Poor Email Management Costs $20-Million
Poor Email Management Costs $20-Million
March 3rd, 2006:US financial services giant, Morgan Stanley is fined US$15-million (AU$20-million) this month for failing to manage its emails.
The massive fine comes as a result of the company's failure to deliver emails relating to a court case it was fighting with billionaire financier Ronald Perelman. That case saw Perelman win US$1.7-billion from Morgan Stanley as he successfully sued them for not uncovering a fraud in the Sunbeam appliance company - in which Perelman held a stake.
The latest fine, from the Securities and Exchange Commission (SEC), falls into line with the opinion of the judge in the Perelman case who, in summing up, told the jury that MS's failure to retrieve and present the relevant emails was, "an act of bad faith". This is the second time in five years that Morgan Stanley has been fined for poor email management policies. With a US$1.65-million SEC fine already under its corporate belt from 2002, the highly respected, globally position financial services behemoth could probably do the maths that would swiftly point out that a well-managed email infrastructure would have saved its shareholders billions.
The January/February 2006 print edition of Image & Data Manager contains a major feature on the challenges presented by the avalanche of emails that organisations now have to deal with. David Thompson, Managing Director of AXS-One Pty Ltd, comments on this feature and related email archiving issues here.
Great to see you covering the highly important issue of e-mail management in your January/February 2006 issue. Within the cover story it said "Archiving correctly is another major headache..." In our opinion, the majority of IT Managers would no doubt agree with this.
Most organisations still rely on back ups to retain content such as email and think that's enough. But when you consider that email and electronic content has now replaced hard copy letters, memos and reports as the principal method of conveying information, being able to find historical emails and other electronic records quickly in response to a court order to produce evidentiary documents adds a new dimension to "email management". The average employee sends and receives 21,000 emails per year. If we assume that after deletions half of these will be backed up along with other electronic content, ensuring fast and accurate access to specific records that have been retained on backup tapes becomes the real headache.
A legal discovery order can costs millions. In a recent US case, discovery costs for 17 backup tapes averaged $US78,000 per tape. Hence, it's not surprising that often companies settle out of court rather than pay to have it undertaken. IT managers should also be aware of the inability of a backup approach to protect their organisation from wilful destruction or modification of evidence. So it seems that archiving may not be such a headache after all.
Proven technology does exist where a single archiving solution can capture every incoming and outgoing email and their attachments, instant messages, output from ERP systems such as SAP, desktop documents, images, voice, etc.
AXS-One's architecture was developed and built to provide massive scalability and provides Google-like search speeds for foreground searches. Our technology automatically transfers and archives electronic documents in their original format, into a single repository that retains and manages the data using a global directory.
So rather than organisations relying on end users to decide what to retain and running the risk of key documents being intentionally or accidentally deleted, the entire process is managed and enforced by technology without impacting users. Because we use write-one, read-many (WORM) technology, they can't be modified or deleted.
Backup systems are still critical for disaster recovery purposes. And an archiving solution is crucial for any organisation that is concerned about governance, regulatory compliance, litigation risks and the operational management of emails where their destruction at the end of their retention period is equally as important as their retention.
New laws in Victoria will see individuals or corporations convicted of intentionally destroying documents to prevent evidence being used in court facing up to five years imprisonment. Companies in other states may find that if they have a Victorian office or deal with a Victorian company, they will come under that legislation.
A more intelligent, long-term strategic approach is to have a corporate-wide archiving capability that handles all data types consistently and automatically. This not only removes the onus from the individual but also gives the organisation water-tight records retention.
AXS-One utilises commodity hardware and delivers unmatched performance supporting both Windows and Unix. Our solution is relevant not only for IT managers, but also an organisation's CEO and directors, and HR, finance and legal managers.
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