Realizing the Cost Savings and Other Benefits from SaaS Archiving
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1 y Realizing the Cost Savings and Other Benefits from SaaS Archiving An Osterman Research White Paper Published January 2009 SPONSORED BY onsored by sponsored by Osterman Research, Inc. P.O. Box 1058 Black Diamond, Washington Phone: Fax:
2 Executive Summary Businesses, government agencies and other organizations receive, generate and store enormous amounts of information. According to an analysis performed by the University of California at Berkeley in 2000, % of the one to two exabytes of information produced each year worldwide is stored in a non-printed format. The vast majority of business information is generated by, and stored in, a large number of applications, including corporate systems, personal Webmail systems, the World Wide Web, instant messaging systems, wikis, blogs, customer relationship management systems, Web conferencing systems, image-processing systems, inventory systems, DVDs, video tapes, audio sources (e.g., Podcasts) and a wide variety of other applications. Unified communications will make the problem significantly worse as it adds additional data to the already crowded mix. contains roughly three-quarters of the information that individuals use on a daily basis, and a large proportion of corporate users spend more than two hours per day generating and using content stored in systems, including a large and growing variety of attachments and other types of data. Further, although many records retention requirements do not impose specific requirements on or instant messages, Osterman Research has found that approximately 80% of enterprises use for closing orders or performing other types of business transactions. As a result, is home to a greater proportion of corporate and other records and so increasingly is subject to legal and statutory records retention requirements. Preserving and related data for long periods is critical on a number of levels: to comply with legal obligations to retain business records, to comply with regulatory requirements, and to keep a record of corporate memory for use by employees and others. Preserving and related data for long periods is critical on a number of levels: to comply with legal obligations to retain business records, to comply with regulatory requirements, and to keep a record of corporate memory for use by employees and others. The result has been the deployment of archiving systems designed to preserve content and, increasingly, content generated by other systems. THE DEBATE IS SHIFTING While some continue to debate the wisdom of preserving content in an archiving system, the debate today has shifted more toward how best to preserve it and the delivery model that will most cost effectively do so. While most organizations that have deployed an archiving system have chosen to implement an on-premises system using servers and software (or self-contained appliances in many organizations), a growing number of organizations have opted for the software-as-a-service (SaaS) model. This delivery mode 2009 Osterman Research, Inc. 1
3 can reduce the total cost of ownership for archiving and can provide a number of other benefits, as discussed in this white paper. As evidence of the growing acceptance of archiving as a best practice as well as the growing use of the SaaS archiving paradigm is the following Osterman Research forecast showing the installed base of archiving seats in North America. We estimate that the market will grow from a total of 38.4 million seats (33% of users) in 2008 to million seats (83% of users) by North American Archiving Market, (Millions of Seats in the Installed Base) ABOUT THIS WHITE PAPER This document focuses on a) the requirements that are motivating organizations to adopt archiving and b) the cost savings and other benefits that organizations of all sizes can realize if they use a SaaS model to deploy an archiving capability. The white paper discusses these cost savings in the context of a cost model that Osterman Research developed specifically for this effort Osterman Research, Inc. 2
4 Why Archive ? There are a variety of reasons to deploy archiving, any one of which can often justify the entire cost of the archiving capability. LEGAL COMPLIANCE AND e-discovery READINESS The Federal Rules of Civil Procedure (FRCP) are, arguably, the most important single reason for organizations to deploy a messaging archiving capability. The FRCP are a body of rules focused on governing court procedures for managing civil suits in the United States district courts. While the United States Supreme Court is responsible for promulgating the FRCP, the United States Congress must approve these rules and any changes made to them. A number of important and substantive revisions to the FRCP went into effect on December 1, These changes represented several years of debate at various levels and have