The Evolving Commercial Records Center Industry.

AT THE CORE

THIS ARTICLE EXAMINES:

* the development of the commercial records center industry

* how increased document creation and new laws and regulations for records retention fueled the growth of commercial records centers

* how technology may impact the industry in the future

For approximately 50 years, the commercial records center (CRC) business has evolved from what began as a repository of mostly inactive or, as some have said, "dead," records into a much more interactive, high-tech relationship with its clients. Employing some of the latest computer technologies, CRCs now offer very sophisticated computer-based indexing, file tracking, fireproof vault storage of computer media, electronic vaulting of customers' data, disaster recovery, and contingency planning programs, as well as a number of other new services (e.g., consulting) and products. This article takes a look at how the CRC industry began and how it has developed over the last half century. It also addresses some of the new technologies, such as radio frequency identification (RFID) and global positioning satellite (GPS), to learn how new technological developments may impact the future of the CRC business. Far from being in decline, CRC is a growth industry.

Development of U.S. Records Management Programs

Until the mid-1930s, no formal records management programs were in place in the United States. The federal government and private businesses kept records in whatever form they felt appropriate without the benefit of retention schedules, disposition guidelines, or other formal information life-cycle procedures. The federal government, however, recognized that some controls needed to be implemented to manage the massive volume of U.S. government files being created. In 1934 the National Archives was established with the primary task of identifying federal records that should be retained as opposed to those that might be eligible for disposal. By 1937, the National Archives was completing the initial survey of federal government records and was becoming aware of a serious lack of uniformity of procedures and an enormous amount of duplication in the records programs of different agencies. During World War II, the U.S. government experienced a proliferation of new agencies and departments. Along with that growth, the government also experienced an unprecedented explosion in the volume of documents it needed to create, store, and manage.

Franklin D. Roosevelt (FDR), who signed the legislation creating the National Archives in 1934, was the first U.S. president to take an active interest in the management and preservation of U.S. government records. He had his own long-term plans for the gigantic Pentagon, which was built at breakneck speed at the outset of World War II and was the world's largest building at the time. "FDR hated the Pentagon [architecturally] but recognized the need for it; his lan for it after World War II was to use it to store records." (Brinkley 1991). Little did Roosevelt know that the Pentagon would have nowhere near the space needed for the government's records.

The Records Disposal Act of 1943 was revised by the National Archives and amended in 1945 to include the government-wide general schedule (GS), which authorized the systematic disposal of government records common to most agencies. In 1948, the first Hoover Commission extended the efforts to control government records and awarded a contract to the National Records Management Council of New York to study and make recommendations to improve efficiency in governmental records management programs.

At about this time, the U.S. business community began to see the emergence of what is now the CRC industry. That emergence was led by Emmett J. (Ed) Leahy, who was with the National Archives from 1935 until 1941. He became the director of records coordination for the Department of the Navy during World War II. Leahy received the Navy Commendation Ribbon for his innovations and cost-saving initiatives and was released from duty with the Navy Department in 1945. In 1948 Leahy became the first executive director of the National Records Management Council. That same year, Leahy formed the Business Archives Center, which was probably the first CRC in the United States. In 1953 he formed the records management consulting firm of Leahy & Company and Leahy Archives, which later became Pierce-Leahy Archives of Pennsylvania. Leahy continued in his role as a pioneer and innovator in the records management industry until his death in 1964. Each year, the Institute of Certified Records Managers (ICRM) confers the "Emmett J. Leahy Award," one of the highest honors for an individual in the records management field.

1950s-1960s Early Development of CRCs

During the 1950s and '60s, the CRC industry continued to develop, primarily in the northeastern United States (New York and Philadelphia) and in other large metropolitan areas around the country (e.g., Chicago and Los Angeles). During the 25 years following World War II, the economy of the United States grew steadily but slowly when compared with the exponential growth of the 1970s and 1980s. A large proportion of CRC expansion was focused on large corporations and organizations, and most records center holdings were inactive. Almost all CRCs during the '50s and '60s were single location or regional in scope.

