The case for electronic records management: physical storage of thousands of documents is becoming passe, and companies should consider enterprise records management systems to save labor costs and provide better security.

• Author: Shukla, Rakesh
• Position: Data Management

Asea change in attitude towards records management has taken place since the tidal wave of accounting scandals and corporate corruption that followed the stock market peak in 2000. At the heart of most of the high-profile shareholder frauds, especially at Enron Corp. and Arthur Andersen, has been the issue of records.

To address these scandals, a plethora of industry and government regulations have been passed that mandate how information in any form, electronic or paper, must be managed and retained for a specific number of years imposing varying retention schedules for records.

For example, the Occupational Safety and Health Administration (OSHA) requires some records to be held for 30 years, Title 21 Code of Federal Regulations (21 CFR Part 11) requires life sciences/pharmaceutical industry records to be held for 2-5 years, and the Health Insurance Portability and Accountability Act (HIPAA) requires retention of healthcare records from 2 to 21 years (and possibly to the life of the patient). Securities and Exchange Commission (SEC) 17a4 and Section 802 of The Sarbanes-Oxley Act have strict record retention requirements as well.

These regulations have teeth. Five Wall Street firms were fined $1.65 million each for not properly saving and retaining their email in 2002. Regulatory compliance failure can result in censure or fines, litigation, reduced market capitalization, federal and/or state suspension from normal business activities and criminal penalties. As a result, enterprise records management (ERM)--the systematic control of records throughout their lifecycle from creation/receipt to use/circulation to maintenance to disposition--has become a high executive-level priority.

Cost of Discovery: Staggering

When a regulatory body, auditor or court requests a record, the cost of discovery can be staggering for electronic records and especially for physically stored records. At some companies, physical and electronic record keeping has been in such a state of disarray that it has often been cheaper to pay regulatory audit fines and fees than to comply by paying the people necessary to find and locate the requested records.

Paper-based filing schemes should be completely rethought and re-implemented from the ground up. In reality, most companies create and retain records in a manual and sometimes ad hoc manner, which is labor-intensive and costly. The solution to discovery requests will not be found in the addition of more people or manual...