already had a significant impact on electronic discovery and the management of electronic data within organizations that operate in the United States. In a nutshell, the changes to the FRCP require organizations to manage their data in such a way that this data can be produced in a timely and complete manner when necessary, such as during legal discovery proceedings. The new amendments codified Electronically Stored Information (ESI), effectively making electronic data more important in the context of legal discovery and litigation in general. LEGAL HOLDS AND PRE-LITIGATION INTERNAL REVIEW When a hold on data is required, it is imperative that an organization immediately be able to begin preserving all relevant data, such as all sent from senior managers to specific individuals or clients. An archiving system allows organizations to immediately place a hold on data when requested by a court or on the advice of legal counsel. Another important reason to deploy an archiving system that provides easy and rapid access to data is to allow various groups to conduct a pre-litigation review of internal data prior to the commencement of a legal action. For example, if an organization anticipates that it might be involved in a legal action of some sort, it can conduct an internal investigation to determine if the action might have merit. Doing so will permit senior managers, legal counsel and others to make better assessments and, in some cases, settle a legal action early, avoiding significant and unnecessary legal expenses. OTHER LEGAL CONSIDERATIONS In the absence of a robust archiving capability, and other business records can be lost, most commonly through inadvertent disposal of content that should have been saved. This can result in serious adverse consequences for an organization that is involved in a legal action. Policies alone without some automatic, consistent and reliable enforcement mechanism cannot solve this problem. Depending solely on corporate mandates or policies to save content will often result in less-than-complete compliance with these policies. Individual users will interpret policies differently, they will mistakenly discard content that should have been saved, and so forth Osterman Research, Inc. 3
5 Further, even if an organization has preserved its content, but must search through this content manually to find information, the costs for doing so can be prohibitive. It can actually be cheaper to settle the case without mounting any sort of defense simply because the cost of obtaining the information required to do so would be too high. In short, a failure to properly archive messaging and other content exposes an organization to unnecessary legal risks. Conducting a search for data in a reactive fashion will not mitigate these risks. COMPLIANCE ISN T JUST FOR REGULATED INDUSTRIES Industries that are heavily regulated, such as broker-dealers or healthcare companies, must meet a variety of statutory requirements with regard to records retention. For example, the SEC imposes requirements on broker-dealers to preserve and instant messaging communications and to monitor these communications. However, virtually all organizations must satisfy statutory records retention requirements, including broad-based requirements such as the Americans with Disabilities Act, the Age Discrimination in Employment Act and the Occupational Safety and Health Act. For example, the Sarbanes-Oxley Act impacts all public companies and has been a prime point for regulatory compliance. 60% Percentage of decision makers that cite growth in messaging storage as a serious or very serious problem 35% Rate at which storage is growing annually. Although many records retention requirements do not impose specific requirements on or instant messages, Osterman Research has found that approximately 80% of enterprises use for closing orders or performing other types of business transactions. As a result, is housing a greater proportion of corporate and other records and so increasingly is subject to legal and statutory records retention requirements. REDUCING THE IMPACT OF STORAGE Several Osterman Research surveys over the past two years have clearly demonstrated that growth in messaging storage is the most critical messaging-related problem faced by administrators: roughly 60% of decision-makers cite growth in messaging storage as a serious or very serious problem. Messaging storage, driven by increasing use of , larger attachments and the like, is growing at an average of 35% annually. This means that a terabyte of storage today will swell to nearly 2.5 terabytes in just three years. By deploying a properly configured messaging archiving system that replaces messages and attachments with much smaller stubs pointing to stored content in an archive, organizations can dramatically reduce the amount of content stored on live messaging servers. This carries with it a number of important benefits, including lower cost of 2009 Osterman Research, Inc. 4
