The market for e-mail archiving is about to explode, as businesses scramble to meet SEC regulations and vendors move in on this virtually untapped market.
According to a new report by the Palo Alto, Calif.-based market research Radicati Group Inc., there are thousands of businesses anxious to get a handle on meeting new government requirements that regulate the storage of electronic documents, such as e-mails and instant messaging.
E-mail archiving is the long-term storage of e-mail and instant messaging documents, including attachments, with easy search and retrieval capabilities.
Of companies surveyed recently by Radicati, 86% said that e-mail archiving is important, although 63% reported that they didn't have an e-mail archiving policy. Radicati surveyed 105 CEOs, IT managers and presidents of major businesses in varied industries.
"This indicates that we're about to see a major growth in sales," said Sara Radicati, the firm's president and CEO. "This is such a broad market."
The numbers indicate that users understand e-mail archiving as an issue, Radicati said. They know they ought to do something about it, but they haven't gotten to it yet.
Radicati said that there's still a lot of confusion about what's being offered in the market, and that confusion is likely what has held users back from implementing archiving tools. "It's intimidating to deal with vendors," she said. "The customer doesn't yet understand enough, and they're being sold on some things that they don't need."
At the center of the compliance regulations is SEC Rule 17a-4. In 1997, the SEC revised its thinking on the preservation of communications between exchange members, brokers and dealers, saying that businesses should also keep track of electronic communications like instant messages and e-mails.
Rules regulating the management of business documents are not new. The government has required businesses to maintain business records for some time. What's different now is that electronic records, such as e-mail and instant messaging, are part of those regulations; consequently, the sheer volume of data that needs to be archived is daunting.
The growth, however, won't come from the financial sector, which is now fairly saturated, Radicati said. Although the Securities and Exchange Commission requires that only financial institutions meet the regulations, a growing number of businesses in non-financial sectors are getting serious about e-mail archiving -- hence, a market explosion.
While SEC regulations are the driving force behind the market growth for e-mail archiving tools in the financial sector, non-financial sectors are investigating archiving tools for a number of additional reasons, including storage management, internal legal policies and customer resource management (CRM).
Rules governing instant messaging archiving will become more widespread among all regulatory industries, according to the Radicati report. Content filtering and e-mail archiving markets will become more interconnected, with respect to internal policy compliance of archived documents.
In anticipation of this boom in product demand, the number of vendors offering e-mail archiving tools is increasing rapidly, but the market is still completely wide open. Currently, the largest vendors of e-mail archiving tools are KVS, Educom and Legato "because they started early," Radicati said. Other players, specifically storage vendors such as EMC Corp. and Fujitsu Softek, are aggressively pursing this market. The potential for vendors is huge," she said.
Essentially, there are a few market segments. They include pure-play e-mail archiving vendors, a group that includes companies such as IXOS and Tumbleweed, and the traditional storage backup vendors, such as Veritas, Commvault and Computer Associates. There are also e-mail archiving outsourcers, such as Iron Mountain and Zantos.
E-mail archiving products have been available for almost as long as e-mail itself, but now these vendors, and a number of news ones, are refining functionality by adding advanced search capabilities, security, remote management, and support for platforms such as Microsoft Exchange and Lotus Notes.
During the past several months, a number of archiving vendors have added regulatory compliance features, said Masha Khmartseva, an analyst with the Radicati Group. Also, during the past 12 months, they've added full-text search, which replaces the previously popular headers-only searches.
Traditionally, companies tended to target specific niche markets with highly specialized offerings. Now, Khmartseva said, more vendors and service providers are starting to expand their focus for a broader reach.
According to the Radicati report, the products that are going to sell are those that meet these user requirements: guaranteed preservation of e-mails, advanced search and retrieval features, rapid response time, ease of use, centralized management and policy enforcement capabilities, and easy customization of filters. Users are also looking for vendors who have legal expertise, or at least perceived legal expertise.
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