EMC Banks on Archives

EMC Corp. (NYSE: EMC) has formed a technology alliance with email archiving software firm KVS Inc. and document storage services company Iron Mountain Inc. to cash in on the emerging market for email archiving (see EMC, Iron Mountain, KVS Archive Email).

Essentially, KVS has created a mailbox archive to work on Centera, EMC's disk-based near-line backup device, giving users the ability to easily store and search through archived email, says Mary Kay Roberto, VP of sales for North America at KVS. Iron Mountain, a third-party services company, provides the remote replication part of the offering (see EMC Has Eyes for Huge Archives).

"This technology alliance delivers the only integrated email archiving solution including the third-party service piece to comply with new regulations," says Roy Sanford, VP of markets and alliances for EMC's Content-Addressed Storage (CAS) division.

Gartner Inc., in an August 2002 report, estimated the market for email active archiving will grow to $134 million by 2006. But with the Securities and Exchange Commission (SEC) starting to enforce regulations that require financial institutions to better manage email communications or face huge fines, vendors are expecting it to be much larger.

All securities companies now have to keep a copy of their email with a third-party provider and be able to provide access to it at the SEC's request, says Margaret Rimmler, VP of digital archives at Iron Mountain.The fines are hefty when companies fail to keep their email records in order. Five top Wall Street brokerage firms were fined a total of $8.25 million in December 2002 for not preserving email communications. In a statement issued at the time, the SEC, the New York Stock Exchange, and the NASD said, "Each firm had inadequate procedures and systems to retain and make accessible e-mail communications." Rules require the firms to keep such records for at least two years.

The discovery that the firms were not properly keeping communications was made as securities regulators probed the brokerages to find out whether analysts were pressured to issue overly bullish research to help win investment banking business.

"It's a doubled-edged sword for financial companies, as they must retain email for two years -- but they also want to eliminate smoking guns, so they want to keep the data only for as long as they have to," says Sanford. Digital archiving has "destruction management capabilities," notes KVS's Roberto. "So they can get rid of it as soon as is possible." [Ed. note: Where there's a will...]

This solution might be timely for the banks, but it's going to cost them an arm and a leg to implement. A single Centera system starts at $205,000 for 5 Tbytes of usable capacity. And you need two of these, by the way: One in your data center and one at an Iron Mountain facility. The total solution is probably pushing half a million dollars even before you throw in the software and services. Yowch!

However, argues Sanford, "that's nothing compared with the litigation exposure. This is a cookie-cutter offering that protects any financial institution." Interesting; so if the technology fails and emails get lost, and the SEC comes knocking on the door, can the bank blame EMC? A resounding "no" is the answer from all parties.Other companies that provide email archiving software include: @rchive-it.com, TrueArc (acquired by Documentum), Educom TS, eManage, IBM Corp. (NYSE: IBM), iWitness, Legato Systems Inc. (Nasdaq: LGTO), Tumbleweed, TopCall, and Veritas Software Corp.