6 storage, improved server performance and more rapid recovery from downtime incidents. KNOWLEDGE MANAGEMENT The preservation and retention of corporate knowledge stored in is undervalued in many organizations. However, contains roughly three-quarters of the information that individuals use on a daily basis, and a large proportion of corporate users spend more than two hours per day generating and using content stored in systems. As a result, an enormous amount of corporate memory is stored in , making its preservation important. An organization that does not preserve its content adequately risks the loss of information that it has paid employees to produce. Driving ROI and Reducing Costs in Archiving Interestingly, while storage management is often not the primary driver for deploying an archiving system, a reduction in storage requirements is one of the most important factors that organizations should consider in evaluating the return-on-investment (ROI) for an archiving solution. This is, perhaps, because archiving s positive impact on storage is among the most quantifiable benefits that an organization will realize after deploying an archiving system. Other important factors in determining the ROI for an archiving solution include being better prepared for legal discovery, providing data security and the ease of implementing the solution, as shown in the following table. Importance of Various Factors When Evaluating the Return on Investment or Need for an Archiving Solution (% That Consider Issue Important or Very Important) Problem All Smaller Orgs Larger Orgs Providing disaster recovery capabilities 68% 69% 66% Ease of implementation 67% 74% 59% Being more prepared for legal discovery 66% 55% 78% Providing data security 65% 65% 66% Storage reduction / storage management 63% 58% 68% Confidence that regulatory requirements are being met 62% 55% 69% Reducing IT administrative involvement, thereby freeing IT staff for 60% 63% 56% other tasks Improving disaster recovery 60% 66% 53% Being more prepared for litigation support other than for legal discovery 58% 54% 63% Being able to improve mail server recovery (e.g., database, mailboxes, folders/messages) 57% 66% 47% 2009 Osterman Research, Inc. 5
7 Importance of Various Factors When Evaluating the Return on Investment or Need for an Archiving Solution (% That Consider Issue Important or Very Important) (Concluded) Problem All Smaller Orgs Larger Orgs The ability to lower mail server costs going forward 52% 54% 50% productivity gains from users not having to perform inbox 51% 55% 46% management The ability to reduce risk by centralizing data (e.g.,.pst or 51% 54% 48% equivalents) and folders/messages) Speed of implementation 50% 48% 53% Being able to satisfy regulatory requirements more effectively 48% 51% 46% The ability to eliminate backup tapes 46% 45% 47% The ability to produce information from the archive directly into a litigation 44% 45% 44% support system Knowledge management / data mining 36% 45% 27% Source: Osterman Research survey of corporate decision makers, 2008 ROI DRIVERS VARY BY ORGANIZATION SIZE While there are many similarities between smaller and larger organizations in the context of factors they need to consider when evaluating the ROI or need for an archiving solution, there are some important differences, as well: Smaller organizations are much more interested in ease of implementation, indicating that appliances or SaaS services will find greater resonance among decision makers in smaller organizations. Smaller organizations are more focused on archiving s ability to help them with mail server recovery, disaster recovery, data mining and user productivity improvements. Larger organizations view archiving as more important for helping them with legal discovery, regulatory compliance and storage management Osterman Research, Inc. 6
8 On-Premises vs. SaaS Archiving As shown in the following figure, the vast majority of organizations consider a completely in-house archiving solution using on-premises servers and software to be desirable or very desirable. However, nearly two-thirds of organizations consider an archiving appliance to be this desirable. Interestingly, the majority of organizations does not view SaaS solutions, including hybrid solutions, as highly desirable, although a large percentage of organizations does find them to be quite desirable in the context of current and planned infrastructure planning. Preferred Methods for Deploying and Managing a Messaging Archiving Solution (% Responding Desirable or Very Desirable) ARE YOUR PERCEPTIONS ABOUT SaaS MESSAGING RIGHT? Osterman Research has found that SaaS archiving solutions are perceived as having a lower initial cost than on-premises solutions, but on-premises systems are perceived to be more advantageous than SaaS solutions on a number of other metrics, as shown in the following table Osterman Research, Inc. 7
