By Cary F. McGovern
Commercial records management moved into the third millennium with a great deal of change. What is the effect of industry consolidation, the movement to digital records and the use of the Internet? How has the industry changed and what can we expect?
Effects of the Commercial Records Industry Consolidation
As you probably know, the commercial records industry has been in consolidation for the past decade. Several players have consumed the high end of the market in North America, Western Europe and Australia. Initially, Pierce-Lehay, Brambles Industries Limited and Iron Mountain bought large local and regional businesses vigorously. Over the past two years, Brambles has changed its name to Recall, and Iron Mountain has purchased Pierce-Lehay, making it the world's largest provider of records-management services.
This consolidation has not been easy for Iron Mountain. Taking over Pierce-Lehay has proven to be an arduous task at best. The company will be busy with this integration for the next two years. In many markets, Iron Mountain is suffering from customer backlash and defection. Most local and regional companies had strong relationships with their local vendor. Iron Mountain is more rigid and inflexible to local businesses' unique demands. Although the company has strong relationships in the Fortune 500 market because of national and international contracting terms, it does not have a lock on local and regional markets. In addition, Iron Mountain has typically concentrated on the 1-million-plus population markets. North American markets ranging from 100,000 to 1 million in population size are wide open for new start-ups, with the 100,000 to 300,000 markets having the highest number.
Since Iron Mountain is a publicly traded company, you can substantially rely on its observations about the market and the financial nature of the commercial records 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 the September 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 been more active. This has been the best time to go into the commercial records business in the last 15 years. If you own or operate a self-storage, moving and storage, courier or warehousing operation, you already have many of the components in place for records management. However, it is a different business from 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 management businesses consistently ask. No one knows the answers, but there sure is a great deal of conjecture about the possibilities.
- Where are we now in the transition to digital records?
- Where are we going and how will we get there?
- How long will it take?
I recently addressed the commercial records industry at a conference in Europe where I was on the program with Bill Saffady.1 Saffady is considered a world-class expert in the movement to digital records and a Fellow of ARMA International. As a college professor, he specializes in this subject and writes abundantly. His observations are on a practical level. He postulates that although electronic and digital records are beginning to proliferate, there is a growing body of traditional records that accompanies them. Paper is not going away for some time.
Although we are in a transition to digital2 records, the timeline is being principally determined by cost and sociological implications. Most organizations have literally hundreds of business systems that operate in their day-to-day environment. The cost of implementing new software and systems is staggering. One system at a time will succumb to digital delivery. Even though the current systems will change, paper documents will not be abandoned altogether. In fact, the opposite seems to be true--the more digital systems we invent, the higher the rate of paper consumption. Today, in any network, there are printers, fax machines and copiers. Estimates by industry pundits imply that there are as many as eight to 10 copies of most documents in any enterprise. The mass is growing and no one seems to be able to figure it out.
Of course, for those of us "Trekkies" who observe the weekly antics of Captains Kirk, Picard and Janeway of the Starship Enterprise, we see no paper being used. How did they get there from here, and how long did it take? What we now know is that we like paper and the cost of change is enormous. Surely it will happen, but over a long period of time.
In several of its press releases over the past year, Iron Mountain has emphasized the nature of storage as "permanent revenue." I don't know about you, but to me "permanent" means a very long time. The average growth of paper in storage in all developed countries is approximately 15 percent to 20 percent annually. This number is growing because the base keeps getting larger. Industry estimates indicate there are more than 1 billion boxes in storage in commercial records centers in North America alone, and an additional 1 billion boxes in self-storage facilities, moving and storage operations, warehouses, customer sites and other nooks and crannies everywhere. Countries of Western and Eastern Europe, Australia, South America and Asia are growth markets as well. Paper records storage seems endless.
Implications of the Internet
One of the most significant changes that has taken place in records management over the past 50 years is the use of the Internet. Today anyone can have inexpensive access to the web via a personal computer and Internet service provider (ISP). Many Internet services are available for free or a very low monthly cost. If you don't know of any free services, you can check out Blue Light at www.bluelight.com , a free service available in hundreds of cities. Simply click on the "Free Internet Services" button on the bottom of the site's left-hand toolbar.
You can expect all commercial records centers to use the Internet for customer access, retrieval services and electronic delivery. You may want to try it for yourself by accessing FIRMS software at www.firmshome.com/guest and requesting a free log-on ID and password. Additionally, more and more commercial records operations are offering a transition to digital services such as imaging and data-repository services through the Internet. ISPs, ASPs (application service providers) and SSPs (digital storage service providers) are growing on the Internet.
You can determine where you want to be in the spectrum of commercial records management services. Storage continues to be an annuity business, and services can 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 and methodologies as they apply to electronic records. This may be purchased from ARMA International at www.arma.org.
2 Most people use the words "digital" and "electronic" interchangeably. "Digital" is the more appropriate term since many analog records are in fact electronic as well, such as traditional video and audiotape. "Digital" implies bits and bytes.
FileMan Records Management is developing a model for selling records-management services on the Internet. The company will soon be piloting several versions of its method. If you are interested in becoming a FileMan Pilot participant, e-mail [email protected] or call toll-free (877) FILE-MAN.