Email:  The Hidden Risk

From its early emergence as a communications tool on the Internet, electronic messaging has developed into one of the most heavily used computer-based applications in almost every corporate enterprise.

Today, it is a mission-critical element of daily business life – one that, if not properly managed, can impede and even threaten an organization’s future prosperity. On the upside, a well-managed email records system can be transformed into a significant corporate-knowledge asset that can provide a distinct competitive edge.

Unfortunately, the management of electronic information is a process that often lies below the radar screens of organizational leaders. Many are unaware of how extensively paper-based communication has been superseded by the use of email messaging to transmit important business documents. The storage and archiving of email has not been given the priority it deserves, pointing to a substantial gap in corporate knowledge management – and hidden risks for many companies.

A Tsunami of Digital Information

Today, electronic stores of information are pervasive. Researchers at the University of California at Berkeley have estimated that 93 percent of all information generated in 1999 was in digital form, leaving only seven percent in other media, such as paper and analogue recordings.1

Email is at the forefront of what Ken Withers, a leading researcher in the legal issues of electronic records management, terms as a digital tsunami of electronic information. According to Withers, “Email is no longer a messaging system. It is a record-generating and communicating system, vital to the business process. The question is whether it is being managed with the same thought and attention that go to other record-generating media.”2 The evidence indicates it is not.

The rapid growth in email as part of an enterprise’s expanding store of digital-based knowledge is astonishing. For example, in a report entitled The Corporate Email Market, 2000-2005, Ferris Research projects worldwide corporate mailboxes growing from 131 million in 2001 to 225 million in 2005, which represents an increase of 30 to 50 percent per annum. IDC forecasts that the number of emails sent daily will leap from 9.7 billion in 2000 to more than 35 billion in 2005. It is estimated that corporate employees currently handle an average of 70 email messages per day.

More to the point, email has emerged as the backbone of inter-office communication, and become a repository of knowledge-rich interactions between employees, customers, suppliers and business partners. The ability to attach documents adds to email’s utility as a communications medium, enabling companies to deliver many types of documents with ease, but without corporate controls.

The Knowledge Management Imperative

While most businesses have embraced the digital age, some of the consequences associated with it have not been thoroughly considered. The lack of email management is a significant problem most have not yet addressed. A failure to properly capture the vast amounts of email knowledge generated enterprise-wide can disable the intellectual capital of a company and hit the bottom line, hard.

From a business standpoint, there are a number of excellent reasons for building and maintaining an email capture system that will encourage the sharing of important business-related messages throughout an organization. These involve improving staff productivity and cutting time wasted “reinventing the wheel” or researching work already performed by others. Making previously created knowledge more readily available in electronic form leads to a dynamic and growing body of intellectual capital for staff to use as a resource.

Since an estimated 50 percent of day-to-day business knowledge exists solely in messaging environments, the ability to tap into this information can substantially enhance future business performance when competing with other firms.

Document Management and CRM

Most often, the knowledge contained in emails and other electronic documents is interconnected. For this reason, it makes sense for emails to be retained within an overall electronic corporate document management strategy, to ensure that all information relating to a particular topic can be located in a single system. After all, email messages and their attachments should be managed as corporate knowledge in the same manner as paper records. Using the same infrastructure to store and locate them only makes sense.

In the modern business world, many employees now interact with customers electronically. Finalizing contract details, managing service inquiries, and undertaking confirmation and follow-up all fall within the realm of how email is being used in the business process. In fact, CRM occurs on many different fronts, including face-to-face, by phone and through email. As employees come and go from the organization, proper capture and collaboration of unstructured email dealings is becoming a vital function of the organization’s knowledge and CRM structure.

Properly implemented, such a system can also deliver enormous value to companies that have made large investments in CRM systems. Having all customer interactions, including those elusive email conversations between staff and customers, in one location would bring significant customer-service benefits. The issue of proper capture becomes even more compelling when one considers that written contracts may not be the only legally binding agreement: email conversations leading to a contract’s conclusion may be just as important in divulging the “essence of the deal.”