Many moving and storage companies (and later, office moving companies as well) began records storage operations during this period. Moving and storage companies were in an ideal position to provide records management services for several reasons. They had warehouse and transportation facilities in metropolitan areas as well as existing relationships with other established businesses in their communities. Many moving and storage companies, as well as independent entrepreneurs, began successful records storage operations during this period. Larger regional operations and national-level CRCs would develop over the following few decades.

1970s -- CRC Development Quickens

The 1970s witnessed several developments that triggered dramatic growth in the records center business. With the exception of an economic slump towards the end of the decade, U.S. businesses grew at a furious pace during the 1970s. The introduction of word processors (and word processing centers) had a tremendous impact on the volume of documents that could be produced and on the time required to produce them. Compounding this development, a continuing growth of federal, state, and local laws and regulations dictated numerous types of records that must be retained to satisfy legal and audit requirements. For the first time, many relatively small businesses saw their valuable office space being swallowed up by the mounting volume of documents they were required to retain. Pierce-Leahy and Bekins Records Management (a division of Bekins Moving & Storage, later to become Bell & Howell, then Iron Mountain) were among the first CRCs to expand into multi-city markets. During this period, records centers, using early generation word processors and computers, first had the capability to produce automated reports and index information for clients. The CRC business was no longer limited to merely warehousing and retrieving documents. For the first time, CRCs could take advantage of new computer technologies to provide valuable database information to their customers -- and to themselves. Some CRCs were hiring data entry personnel to assist in the creation of huge databases for indexing, cross-referencing, and tracking files and boxes of records. A new, technology-oriented relationship was developing between CRCs and their customer bases.

1980s -- ACRC and Continued Rapid Growth

The 1980s saw a virtual explosion in the CRC industry. Fueled by a rapidly growing economy and the advent of the personal computer and desktop printers, American businesses consumed more business paper than in any previous decade. In 1980 the Association of Commercial Records Centers (ACRC) was formed. The original membership of this trade association represented companies from the United States and Canada: Mohawk Business Records of Minneapolis; Records Management Services Inc., of Chicago; Leonard Brothers Records Service Center of Detroit; the File Room of Chicago; Iron Mountain Group of Boston; and STACS Records Management from Canada. During this decade, the CRC business developed into a nationally known industry. Almost every major city in the United States (and many in other countries) had one or more CRCs. Again, the combination of an explosive growth in the creation of documents and the creation of new regulations and laws requiring their retention fueled the growth of this industry.

United States consumption of bond
and writing papers (1989-1998)
in per million tons of shipped,
bond paper:

1989 - 3.0
1990 - 3.1
1991 - 3.4
1992 - 3.5
1993 - 3.6
1994 - 3.9
1995 - 4.0
1996 - 4.3
1997 - 4.6
1998 - 4.8

Source: American Forest and Paper Association

Several important technical developments also took place in the early 1980s. Bar code labels and scanners were introduced and became widely used to track inventory of many kinds -- including files and records containers -- more efficiently. The new bar code technology enabled CRCs to process large volumes of files and containers quickly and accurately while reducing error rates to insignificant levels. Soon, a number of sophisticated bar code-based software programs became available to automate other functions of CRC operations. If other areas of a records center were well managed, bar code efficiency and software programs helped CRCs offer a compelling cost-effective and accurate alternative to storing and managing records in-house.

Another technology introduced in the mid-1980s was expected to have a profound effect on the CRC industry: the optical disk or "platter." When introduced, the 14-inch optical platters had a storage capacity of more than 80,000 pages of documentation. The optical disk was touted as the beginning of the end for both microfilm services and CRCs because it was originally thought to be the precursor of the "paperless office." Many CRCs took advantage of optical disk technology and formed service bureaus to convert paper documents into images for storage on the disks. A number of CRCs are still converting paper documents to CD-ROM (CD) optical media for their customers. However, compared with the original predictions, conversion from paper to CDs still represents a very small percentage of inactive and semiactive documents. In a May 2000 conference address in Acapulco, Mexico, David O. Stephens, CRM, CMC, of Zasio Enterprises gave a presentation on the future of the commercial records storage industry. Stephens indicated that although electronic recordkeeping may be on the verge of an exponential growth period, the traditional CRC industry should remain fairly stable for at least the next 10 to 15 years.

