Driven by regulatory compliance, businesses are expected to spend $860 million on email archiving software and...
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services through 2009, according to research firm IDC in Framingham, Mass.
This number includes sales of hosted (or outsourced) services and licenses for email archiving software, and amounts to a compound annual growth rate of nearly 35%, IDC said.
According to The Radicati Group Inc., a technology market research firm in Palo Alto, Calif., the installed base of users of email archiving solutions has climbed steadily to a pinnacle of 38 million today. During the past three years, a slew of new government regulations have emerged that govern how corporate email and similar electronic communications are stored and managed. The increased adoption is due to companies trying to avoid hefty fines and other penalties that stem from failing to comply with the new laws.
Unfortunately, companies are implementing compliance measures reactively, which means they have less time to plan policies and procedures, said Barry Murphy, a senior analyst at Forrester Research Inc. in Cambridge, Mass.
"Companies are unsure of exactly which emails to archive and for how long. In the absence of best practices, this gets determined by the risk tolerance of the legal department or chief compliance officer," Murphy said.
Compliance affects costs, IT management
Aside from legal issues, though, compliance is changing how companies view email messages. For instance, enterprises realize the business benefits of granular email management. Offloading email from messaging servers to an intuitive archive for easy access and retrieval helps companies better manage their storage space, experts say.
"There is an operational benefit [of email archiving], because email is growing so rapidly that infrastructure is just creaking under the weight," said David Via, a Cleveland, Ohio-based analyst with Ferris Research.
This is critical, considering The Radicati Group's estimate that the typical corporate email account receives about 16MB of data per day -- a figure expected to climb to 21MB by 2010.
Companies will continue to explore email archiving to rationalize IT costs and simplify management, although experts predict that eventually won't be the chief reason they buy. Coming soon, but not yet ready for prime time, are products that combine email archiving with data mining, aimed at helping companies use the information to predict future market demand, respond quicker to customer requests, or roll out new products.
"Companies are asking, 'How do we get value from this?' They want to apply business analytics to it, and I expect vendors will begin to get into this market," said Erica Driver, a principal analyst at Forrester.
Consolidation has become the norm, not the exception, for vendors of email archiving products. Pleasanton, Calif.-based Zantaz Inc. remains the leader with market share of 27%, but most other independent vendors have been gobbled up in a voracious feeding frenzy during the past several years. Notable in 2005: CA's acquisition of iLumin Software Services Inc., while thus far in 2006 Symantec Corp. has acquired IMLogic Inc.
Khmartseva of Radicati Group said the M&A activity is fueled by customer demand for more integrated software, to replace the assortment of point solutions companies presently need to buy. Established database vendors are acquiring smaller archiving vendors to add capabilities they lack. Aside from normalizing prices, the resulting competition should be good for customers because "if there is a problem with an integrated solution, you only have to deal with one vendor" for support.
Heightened customer expectations also are beginning to dictate how software vendors build their infrastructure. Well aware of the liabilities their customers face, some vendors are voluntarily absorbing more risk in service-level agreements.
"We have various financial penalties that can be imposed on us if we don't deliver against an SLA," said Steve Uhring, vice president of sales and marketing at Torrance, Calif.-based LiveOffice Corp.
But what happens if a software glitch results in a regulatory violation that leads to bad publicity, if not massive fines or worse? Even in the intense regulatory climate, experts doubt companies would be able to hold vendors liable, especially since most archiving solutions can be customized by end users.
"Software vendors a long time ago learned to write license agreements so that their products aren't warranted for any particular purpose," Via said.
Instead of suing, companies should define policies for managing their information infrastructure and put systems in place that "support the uniform enforcement of specific policies, so that when they have an audit they can demonstrate that they are in compliance," Tero said.
Garry Kranz is a freelance business and technology writer in Richmond, Va. He can be reached at firstname.lastname@example.org.