9 Perceptions About Whether an On-Premises or SaaS Solution Can Better Satisfy Various Criteria Criteria On-Premises SaaS No Difference Lower initial cost 28% 58% 14% Lower ongoing cost 71% 17% 13% Better security of the archived data 69% 11% 19% More flexibility in managing archived data 69% 14% 17% Faster search capabilities 59% 11% 30% It s a better fit for the organization 79% 11% 10% Osterman Research has found that on-premises offerings of all types are generally perceived as more advantageous than SaaS offerings, except in terms of the cost of SaaS services. Contrary to these perceptions, SaaS services can provide the same level of security, control and flexibility that on-premises offerings provide, as discussed later in this white paper. SaaS VENDORS NEED TO ADDRESS SEVERAL ISSUES Clearly, vendors of SaaS archiving solutions have their work cut out for them in overcoming a number of negative (and largely inaccurate) perceptions: They need to demonstrate that SaaS archiving solutions can offer lower ongoing costs for many organizations, even very large ones. They need to demonstrate that the data they archive is at least as secure as for onpremises solutions. They need to demonstrate that they can provide performance and flexibility on par with on-premises solutions. Why Use the SaaS Model for Archiving? SaaS-based archiving systems can offer a number of distinct benefits for organizations of virtually any size: There are virtually no up-front costs and, hence, no capital expenditures. They require very little IT involvement in managing the system compared to onpremises systems. Immediate scale. High availability (typically guaranteed by a service-level agreement) Osterman Research, Inc. 8
10 Because these services are priced on a per-seat basis, overall archiving costs can be more predictable. The deployment of additional services or the extension of retention time can be much easier with the use of a SaaS or managed service. SaaS solutions deliver much lower opportunity costs arising from freeing up IT staff for initiatives that could offer greater value for the organization. There is also a newer model for deploying messaging archiving known as Hybrid Archiving. This model, which uses a combination of on-premises and SaaS components, combines the advantages of both models. 58% Percentage of decision makers that believe that SaaS archiving offers lower initial cost 69% Percentage of decision makers that believe that on-premises solutions provide more flexibility in managing archived data SaaS Archiving: Examples of the Cost Savings Osterman Research built a cost model specifically for this white paper that allows a thorough analysis of the costs involved in managing an on-premises archiving system. The elements in the cost model permit testing of various scenarios based on the number of users whose content will be archived, initial hardware costs, hardware refresh costs and refresh cycles, software licensing costs and subscription fees, power requirements and other relevant costs factors. The cost model was designed to do several things: Provide users with the ability to modify any or all of the parameters that are relevant in the context of archiving, including retention time, the type of storage used, requirements for compliance, etc. Compare various on-premises deployment scenarios with SaaS and/or hybrid archiving scenarios. Test different pricing models. Using the model, we have developed comparisons for various archiving deployment scenarios, as shown in the following figures. It is important to note that we focused on a six-year lifecycle for these examples, since a) archiving is focused on long-term retention in many cases, and b) because it is important to include at least one hardware and software refresh cycle in cost-of-ownership calculation: 2009 Osterman Research, Inc. 9
11 SCENARIO 1: SMALL MANUFACTURING COMPANY Specifics of this scenario: 500 users in Year 1 with user base growing at 5% per year Three-year retention period for No redundancy required in the archive Archive does not need to be compliant for SEC purposes Three-year capital refresh cycle Cost SaaS On-Premises Average cost per user per year over six years $ $ Average savings per user per year over six years $44.89 % savings provided by hosting 29.4% SCENARIO 2: SMALL BROKERAGE HOUSE Specifics of this scenario: 500 users in Year 1 with user base growing at 5% per year Seven-year retention period for Redundancy required in the archive Archive needs to be compliant for SEC purposes Three-year capital refresh cycle Cost SaaS On-Premises Average cost per user per year over six years $ $ Average savings per user per year over six years $ % savings provided by hosting 55.5% SCENARIO 3: MID-SIZED COLLEGE Specifics of this scenario: 5,000 users in Year 1 with user base growing at 3% per year Five-year retention period for Redundancy required in the archive Archive does not need to be compliant for SEC purposes Four-year capital refresh cycle Cost SaaS On-Premises Average cost per user per year over six years $93.24 $ Average savings per user per year over six years $32.74 % savings provided by hosting 26.0% 2009 Osterman Research, Inc. 10