1990s -- Explosive Growth and New Technologies

By almost any measure, the 1990s will probably be remembered as one of the most phenomenal decades in American economic history, and the growth in the commercial records center industry reflects that boom. In 1991 ACRC (now PRISM) membership stood at 380 companies. By the end of the 1990s, PRISM membership had grown to more than 500 members, and a recent strategic plan by PRISM projects that by 2004 the association will have more than 650 members. According to some estimates, more than 2,000 CRCs are now operating in the United States. This estimate includes small and specialized organizations; therefore, it is greater than the numbers suggested by PRISM membership.

Once again, a number of factors contributed to this growth, including a continuation of the pattern in which more documents were created at the same time that new laws requiring longer retention periods were passed. As records managers know, the rate of disposal of records tends to be slower than the rate of accession. In addition to these factors, one of the key developments contributing to the growth of the CRC industry during the 1990s was the trend towards outsourcing.

As the trend towards organizational downsizing and merging became more widespread, many companies became aware of the economic advantages of subcontracting or outsourcing administrative services such as printing, copying, courier, and file room management. Records storage services came to be considered an ideal function for outsourcing. Many companies that would not have considered CRC services before now chose to store and manage inactive records with CRCs.

PRISM Membership

1991 - 388
2000 - 508
2004 - 652 (projected)

Source: PRISM International

A significant trend that developed in the 1990s was the move towards consolidation or acquisition of smaller CRCs by the larger companies. During the last half of the 1990s, this trend accelerated dramatically and culminated in the $1.1 billion merger of Iron Mountain and Pierce-Leahy, finalized in February 2000, with 115,000 customer accounts. Many observers of the CRC industry are concerned about where this trend is going and what effect it will have on the business and on end users. However, other industries and businesses (airlines, automobile companies, utilities, and banks) have gone through similar consolidations without a sacrifice in services. Today, the lines are beginning to blur between the CRC industry and the information destruction/shredding business. Some significant merger/ acquisition activity may occur between these two industries in the very near future.

Other developments and services that helped accelerate the growth of CRCs in the 1990s were vault storage, electronic vaulting, disaster recovery and contingency planning, hot site services, and computer fulfillment. Vault storage, fireproof, and temperature- and humidity-controlled storage generally offers a secured area with a monitored temperature between 60 degrees and 70 degrees and a humidity level between 40 and 50 percent. Vault storage actually began in the early to mid-1980s but became a more significant factor in the 1990s with the explosive growth of computer use in organizations and their need for data backup. Electronic vaulting uses a central computer, usually located in a CRC vault, to poll a client's local area network (LAN) on a daily basis and create a 30-day emergency backup for the client. Electronic vaulting has met with various degrees of success in certain markets, but it does offer another valuable service for CRC clients. In May 2000, Iron Mountain and Computer Network Technology announced a joint effort to offer electronic vaulting on a national basis. CRCs are in an ideal position to team with organizations in their overall disaster recovery/contingency planning efforts. CRCs can function as a backup for computer data, supplies, or even as a hot site as part of a larger recovery strategy. Computer fulfillment, or the storage and distribution of computers, boards, and components, is another area in which CRCs can assist existing clients. Because CRCs usually have sophisticated bar code programs, climate controlled areas, and courier services, they are in an ideal position to receive, store, and distribute computer equipment as needed by customers.

Trends, Technology, and the "Paperless Office"

The "paperless office" remains an elusive target at best for most companies and organizations, although technological advances will make that goal easier to attain in the future. At this time, however, the commercial records center industry should continue to function traditionally at least for the next 12 to 15 years. The simple fact that consumption of business paper has continued to increase annually through last year indicates a strong possibility that inactive records storage will continue to increase or at least remain stable for a minimum of 10 years. So, for the foreseeable future, records will not be paper or digital; they will be digital and paper.

