E-Mail Archiving Stealing ECM Spotlight?

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Corporate concerns about compliance and records retention are driving a boomlet in e-mail archiving applications.

Between 2002 and 2004, according to IDC, the market has exploded in a six-fold growth in sales, reaching about $180 million last year for enterprise content management (ECM). That’s a lot of e-mail archiving for software providers within the ECM sector, such as Zantaz, KVS and iLumin. Given the success of e-mail archiving providers, some analysts wonder if a full ECM solution is even necessary.

Enterprise Strategy Group analyst Peter Gerr said the fundamental features of e-mail
archiving make it complete enough for some businesses.

The ability to quickly keep files from being deleted or altered, combined
with the practice of retrieving e-mail, lowers storage costs and improves an
organization’s ability to retain records and protect intellectual property.
That’s about all some corporate customers are looking for in terms of
content management, Gerr said.

“I believe with ECM, solutions from Documentum, FileNet and Hummingbird
may be seen as invasive by some companies. They’re kind of the ERP of the
21st century in that they take years to get right,” Gerr said.

He argued that it is a lot easier to see ROI from e-mail
archiving than it is for most companies with an ECM solution. For one, he
said, e-mail is universal. For another, “ECM disrupts business processes.”

Meanwhile, the burgeoning e-mail archiving market won’t be stopped, said IDC
senior analyst Julie Rahal Marobella, who predicted it would enjoy a compound annual growth rate
of more than 50 percent through 2008.

Sarbanes-Oxley, HIPAA and other regulatory mandates have sparked a good deal
of consolidation among rivals looking to milk this new cash cow, triggered
in 2003 by EMC’s acquisition
of Legato. Analysts expect this trend to continue.

Leaders Are Optimistic

If e-mail archiving vendors have designs on cracking ECM, they’re not
broadcasting it. But such endorsements could open new doors for market leaders. While Marobella
declined to provide exact market share figures, she did pronounce Zantaz the
market leader in terms of revenue for 2003, followed by KVS and iLumin.

Zantaz has an ace in its deck, said CEO Steve King. The company provides two
types of e-mail archiving — hosted and on-site software — at a time when
most vendors just sell software and tell customers to install it and run it
themselves.

“Most of our competitors sell software, and most of the hosted players are
hosting it from one of the other providers,” King said. “So our
differentiation is not that we have hosting, but that we have both.”

While its purchase of Educom
gave Zantaz on-site software, the SteelPoint
buy gave Zantaz a strong presence in discovery software and litigation
support. King said this is compelling for customers who need the expertise
to not only find files, but fork them over to meet subpoena requests.

Marobella and Gerr agree, but they also believe Zantaz has able competitors
in iLumin and KVS, which was acquired
by Veritas. Veritas is in the process of being acquired
by Symantec, further highlighting the consolidation among companies that
manage, protect and serve corporate data.

Jeremy Burton, executive vice president of products at Veritas, said KVS was
the obvious choice for Veritas among the sea of smaller vendors for two
reasons: The company focused on supporting Microsoft Exchange better than
anyone, and the product had an “elegant architecture.”

As an example of how respected KVS is in the market, Burton noted that EMC
partners with KVS and uses its products in Centera systems despite selling
its own Legato brand. “More often than not they’ll bring us into a deal
before Legato,” Burton said.

While Burton admits Veritas initially believed e-mail archiving would not
take off, KVS’s technology and traction has made a believer out of the
company. In the forthcoming KVS Enterprise Vault 6.0 software, Burton said
KVS will bundle more business intelligence capabilities and add APIs
that plug into a variety of devices.

iLumin, which Gerr and Marobella said have tackled the problem of discovery
and compliance head-on, is also promising.

Mike Gundling, iLumin’s senior
vice president of product management, said more firms across industries are
keeping e-mail for more employees for longer periods of time “so it’s
becoming a huge information management challenge for them.”

iLumin aims to hit the sweet part in the market by offering comprehensive
e-mail services, covering mail storage management, discovery, compliance and
records management.

Moreover, Gundling said “we’re trying not to have religion so we can
integrate in an open way with a systems vendor’s storage strategy or content
management strategy. We don’t want to be tied too close to one vendor.”

Advice For Archivists

Marobella said industry watchers can expect continued consolidation as
competitors look to pad their archiving portfolios with additional discovery
or records management utilities.

But because acquirers are purchasing archivists to bolster either their ECM
lines or storage management suites, it is impossible to tell what category
e-mail archiving will fall into.

“Where is e-mail archiving headed? Will it become more of a part of content
management like Documentum or FileNet, or will it be back-up and archive in the
storage market like KVS?” Marobella wondered. “It’s something we need to
wait and see about. The next year is going to be pretty interesting.”

Regardless, Gerr said e-mail archivists can’t rest on their laurels by
selling to financial institutions. Although this space has been vendors’
bread-and-butter to date, that target segment can reap only so much reward
before it dries up.

“Over the last 24 months, we’ve seen tactical deployments of enterprise
messaging and archiving, but I’m not convinced the surge in the number of new
solutions to address the exploding cost of storage is over,” Gerr said. “The
regulatory impact of compliance has been felt in other industries.”

Vendors should also focus on expanding their selling scope to the government
and health industries, as well as to life sciences and pharmaceutical firms,
Gerr said.

One thing Zantaz, KVS and iLumin all agreed on was that creating more
APIs that plug into storage devices or ECM systems will give them leverage
and help them find placement in the offerings of large systems vendors.

Burton summed up how to approach the market going forward.

“All we can do is keep on top of what the customer wants,” he said. “But
it’s a good problem to have because we’ve just scratched the surface of what
we can do with that.