On Message: How Companies Store CommunicationsBy Larry Barrett | Posted 2002-09-16 Print
It's a brave new world for storing communications with customers. And, if you have to meet these regulations, it can be expensive
Technology executives at brokerage firms, banks and energy companies already store huge amounts of data on trades. Now, if they want to stay on the right side of federal regulators, they'd better be stepping up their storage of e-mail messages and instant messages, as well.
In the wake of accounting scandals at companies such as Enron and WorldCom, the U.S. Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange all are more vigilantly enforcing SEC regulation 17a-4, which requires trading firms to preserve all e-mail and instant messages—sent or received—for at least three years. Not only must they store all this data; it also must be kept in a nonerasable, non-rewritable format that can be indexed and downloaded on demand for regulatory officials.
"Everything from Martha Stewart to Enron has brought e-mail into focus. This is getting people's attention now and it's something you just have to do," says Jim Pirak, vice president of compliance at ShareBuilder Securities, a subsidiary of Netstock Corp.
Improved and increased data storage comes at a cost federally regulated companies are forced to address, but it's an issue other industries would do well to learn more about. In a climate where customers and investors are demanding more accountability, many analysts believe accessible record-keeping will become critical to providing evidence and establishing credibility.
"This is an expense, pure and simple. It's not like installing a CRM (customer relationship management) system where you expect to get some payback from it. It's a cost," says analyst Adam Couture of technology consultancy Gartner Inc.
A large securities firm with 10,000 brokers can generate about 500 gigabytes of e-mail a month. Storing e-mail for at least three years means roughly 54 million e-mails, or 16 terabytes of data.
Just storing the data on servers can cost a company hundreds of thousands to several millions of dollars each year. Having the personnel in place to index and retrieve the data further increases costs. And if a brokerage firm has not saved the data for the prescribed time, it will have to pay an outside digital document specialist to come in to hunt down and restore the pertinent data.
Analysts estimate that for every $1 a company spends storing data on tape or disk, it spends another $4 to $7 to manage it. When it comes to archiving, the vast majority of costs comes from the management, software and support needed to inventory and retrieve the data.
IT Solutions Builder TOP IT RESOURCES TO MOVE YOUR BUSINESS FORWARD
Which topic are you interested in?
What is your company size?
What is your job title?
What is your job function?
Searching our resource database to find your matches...