Capture E-Mail, Capture Profit
Mackin Imaging Systems anticipates as much as $5 million in additional revenue over the next two years by responding to the growing demand for e-mail management solutions.
The average e-mail user receives 70 e-mails a day at his or her work account. It's not unusual that at least one of them will include a dire warning about the bad things that will happen if the chain is broken and a message is deleted. Most of us don't take that warning very seriously, but for customers in some vertical markets, sending or deleting some e-mails could result in millions of dollars in fines or a 20-year prison term. The guidelines for e-mail retention are becoming more stringent in a number of industry segments, and integrators like Mackin Imaging Systems (Bristol, PA) are seeing a corresponding increase in sales by answering the demand for e-mail management software and consultation. "In the next 18 months to 2 years, I anticipate that e-mail management will be at least a $2 million opportunity for Mackin, maybe even $5 million," says Mario Duckett, VP of sales for Mackin. E-mail management is a broad term for strategies to capture, archive, and retrieve electronic correspondence.
The passage of the Sarbanes-Oxley Act of 2002 drastically widened the need for e-mail management. VARs in the healthcare, pharmaceuticals, and financial vertical markets have been looking at the implications of various regulations, but Sarbanes-Oxley extends the standards for corporate accountability and threatens a 20-year prison term for violators. (For a summary of Sarbanes-Oxley and an analysis of how it will affect the information management industry, go to www.arma.org/legislative/sarbanes_oxly.cfm.)
In the second half of 2002, the financial implications of lax e-mail retention and monitoring policies were made clear to the corporate community. Five Wall Street firms were fined more than $1.6 million each by the SEC (Securities and Exchange Commission) for failing to keep e-mails related to specific transactions. In addition, Merrill Lynch paid $100 million in fines to settle a conflict of interest investigation by New York state after e-mails were retrieved in which analysts privately discredited recommended stocks. Fines like these are likely to become more common if the SEC gets the 48% budget increase requested by President Bush for 2004. If passed, that budget would allow the agency to hire another 710 lawyers.
A Horizontal Technology With Enterprise Appeal
Even before the massive fines were levied last year, analysts were estimating e-mail management would be a $600 million market in 2003, making it a lucrative opportunity for VARs. "The margins are similar to other content management applications," comments Duckett. "But the level of involvement and professional services is a whole different ball game because e-mail is an enterprise application, not just a departmental one." Since an e-mail management system goes right to the enterprise IT level, Duckett advises sending in the most technically adept salespeople when proposing this kind of solution.
"We're actually going to lead with e-mail management for some customers, but it's going to come up somewhere in every discussion," says Duckett. "Because they have an immediate need for e-mail management, it's helping us approach some companies like brokerage firms where we haven't had a strong presence so far. It's also going to be a way to go back to our existing customers with new services." For instance, Mackin has a number of healthcare and insurance customers that are affected by HIPAA (Health Insurance Portability and Accountability Act). This legislation sets forth stringent privacy and security requirements for patient records. E-mail management is attractive when there is a potential for information to be transmitted via e-mail. "Software isn't HIPAA-compliant; organizations are. We stress how we can help customers get there with the products and consultation we offer," says Duckett.
While regulatory compliance is a compelling reason for purchasing an e-mail management system, it isn't the only reason. As a result, the technology is appealing to customers even in non-regulated markets. "In addition to compliance, e-mail management purchases can be driven by internal corporate policies and goals," notes Duckett. "Some companies just want customers to know they are embracing the technology. In the case of those brokerage firms that were fined in 2002, they could afford the fine. What really cost them was being dragged into the public arena and losing customer confidence. If they can get the management and compliance capability for a million dollars, why risk the fine and the publicity?" Mackin has sold e-mail management solutions from LEGATO Systems, Inc. to companies with as few as 60 people or as many as 23,000.
Offer Consultation Beyond Archiving And Retrieval
Especially in the case of regulated industries, customers are looking for a way to index and archive e-mails so they can be reliably and quickly retrieved in the event of an audit or other legal action. However, VARs should be offering software and consultation that prevents e-mail correspondence from becoming a liability in the first place as it did for Merrill Lynch. "Some regulations create the need to search e-mail for 'bad' words," says Duckett. "A broker, for instance, can't use words like 'guaranteed returns.'" In a case like this, Mackin uses EmailXaminer from LEGATO, which supports full-text indexing and helps the customer create a weighted lexicon that throws up a red flag when a suspected violation occurs. The process can also be applied in a positive way, making sure a disclaimer is added, for instance. In either case, an audit trail is created that allows administrators to quickly see how many possible violations occurred and to look for patterns.
In other instances, customers prefer a combination of automated and hands-on e-mail strategies. "We have also set up systems where a compliance officer reads a random sample of e-mail correspondence," says Duckett. "Anywhere from 2% to 5% of e-mails are automatically routed to the compliance officer's inbox for review. In the workplace, there is no such thing as private e-mail, so companies are under no obligation to protect an employee's privacy."
E-mail management software should also relieve customers' burdened mass storage resources by offering functions such as single instance message storage. "Externally generated e-mails cause heavy traffic, but internally generated ones are even worse because they are often sent to multiple people within an organization. With single instance message storage, even if an e-mail is sent to 40 employees, the message is captured once with a tagged identifier," Duckett adds. Because of the volume of e-mail correspondence in most organizations, VARs should also be prepared to offer mass storage hardware, software, and services. (See sidebar on page 78.)
Duckett believes as e-mail management solutions gain acceptance, the next logical step for growing his business will be to apply similar technology to corporate IMs (instant messages). "The technology is available today," he says. "When employees send IMs on company time, they are company property and a potential liability." Analysts are in widespread agreement that use of corporate electronic messaging will continue to grow, and as long as the government keeps regulating it, VARs like Mackin have plenty to :) about.