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E-Mail Archiving Growth Fueled by Federal Rule Changes
December 17, 2007
Changes to the U.S. Federal Rules of Civil Procedure (FRCP), which became effective Dec. 1, 2006, were not welcomed by financial services firms. The rules, among other things, require companies to have enterprisewide retention policies in place for all electronic communications. But in an important corner of the information technology business--e-mail archiving solutions--the changes have created a giant opportunity for vendors.
The updated FRCP, now one year old, is driving new, innovative e-archiving systems and spawning a second generation of products that are rapidly gaining market share.
Because of its heavy use of electronic communications and high degree of regulation, the securities industry has historically been the focus of e-discovery companies. "The market got started with financial services, mainly because of regulation," notes Sara Radicati, president and CEO of Palo Alto, Calif.-based Radicati Group. "The initial focus was on recovery." A new generation of products is "focusing on better search techniques and more fine-tuned ways to search."
According to a study of e-mail archiving vendors released in July by Radicati, the percentage of corporate mailboxes protected by archiving solutions is estimated to grow from 14 percent this year to more than 70 percent by 2011. The total e-mail archiving market--including North America, the biggest spender in this area--is expected to reach almost $1.3 billion by year-end, and grow to over $6 billion by 2010, says the study.
A report from IT research firm Gartner in Stamford, Conn.--"E-Mail Active Archiving Market Update, 2007"--foresees the e-mail archiving business growing at a five-year compound annual growth rate of 37.2 percent, reaching $1 billion in new license sales by 2011.
As the Gartner study notes, the mailbox management system that a firm uses is a huge factor in its selecting an e-mail archiving product. Customers of the three major systems--Microsoft Exchange, IBM's Lotus Domino and Novell's GroupWise--are likely to seek e-mail archiving solutions that are compatible with what they're already using.
"The common technology is the driver for archiving solutions," says Stephen O'Malley, managing director of New York-based FTI Consulting and a specialist in electronic evidence consulting. "What makes the solutions successful is the ability to integrate with as many technologies as possible. Companies will not want to revamp their e-mail solution to be compatible with the archiving solution."
While there are currently hundreds of companies in the e-mail archiving space, consolidation is whittling them down to a relatively small number of leading providers. The Radicati study lists 16 key companies, which it divides among mature players, top players, specialists and trailblazers.
Two vendors singled out by FTI Consulting's O'Malley are Cupertino, Calif.-based Symantec Corp. and EMC Corp. in Hopkinton, Mass. "Both product lines have a wide customer base," he says, "driven by the ability to connect the solution with other types of technologies." Symantec offers a comprehensive suite of user-friendly archiving solutions, while EMC provides extensive storage capability, and the ability to access it relatively quickly. A large part of EMC's customer base is generated by that ability, O'Malley says.