The Legal Challenge

The legal discovery process is the first test for many companies on how well they manage email records and other forms of electronic document storage, and the evidence shows that few can pass a detailed examination.

The case of Wyeth-Ayerst Laboratories illustrates the point. Wyeth and its sister company, A. H. Robins, were sued in Massachusetts over the weight-loss drug combination “fen-phen.” In that case, the defendant faced the possibility of having to recover the email of some fifteen employees from more than 800 backup tapes.

Although the plaintiff sought relevant messages from only a few of the defendant’s employees, the company’s backup tape system could not easily isolate the required mailboxes without incurring considerable cost. Ultimately the defendants estimated the cost of restoring the tapes for search purposes at between US$1.1 million and $1.7 million. Faced with the potentially exorbitant cost of electronic discovery and the possibility of losing despite such an effort, Wyeth chose to settle with the plaintiff.3 Had Wyeth installed an email archiving system that was easily accessible and searchable, the costs would have been a fraction of this.

There are other costs and risks associated with the electronic discovery process. For example, in the case of a badly organized archival system, a judge might allow opposition lawyers and staff direct access to a company’s corporate information system to search through emails and other documents. This could result in the accidental dissemination of proprietary knowledge and information sought by competitors. Another part of this process would likely involve having a team of lawyers review each document ahead of the opposition, an exercise that could become very expensive.

7 Tips

For Email Management

1: Do something about it now! Don’t wait until you are in litigation or losing customers before you start managing your email knowledge.

2: Create a policy and make it known. Employees typically don’t mind these systems in place as long as they know the rules.

3: Don’t rely on employees to file email. Volumes of email are increasing, policies can be detailed and if you rely on staff to file their own messages they will never get around to it. Even if they do, the company will end up with many duplicates of the same messages, filed inconsistently into obscure locations that nobody else can find.

4: Get organized. Give some thought to how your company needs to use this knowledge and create an indexing scheme that supports this. Whether it is by customer name, subject matter, transaction number or product title (or any combination of the above), set up a scheme that allows people to find the information easily. The real power of a good email capture system lies not in sticking the messages in a vault but in allowing others to use the knowledge to your organization’s benefit.

5: Go for maximum return. It may be too expensive or politically challenging to put together a strategy that works for the entire organization, so start with areas offering maximum return. How about customer service, procurement and legal? Every company can benefit in these areas.

6: Encourage employees to use their ‘own’ accounts. You cannot stop employees doing personal email during work time but if they are going to do it and don’t want their email monitored, then encourage them to signup with a free service provider. This has a number of corporate benefits. It reduces the volumes passing through the corporate server and also offers less distraction when the inevitable ‘joke of the day’ arrives. Also, make sure

you suggest services that offer integrated virus scanning

– most do.

7: Educate people on how to use filters. With email volumes increasing, even junk mail wastes time. People have a habit of still reading it before dismissing the content as junk and deleting it. Educate people on how to setup filters to get rid of these worthless distractions.

Cases like Wyeth highlight the erroneous assumption that has underpinned email’s position within the modern organization since its emergence in the 1970s: that it is a communications medium more like the phone and postal systems than a repository of documents and accumulated business acumen. As email has permeated the business world to become a vital productivity-enhancing tool, emails have moved far beyond the status of phone calls; they’ve become full-fledged business records that must be preserved and made accessible upon demand for internal and external requirements.

The ability to sift out the waste and still capture emails of corporate importance requires good planning and implementation of business rules, and a shift in corporate culture for many companies. Employees need to get used to the fact that everything they send through email, from jokes to contracts, is content owned by their employer.

Destroying Emails Is An Illegal Act

By their very nature, business records must be managed throughout their life cycles according to logical and reasonable procedures established by regulatory authorities and courts. They cannot be destroyed or preserved arbitrarily. Taken with other document records, they tell a story about how an organization has conducted its business, including information that legal adversaries might have a right to see and use in court. Even in instances where it may be perfectly legitimate to delete an email, it can actually be impossible to do so, if through poor email management you cannot locate the original message in the first place.

