eDiscovery Spending on the Rise in 2010

By Michael
December 10, 2009

eDiscovery Survey Spending by organizations to comply with electronically stored information (ESI) regulations stemming from lawsuits and regulatory probes has risen this past year and will continue to rise in 2010, according to a new study.

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  1. I think if you were to take data from 6 organizations that have gone each way, you’d find that it takes a nmuebr of years before there are cost benefits from outsourcing the management of active records and there are a nmuebr of reasons for this.Initial costs are high- the packaging, indexing and transfer of records to an outside provider, including their ingestion costs on a new contract are steep. Labor and effort to pack and inventory/index existing records, combined with carton costs alone (depending on overall volume) are not trivial. In addition, most vendors charge a fee for pickup and initial receipt, including entering data into the system for tracing your assets .this is also non-trivial.Re-purposing of existing space- the shelving or cabinetry has to be disassembled and removed, sent for some other use elsewhere and/or sold. It will likely not garner as high a price as the labor associated with removing it from the current use, and it will be FAR less than the initial purchase price. The space, if previously designed for storing records properly will generally not be suited for much other than storage. It will generally be windowless, built adjacent to the core of the building, not have many electrical service outlets and will have a non-standard air supply and exhaust system designed to suit low humidity requirements for records.Direst costs for storage and services- any request to pull records from storage will result in a remove from shelf, pack, transport, and ultimately a return fee. You will also have to establish a practice for tracking the records while removed from storage to ensure they return, or if destroyed, the record is updated to indicate this. You’ll also have a charge for destruction- even if you remove the cartons/files permanently and decide to destroy them yourself, you have to pay an ADDITIONAL fee for this Permanent removal (check your T&C if you doubt me!) You will also incur a charge monthly for the storage of cartons or files, and a decision has to be made about how to allocate the cost for these new direct charges- back to the owning departments’ or as an overhead charge? And how do you budget for this if you don’t know the volume or activity?Misplaced, lost or destroyed files- while they are in YOUR direct control, you can establish policies, practices and mechanisms to avoid any of these concerns. When they are with a third party, along with thousands of records belonging to others, the possibility of commingling or improper handling goes up astronomically. There are numerous examples of fires up to and including total warehouse losses occurring when records are stored with third party providers and again, check your T&C, but their liability is typically limited to $1 per carton MAXIMUM. If you desire a higher level of protection, sometimes you can purchase this but the provider has to be able and willing to provide it. But how do you estimate the value of records and is it worthwhile to purchase some form of insurance to cover this?Routine processing of short term retention records- a large volume of active’ records belonging to organizations have a current year plus 2 years (CY+2) retention. The costs to pack, ship, ingest, service, pull and destroy these over a 2 year period is likely to be MUCH higher than any costs you would incur internally for handling them. This is especially true if they are accessed multiple times during the 2 years they are in storage. You need to calculate a break even point to determine if it’s even worth considering them as candidates for transfer to offsite storage.Depending on your total volume, activity and retention periods, there may be cases where you will see a reduction in overall costs after 5 or more years, but it would be limited cases where you would see a direct benefit any sooner. And how do you calculate the risks? If you have sensitive records that you have to be concerned about the content being exposed during transfer or while in storage, you can only pass along so much of that liability. Ultimately, it still falls upon you, because YOU made the decision to contract it to a third party. And in the event of some catastrophe or disaster where you need near immediate access to your records that are stored elsewhere, what will the cost to your organization be of the delays in access?Years ago, when I ran a consulting service for records management and clients would ask about this issue I would help them identify the benefits and risks, and there were very few cases where contracting it out was the recommendation. My advice to them was Do what you do best; Contract the rest . About the only things that went offsite were the records that had a statutory or legal long term retention requirement (25 or more years) that were essentially NEVER accessed once they had reached a period of inactivity. But even in these cases, they had to consider the cost of in and out , shipping and storage over 25 years to determine how much per carton it cost them to store with w 3rd party as opposed to a dense storage situation within their own environment.

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