Stricter regulations prove a boon to document storage firms.

THE Sarbanes-Oxley act has sent public companies scrambling to keep up with a raft of tighter regulations -- and many have scrambled right into the arms of two local companies that make and sell the software for keeping up with stricter document retention requirements.

Software maker LaserFiche Document Imaging, a division of Long Beach-based Compulink Management Center Inc. and Los Angeles-based American Microimaging Inc., which installs computer systems that include LaserFiche's software, have both capitalized by selling products they say eases compliance.

LaserFiche said revenues from sales to financial services firms nearly doubled in May over like month a year earlier. American Microimaging has closed 20 deals with financial services firms since January, four times greater than in the like year-earlier period. Both companies cited compliance with Sarbanes-Oxley as the driving force behind the surge in business.

It's no secret that companies are looking for help.

In a poll conducted by Boston-based AMR Research, 85 percent of the 60 public companies surveyed said they plan on modifying their information technologies systems because of compliance regulations.

In its effort to capture a chunk of that market, LaserFiche will be going head-to-head with much larger accounting software vendors, like KPMG International, SAP AG and Oracle Corp.

'No check list'

The rush concerns some analysts who said that the general lack of understanding of the legislation would lead to software companies jumping on the bandwagon without necessarily helping.

"The act is not a technology blueprint and there is no check list," Rebecca Wettemann, vice president of research at Nucleus Research, which tracks the financial effects of technology.

Records management and storage are central issues facing most companies. Conversion from paper to digital systems has been the common ways to deal with the problem.

Sarbanes-Oxley requires companies to track document usage and quickly produce original documents with information on who has accessed them. Traditional paper storage prolongs this process. "If they do not have proper record detection they can go to jail," said Allen Adjamian, business development manager at American Microimaging.

LaserFiche's software scans paper documents, turning them into digital files and saving them in a database. Each time a document is accessed, the activity is given a traceable digital stamp.

"Companies are being forced to go back to their paper cabinets and take them out. It is so prohibitively expensive to operate in a paper environment," said Jeff Green, director of financial services at LaserFiche.

LaserFiche has been selling document-imaging systems since its establishment in 1987. A good portion of its sales have been to companies looking to manage digital documents so they can easily retrieve them in case of legal action.

"Now the law has caught up with our technology," said Green.

LaserFiche claims a market share of over 60 percent in the municipal government document imaging market and says it has made major inroads in the securities, banking, health care and federal government markets in recent years.

Much of the activity has been in the financial sector, both public and private, because the law requires public companies to detail what they have done to establish and maintain adequate financial reporting. Accountants, who must sign off on those efforts, have also proven to be active customers.

American Microimaging has seen a rush of compliance-driven business from smaller local accounting firms such as Encino-based RC Baral and Co. and Rabco CPA in Pasadena. The company also is working with the Bank of China, a publicly traded company with offices in Los Angeles and New York.