No matter how one looks at it, the onus is on corporations to maintain adequate and well-organized email records. Failure to do so invites censure from the judiciary and regulator and, potentially, enormous search costs if retrieval of archived emails is demanded during the legal, regulatory or knowledge-management process.

Senior Management Unaware Of The Risk

Alarmingly, senior executives are largely unaware of the serious threat that inadequate email records management represents to their organization. For example, Withers cites a survey of the American Bar Association of in-house business lawyers that found that only 39 percent of their companies had record-management programs that addressed electronic records, and just 28 percent monitored these programs for compliance.4

A more recent survey indicates that 82 percent of lawyers who represent their clients in civil disputes believed their clients did not have an established protocol for handling discovery requests for electronic documents. More than three-quarters did not believe their clients were aware that electronic information could become evidence until they were in litigation.5

Taken together, these findings imply that records-management practices regarding email are primitive or non-existent in many companies, and that most organizations are not prepared to defend themselves in lawsuits that might involve electronic records. One need only consider the settlement costs incurred by Wyeth to find a strong financial argument for companies to modernize their email knowledge and electronic records-management systems.

Regulatory Requirements

Companies operating in such regulator-controlled industries as the stock exchange, utilities, healthcare, airline, power-generation and water treatment are particularly at risk. Fortunately, due to the regulators’ influence and control over these sectors, these firms are typically advanced in meeting their industries’ requirements for paper record keeping, which can have specific notations on indexing, auditing, etc. Addressing these regulations often becomes a critical function for these organizations.

Rulings from the regulator continue to encourage organizations to actively promote policies for email retention, disposal and audit. Unfortunately, since many email software systems do not have the tools to enforce compliance, many corporations end up committing benign neglect – that is, ignoring their own set policies, sometimes in an attempt to avoid expense. Obviously, this behavior increases the risk of being the subject of regulatory sanctions or lawsuits, both of which can impact corporate valuations and distract employees from regular business processes.

Cutting IT Admin Costs

Ironically, most companies don’t realize that the cost of fixing the problem is actually lower than living with it. Studies show that savings can actually be realized in less than twelve months. One reason is that the exponential growth of email is increasing the management workload of IT administration staff. A study entitled End Email Chaos, by OTG Software and Creative Networks, found that doubling the amount of email increased the administrative time spent on messaging-related activities by 25 percent.

The same survey notes that administrators spend 8 to 12 hours per week on backup and archiving tasks alone, and up to 18 hours on email data management. Many email users can’t access backup tapes, so administrators allocate 5 to 6 hours per week recovering archived messages on their behalf, a process that can stretch into days if the email is more than a year old.

The costs to the organization associated with having experienced IT administrators handling what are essentially clerical tasks will only rise in years to come. Overburdened staff will almost certainly welcome the automation of many of these duties. Further, access to this vast store of knowledge could reduce duplication of work within an organization.

Combine the expanding administrative workload with legal diligence and the knowledge imperative discussed earlier, and there is little doubt email archiving, management and activation is becoming a vital information management issue – and one that presents a huge opportunity to fully capture and put to work all the intellectual capital hidden within most firms’ email systems. Given the further explosive growth of email looming just over the horizon, getting a handle on it quickly is a worthy idea.

1. Lyman, P. and Varian, H. “How Much Information?” (2000).

2. Withers, K., “Managing Electronic Mail: The Legal Case”, PowerPoint presentation 2001

3. Ferris Research White Paper, “Electronic Message Archiving”, March 2001

4. Smedinghoff, T., “ABA/ACCA Survey of Electronic Commerce Practices” (Chicago, American Bar Association, 1998)

5. PricewaterhouseCoopers/American Bar Association Section of Litigation “Digital Discovery and its Importance on the Practice of Litigation” (Chicago: American Bar Association, 2000)

Adam Wilkins is vice-president of Yaletown Technology Group Inc. of Vancouver ( Yaletown designs and implements knowledge-management information systems and custom software application technologies. Mr. Wilkins can be reached at