on the horizon, Sarbanes-Oxley has set a new standard for operating a business. We might as well work toward that."
Reaping Multiple Dividends
A good ERM program can go a long way toward making compliance easier. Just ask Florida Department of Health CIO David Taylor. Florida's "Sunshine Law" opens all public records, including E-mail, to public inspection. When Taylor started his job two years ago, the department's E-mail retention policy relied on employees to remember not to delete E-mails before nightly tape backups took place. Records requests came in once or twice a week, and each time staff members had to hunt down and restore what they hoped were the appropriate tapes before the tedious search for E-mails could even begin. The whole process took hundreds, if not thousands, of man-hours.
Today, an E-mail archiving system that uses KVS Enterprise Vault software, EMC Centera storage hardware, and an AltaVista search engine has cut the time needed to find a given E-mail by 90 percent. And by storing messages older than 30 days centrally, rather than on desktops and local servers, the department has improved E-mail system performance for its 17,000 users and reduced its local server needs. Because of those factors, the new system should pay for itself within two years.
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