First, let’s look at the present business landscape. In recent years, an unprecedented level of government legislation has affected businesses in relation to managing records. In 2002-2003, more than 20 new laws were enacted worldwide impacting how organizations gather and disseminate information. In fact, more were passed in some industries than were written in the previous century. As a result, businesses have had to become easier to audit and to function to a more regulated environment.
One of the best known regulations is the Sarbanes-Oxley Act (SOX) of 2002, created after the Enron and WorldCom financial accounting scandals, which made the world aware of the need for records management. SOX, administered by the Securities and exchange Commission, sets compliance deadlines and publishes requirements. According to the act, all business records, including electronic ones, must be saved for at least five years. The consequences for noncompliance are fines, imprisonment or both. In other words, noncompliance is dangerous and costly.
SOX is fairly detailed, but it doesn’t dictate how businesses must store records, nor does it assist with processes. Therefore, whether it’s a government agency or a hugely competitive enterprise, all organizations need help. The more they know about their business or environment and maintain records organization, the more effectively they can respond to opportunities or crisis situations. A well-positioned records-management operation is the best option for providing that assistance.
New Industry, New Opportunities
Take a look at the current records storage competition in the United States. Did you know that more than 4,500 companies advertise records storage in the Yellow Pages alone? The key words here, however, are “records storage.” The value proposition is no longer in simple storage.
Do you remember the arguments used to convince business owners to store files at a storage facility as opposed to using up valuable retail/office space? According to Jim Oakley at www.mrfeasibility.com, “The average file cabinet holds about eight boxes worth of files. The same cabinet consumes about 9 square feet of floor space. If you are paying $15 per square foot annually for office space, these eight boxes cost you $135 per year to store or $16.88 per box per year. The average cost to store a box in a commercial records center is $3.75 per year. This translates into a monthly box average of 31 cents for storage, plus 15 cents in service fees (indexing, retrieval, etc.).”
Reasoning for records storage makes financial sense to consumers. Competition for this service is intense, but the good news is this: Records management is the future.
In today’s competitive marketplace, critical business decisions are extremely time sensitive; organizations can lose valuable market share if they don’t act quickly to capitalize on opportunities or avoid crises. If you’re a records-management company prepared to go the extra mile by offering local, responsive services to clients, you can expect to reap extra dollars, distinguishing yourself from the competition.
Many existing records-management companies are cashing in by selling their businesses to the larger players. In 2006, many sold out and the pace looks like it will increase in 2007. In fact, at least five acquisitions closed in January, at the time of this writing.
On Jan. 9, 2007, ArchivesOne Inc., identified as the third-largest records-management and document-storage company in the United States, announced the purchase of eastern Secured Data. This marked the 33rd acquisition since ArchivesOne was founded in 1991 and the second in a month for the company. On the same day, Iron Mountain, a global records-storage leader, announced a proposed public offering of approximately $208 million.
The big guys are getting bigger, but that only increases opportunities for you. Why? Many companies prefer to deal with a smaller, local service provider that can offer a very personalized service.
Best of All
The big guys want you to get started. You won’t actually hear them say this, but it’s not often you see these companies start up a new operation. They don’t have the local contacts you have; they don’t have the property you have; they don’t have your customer base; nor do they have the desire. They want you to grow and be successful because it’s in their best interests.
In the January edition of Inc. Magazine, there is an interesting article by Norm Brodsky, one of the most respected men in the records-management industry. “I was ... 47 when I launched the records-storage business in 1990,” he says. “I began with a single truck and 27 boxes that a customer asked me to store for him. Today we have a fleet of almost 100 trucks, and we store more than 3 million boxes in seven warehouses.”
Brodsky is considering selling the business and has no shortage of potential buyers. Success is not just measured by stored boxes. It can also be gauged by being the major player in a small market, which can make for a profitable business and a future acquisition target for the big guys.
What does this mean for you? It’s all in the timing and the time is now. Many businesses need help managing not just storing their records so they can meet operational needs, accountability requirements and community and government expectations.
Numerous facilities claim they offer records storage, so if this is the segment you want to be in, consider yourself one of the pack. however, if you want to become part of an emerging industry and expand business beyond the storage element into records management, you need to become a “solution provider.”
Plenty of businesses will be watching your progress. If you’re successful and enjoy it, then keep growing. If you’re successful but decide this isn’t a long-term venture, take the phone call when it comes.
Ian Thomas is vice president of business development for O’Neil Software. For 25 years, O’Neil has provided software and hardware solutions for more than 850 records centers in more than 60 countries, ranging from startups to multinationals. O’Neil’s software solutions manage multiple types of data including traditional storage boxes, file folders, documents and tapes. O’Neil also provides barcode tracking, portable printers, laser scanners, wireless handhelds and web technology featuring RSMobile software. For more information, visit www.oneilsoft.com.