Iron Mountain Keeps Truckin'

Who cares about a few lost tapes? Iron Mountain's digital business is on the upswing

June 14, 2005

3 Min Read
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Iron Mountain Inc. (NYSE: IRM) is using an acquisition and a new service to remind the world that it's gone digital -- sort of (see Iron Mountain Integrates Connected ).

The records management and data protection firm is still very much about manual administration of business records (we're talking trucks, vaults, and shredders). In fact, that's what got it into hot water a couple months back, when tapes from Time Warner Inc. (NYSE: TWX) went missing on their way to Iron Mountain's facility (see A Tale of Lost Tapes).

But execs say 1,000 corporate customers in 70 countries have queued up for 9 petabytes of its digital facilities, thanks in part to its acquisition last year of Connected Corp. for $117 million (see Iron Mountain Gets Connected).

Services like online backup for PCs, digital records management and archiving, and now compliance assessment will account for roughly $75 million to $80 million in sales for all of 2005, execs say. While that will be just about 4 percent of projected sales, Iron Mountain expects next year's digital business to grow 35 percent (see Iron Mountain Reports Q4).

Hence, today's announcement. "It's sort of a coming-out party for the digital business at Iron Mountain," says John Clancy, the former COO of Connected who is now executive VP of Iron Mountain's digital services unit.Despite growing competition in all kinds of storage services, Clancy's confident Iron Mountain has sufficient differentiators to keep its momentum. He's particularly proud of Connected's data protection software and service and the electronic vaulting Iron Mountain provides through a deal with LiveVault Corp.

Then there's the new Compliant Records Management Program, which gives customers a "free risk assessment" to measure how well they're keeping things like data records in line with new regulations like Sarbanes-Oxley.

Of course, this kind of estimate is also being offered by nearly every big storage equipment supplier and service provider that competes with Iron Mountain, such as Anacomp Inc., MTI Technology Corp. (Nasdaq: MTIC), and SANZ.

In its favor, a rising tide should lift Iron Mountain's digital boat along with the rest -- at least a bit. A recent report from IDC says the market for storage services is growing solidly, if not astronomically. In the U.S., the firm predicts growth of 4.3 percent over the next five years and slightly higher growth in other regions internationally, particularly in the Asia/Pacific.

What's more, most companies are looking to their suppliers of storage gear and services for help, according to IDC. That puts Iron Mountain in league with other cream-skimmers.Nothing's likely to happen to those Iron Mountain trucks in the meantime. "I don't think Iron Mountain's core business in traditional records management is going away," says Doug Chandler, program director of storage software and services at IDC. "But they're seeing how much digital information is being created every day, and how much hard copy converted to digital format. They want a bigger piece of that pie."

As for lost tapes, Iron Mountain's moved on, apparently unscathed. "It hasn't affected our business. Internally, we reviewed things, but fundamentally our reliability was already five nines," says Ken Rubin, EVP of corporate marketing at Iron Mountain. Despite some minor "refinements," Iron Mountain isn't preoccupied with the human error factor, he says.

Mary Jander, Site Editor, Byte and Switch

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