The market for electronic communications retention, retrieval, and supervisory systems is growing at a rapid pace. This growth is driven by a number of factors including the need for better regulatory control over corporate communications, Sarbanes-Oxley compliance, enhanced electronic discovery tools for litigation support, better control over internal policies, the mining of critical information from the unstructured data that is electronic communications, and enhanced mailbox management. Open Source and Open Source-based solutions offer clients distinct advantages over proprietary and/or 100% commercial solutions.

Electronic Communication Archiving Market Segments
The market for electronic communications retention can be divided into six key areas: regulatory compliance, Sarbanes-Oxley compliance, litigation support, internal policy compliance, knowledge management, and mailbox management.

The regulatory compliance facet ensures that all laws and regulations from government entities such as the SEC, NASD, and NYSE are followed. The largest clients in this space include banks (investment, commercial, and retail), other financial institutions, and insurance companies. Large institutions have spent considerable resources complying with regulations over the past five years and have, for the most part, been fined into submission. The most active area of this market segment is small banks, credit unions, and (in particular) hedge funds.

Small banks and credit unions have flown under the regulatory radar with respect to government agencies such as the SEC. Many are aggressively following in the footsteps of their larger brethren and investing their resources in the area of regulatory compliance. Hedge funds are technically unregulated entities with respect to electronic communications retention, although there has been considerable saber rattling from the SEC and other regulatory bodies over the need to police these entities better. As such, our industry is attracting considerable interest from hedge funds with respect to archiving. It's unclear whether this is in response to vocal government regulators or to support electronic discovery in potential future litigation.

A market sub-segment of regulatory compliance is found among those clients for whom compliance with the Sarbanes-Oxley Act requires that they retain their electronic business communications. While Sarbanes-Oxley requires the retention of business records by all public companies, this segment is only beginning to be interested in archiving products. Surely, most public companies have personnel planning for formal document and electronic communications archiving. They are canvassing the existing technologies and putting document-retention policies in writing. However, they are not purchasing products in this space at a high level. I predict that in the near to medium future one of the larger mid-sized company will run afoul of Sarbanes-Oxley because of financial shenanigans or high-profile litigation in which they can't produce the appropriate documents. The SEC will extract a high fine from the offending company, causing many small and medium-sized public companies to fulfill their obligations, resulting in a spike of acquisition in this technology area. At this stage, the regulatory threat doesn't seem real, especially for companies at the smaller end of the public entity universe.

In Europe a similar view exists around Basel II, a set of regulations that seeks to guarantee that all public companies have adequate risk analyses, mitigation strategies, and financial reserves. Basel II is much larger in scope than Sarbanes-Oxley in the United States, since it deals with all risks as opposed to the financial risk areas covered by Sarbanes-Oxley. Basel II is viewed by many public companies as more theoretical than practical, with many companies postponing all but the most rudimentary planning exercises. Just as with Sarbanes-Oxley, the smaller the company the less chance they're adequately planning for the regulations.

The marketing strategy for both Sarbanes-Oxley and Basel II is to ensure that potential clients know you exist and understand your technology, assist them in their planning exercises for the record retention portion of their compliance programs, and be ready to provide solutions quickly when they're motivated by regulators to resolve their compliance issues in this space.

An important driver in electronic communications retention is for the support of electronic discovery in civil litigation. With the estimate that over 90% of the companies with over 100 employees will be involved in civil litigation in the next three years, almost no company can ignore the role of document archiving. Judges have shown no patience with civil litigants who can't produce their documents, including electronic communications, in a timely fashion. Sanctions as well as partial or full default judgments aren't unusual when the material isn't forthcoming. Companies that attempt to produce deliverables such as e-mail that matches certain sender/receiver and keyword criteria from backup media are often surprised at the amount of time and expense third-party companies charge. In-house attempts to extract the material aren't typically cheaper and almost always take much longer. In fact, the cost of electronic discovery in such situations often leads to a disadvantageous settlement in spite of the merits of the case.