Commercial Records Management 2001

By Cary F. McGovern

Commercial records management moved into the third millennium with a greatdeal of change. What is the effect of industry consolidation, the movement todigital records and the use of the Internet? How has the industry changed andwhat can we expect?

Effects of the Commercial Records Industry Consolidation

As you probably know, the commercial records industry has been inconsolidation for the past decade. Several players have consumed the high end ofthe market in North America, Western Europe and Australia. Initially, Pierce-Lehay,Brambles Industries Limited and Iron Mountain bought large local and regionalbusinesses vigorously. Over the past two years, Brambles has changed its name toRecall, and Iron Mountain has purchased Pierce-Lehay, making it the world'slargest provider of records-management services.

This consolidation has not been easy for Iron Mountain. Taking over Pierce-Lehayhas proven to be an arduous task at best. The company will be busy with thisintegration for the next two years. In many markets, Iron Mountain is sufferingfrom customer backlash and defection. Most local and regional companies hadstrong relationships with their local vendor. Iron Mountain is more rigid andinflexible to local businesses' unique demands. Although the company has strongrelationships in the Fortune 500 market because of national and internationalcontracting terms, it does not have a lock on local and regional markets. Inaddition, Iron Mountain has typically concentrated on the 1-million-pluspopulation markets. North American markets ranging from 100,000 to 1 million inpopulation size are wide open for new start-ups, with the 100,000 to 300,000markets having the highest number.

Since Iron Mountain is a publicly traded company, you can substantially relyon its observations about the market and the financial nature of the commercialrecords business. For more information, read the company's press releases at www.ironmountain.com/index.htm. To get another look at how the consolidation has affected local competition,you may want to read Norm Brodsky's article, "Size Matters," in theSeptember 1998 issue of Inc. magazine. It can be found at www.inc.com/incmagazine/article/0,,ART992,00.html.

My start-up consultation services with self-storage operators have never beenmore active. This has been the best time to go into the commercial recordsbusiness in the last 15 years. If you own or operate a self-storage, moving andstorage, courier or warehousing operation, you already have many of thecomponents in place for records management. However, it is a different businessfrom self-storage and requires an effective business plan.

Three Basic Questions for the Movement to Digital Records

There are three questions that operators of commercial records managementbusinesses consistently ask. No one knows the answers, but there sure is a greatdeal of conjecture about the possibilities.

I recently addressed the commercial records industry at a conference inEurope where I was on the program with Bill Saffady.¹ Saffady isconsidered a world-class expert in the movement to digital records and a Fellowof ARMA International. As a college professor, he specializes in this subjectand writes abundantly. His observations are on a practical level. He postulatesthat although electronic and digital records are beginning to proliferate, thereis a growing body of traditional records that accompanies them. Paper is notgoing away for some time.

Although we are in a transition to digital² records, the timelineis being principally determined by cost and sociological implications. Mostorganizations have literally hundreds of business systems that operate in theirday-to-day environment. The cost of implementing new software and systems isstaggering. One system at a time will succumb to digital delivery. Even thoughthe current systems will change, paper documents will not be abandonedaltogether. In fact, the opposite seems to be true--the more digital systems weinvent, the higher the rate of paper consumption. Today, in any network, thereare printers, fax machines and copiers. Estimates by industry pundits imply thatthere are as many as eight to 10 copies of most documents in any enterprise. Themass is growing and no one seems to be able to figure it out.

Of course, for those of us "Trekkies" who observe the weekly anticsof Captains Kirk, Picard and Janeway of the Starship Enterprise, we see no paperbeing used. How did they get there from here, and how long did it take? What wenow know is that we like paper and the cost of change is enormous. Surely itwill happen, but over a long period of time.

In several of its press releases over the past year, Iron Mountain hasemphasized the nature of storage as "permanent revenue." I don't knowabout you, but to me "permanent" means a very long time. The averagegrowth of paper in storage in all developed countries is approximately 15percent to 20 percent annually. This number is growing because the base keepsgetting larger. Industry estimates indicate there are more than 1 billion boxesin storage in commercial records centers in North America alone, and anadditional 1 billion boxes in self-storage facilities, moving and storageoperations, warehouses, customer sites and other nooks and crannies everywhere.Countries of Western and Eastern Europe, Australia, South America and Asia aregrowth markets as well. Paper records storage seems endless.

Implications of the Internet

One of the most significant changes that has taken place in recordsmanagement over the past 50 years is the use of the Internet. Today anyone canhave inexpensive access to the web via a personal computer and Internet serviceprovider (ISP). Many Internet services are available for free or a very lowmonthly cost. If you don't know of any free services, you can check out BlueLight at www.bluelight.com , a freeservice available in hundreds of cities. Simply click on the "Free InternetServices" button on the bottom of the site's left-hand toolbar.

You can expect all commercial records centers to use the Internet forcustomer access, retrieval services and electronic delivery. You may want to tryit for yourself by accessing FIRMS software at www.firmshome.com/guestand requesting a free log-on ID and password. Additionally, more and morecommercial records operations are offering a transition to digital services suchas imaging and data-repository services through the Internet. ISPs, ASPs(application service providers) and SSPs (digital storage service providers) aregrowing on the Internet.

You can determine where you want to be in the spectrum of commercial recordsmanagement services. Storage continues to be an annuity business, and servicescan offer relatively high margins while technology decreases in price every day.

1 Saffady, Willam, Managing Electronic Records, 2nd Edition. Price:$35, Catalog No. A4609. This Association of Records Managers and Administrator's(ARMA) second edition provides discussion of records management concepts andmethodologies as they apply to electronic records. This may be purchased fromARMA International at www.arma.org.

2 Most people use the words "digital" and "electronic"interchangeably. "Digital" is the more appropriate term since manyanalog records are in fact electronic as well, such as traditional video andaudiotape. "Digital" implies bits and bytes.

Regularcolumnist Cary F. McGovern is a certified records manager and the principal ofFile Managers Inc., a records-management consulting firm specializing inimplementation assistance and training for new, commercial records-centerstart-ups, as well as marketing support for existing records centers. For moreinformation, visit www.fileman.com.

FileMan Records Management is developing a model for sellingrecords-management services on the Internet. The company will soon be pilotingseveral versions of its method. If you are interested in becoming a FileManPilot participant, e-mail [email protected]or call toll-free (877) FILE-MAN.