12 SCENARIO 4: LARGE RETAILER Specifics of this scenario: 10,000 users in Year 1 with user base growing at 2% per year Two-year retention period for No redundancy required in the archive Archive does not need to be compliant for SEC purposes Four-year capital refresh cycle Cost SaaS On-Premises Average cost per user per year over six years $64.87 $85.19 Average savings per user per year over six years $20.32 % savings provided by hosting 23.9% SCENARIO 5: LARGE PHARMACEUTICALS COMPANY Specifics of this scenario: 25,000 users in Year 1 with user base growing at 2% per year Three-year retention period for Redundancy required in the archive Archive does not need to be compliant for SEC purposes Three-year capital refresh cycle Cost SaaS On-Premises Average cost per user per year over six years $71.40 $ Average savings per user per year over six years $48.59 % savings provided by hosting 40.5% CONCLUSIONS For all of these diverse scenarios, SaaS archiving offers a lower total cost of ownership than on-premises approaches over six years. In addition, while there are particular situations in which an on-premises deployment can be less expensive than SaaS archiving, the costs of SaaS archiving are mostly lower in each individual year. The bottom line is that these scenarios demonstrate that a SaaS archiving model can offer dramatic cost savings across a variety of organizations sizes, retention periods, compliance requirements, redundancy requirements, etc Osterman Research, Inc. 11
13 About Proofpoint, Inc. and Proofpoint Archiving TM Proofpoint delivers innovative solutions that help enterprises reduce the risks and costs related to , powered by the latest advances in cloud computing, virtualization and machine learning technology. Proofpoint secures and improves enterprise infrastructure with solutions for security, archiving, encryption and data loss prevention. Proofpoint Archiving TM is a SaaS hybrid solution that lets organizations easily access, search and retrieve archived data in real-time from Proofpoint s secure, state-of-the-art storage infrastructure. With industry-leading customer service, technology and expertise, Proofpoint offers customers a complete, worry-free way to meet retention, e- Discovery, legal compliance and storage management needs. Proofpoint offers qualified enterprises a complimentary archiving total cost of ownership assessment, based on Osterman Research's cost model described in this paper. The assessment can help your organization understand the costs, benefits and tradeoffs of deploying a SaaS archiving solution versus on-premises solutions. Request a TCO assessment for your organization by visiting: Summary archiving is a best practice for organizations of all sizes in the context of meeting their legal obligations, regulatory requirements, knowledge management needs and storage management capabilities. While some decision makers continue to resist the notion of archiving and other content for more than just 60 or 90 days, a growing proportion of them realize that they must archive for the reasons noted above. Consequently, the debate has now shifted to one that focuses on the cost of providing archiving capabilities. A SaaS archiving model can provide dramatic cost savings, while offering the security and control that organizations demand from on-premises offerings Osterman Research, Inc. 12
14 2009 Osterman Research, Inc. All rights reserved. No part of this document may be reproduced in any form by any means, nor may it be distributed without the permission of Osterman Research, Inc., nor may it be resold or distributed by any entity other than Osterman Research, Inc., without prior written authorization of Osterman Research, Inc. Osterman Research, Inc. does not provide legal advice. Nothing in this document constitutes legal advice, nor shall this document or any software product or other offering referenced herein serve as a substitute for the reader s compliance with any laws (including but not limited to any act, statue, regulation, rule, directive, administrative order, executive order, etc. (collectively, Laws )) referenced in this document. If necessary, the reader should consult with competent legal counsel regarding any Laws referenced herein. Osterman Research, Inc. makes no representation or warranty regarding the completeness or accuracy of the information contained in this document. THIS DOCUMENT IS PROVIDED AS IS WITHOUT WARRANTY OF ANY KIND. ALL EXPRESS OR IMPLIED REPRESENTATIONS, CONDITIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE DISCLAIMED, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE DETERMINED TO BE ILLEGAL Osterman Research, Inc. 13
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