Questions about the stability and longevity of some computer media are of interest to CRCs. A recent Business Week article reported the following cases of missing or lost computer data:

* twenty percent of the information collected by the 1976 Viking mission to Mars

* some POW and MIA records from Vietnam

* almost 3,000 Pennsylvania State University student records (Business Week 1998)

Jeff Rothenberg, senior scientist at the Rand Corporation, is quoted in the article: "Digital information lasts forever, or five years, whichever comes first." That is, the drives read the media will become obsolete about every five years, and thus the durability of the media may not be the central problem as many have assumed. The article concludes with a statement from Tom Antoginni, whose Massachusetts company markets a backup product called PaperDisk, which uses paper to print out complex patterns of dots and dashes representing digitized files. Antoginini claims, "It should last for centuries or about as long as old fashioned, high-quality paper." Printing digitized patterns on high-quality paper may sound a little like "back to the future," but such alternate technology will almost certainly make some promising inroads in the next few years. After all, the use of papyrus and clay recording media overlapped for some 1,700 years, as did paper and papyrus for some 800 years.

Interesting new technologies that will influence services in the CRC industry are in development. Radio frequency identification (RFID) bar codes, for example, have some major implications and advantages for CRCs. Using a new technology developed by Motorola called "BiStatix," bar code labels include a tiny radio transmitter not much bigger than a coffee ground and a printed circuit antenna to transmit up to 110 characters of updateable information to a host computer. When queried through a computer, they literally "talk back" or respond to the system with location, date fields, description of contents, or other pertinent information. If a file or container is removed from a given area without being properly checked out, the system can sound an alarm and ensure that proper procedures are followed.

One of the most interesting RFID applications for CRCs is inventory control. Using RFID technology, a complete warehouse inventory could be accomplished in a matter of minutes or hours rather than days, weeks, or months. This technology could be applied to files and records cartons as well. RFID has the capability to revolutionize many business applications just as linear bar code technology has since the early-1980s.

Global positioning satellite (GPS) technology also presents some very interesting possibilities for CRCs. Each delivery vehicle from a records center can be identified and tracked on a computer screen map in a CRC operations center. The GPS system automatically updates new locations for each vehicle every 15 minutes. If a "next day" delivery becomes an "emergency delivery," the exact location of the appropriate vehicle can be obtained by clicking on that vehicle on the screen; the precise, real-time position and speed of the vehicle is displayed. A message can be keyed in and transmitted via GPS. The updated information is displayed on a liquid crystal display panel on the vehicle's dashboard, and the delivery information can be appropriately updated.

Database transmission and communication via the World Wide Web, high-speed transmission of information via fiber optic cable, and other technologies are today's realities. The CRC industry has undergone many changes in the first 50 years of its evolution, many of them in just the last 10 to 15 years. The possibilities for the next 50 years are endless.

Looking forward, one thing is predictable and certain. Only the CRCs that concentrate on service and technology will survive and thrive in the coming years. Companies that do not continually strive to provide a high level of quality service will not be successful in the future. The innovative companies that remain focused on customer service will. Because technology is changing so quickly, successful CRCs must also stay abreast of the very latest advancements and pass the benefits of those developments on to their clients. The CRC industry has evolved and changed over the last 50 years to better serve the records management community. The changes the industry will face in the next few years will be even more profound. The CRCs that are prepared to adapt to and embrace these changes are the companies that will be most successful in coming years.

The number of tons of paper stock made into file folders increases every year.

(American Paper Institute)

Filing cabinet sales increase by 18 percent a year.

(Business Equipment Manufacturing Association)

Sales of paper-fed fax machines grew 16.5 percent between 1998-99, and continuing increases are likely through 2004.

(Associated Press)

REFERENCES

Brinkley, David, "Prime Time Live." ABC News, 7 March 1991.

"Data Storage: From Digits to Dust." Business Week. 28 April 1998.

Michael J. Faber, CRM, is vice president of Paxton Records Retention, a commercial records center in Springfield, Virginia. He has more than 19 years' experience in the records management industry, including six years with Tab Products Company. A member of ARMA International since 1986, he is active with both the Northern Virginia (NOVA) and Washington, D.C. (GWDC) chapters. GWDC's Chapter Member of the Year in 1990, he is an active member of PRISM, the Virginia Association of Archivists and Records Administrators, and the Mid-Atlantic Regional Archives Conference (MARAC). The author can be reached at [e-mail].