Working on an Article “Commercial Records Management Industry 2010 — FileMan Perspective

Posted on Jul 19, 2010 in Records Management News

The Com­mer­cial Records Man­age­ment Indus­try July 2010

• The CRM Indus­try is a world­wide phe­nom­ena that seems to defy logic. It is grow­ing in all five pri­mary ser­vice groups; (1) records man­age­ment ser­vices, (2) dig­i­tal access solu­tions, (3) shred­ding and destruc­tion ser­vices , (4) data pro­tec­tion ser­vices and (5) spe­cial project ser­vices
• The num­ber of new start-ups exceeds 100 each year, only about a third seek help from a con­sul­tant. There are only two start-up con­sul­tants File­Man and Spin­ney & Huber. There are more start-ups out­side of North Amer­ica than in North Amer­ica exclud­ing Mex­ico. Most of the start-ups are in Cen­tral and South Amer­ica, Africa, Asia and China.
• There are at least 11 buy­ing com­pa­nies that I have iden­ti­fied (maybe more) all of these are funded by some sort of Pri­vate Equity. The pri­mary pur­pose of Pri­vate Equity is buy annu­ity rev­enue and to build up the value … then to sell usu­ally within a five to ten year win­dow. These com­pa­nies are not hunters (although the all have “new busi­ness sales­men”) they spend most of their sales effort devel­op­ing exist­ing clients into more valu­able assets through cross sell­ing ser­vices (farm­ing) and tight­en­ing the agree­ment and the cost of removal. Even­tu­ally all of the buy­ing com­pa­nies includ­ing Iron Moun­tain will likely be bought by “a big­ger fish”.
• Annu­ity rev­enue is still King and still grow­ing at greater than 10% from exist­ing accounts. New hunted accounts tend to grow as much as 25% in the first two years.
• Hunter sales is below what I would expect to be nor­mal in any mar­ket in North Amer­ica less than 30% of accounts have been out­sourced and out­side of the of North Amer­ica less than 10% of busi­ness has been cap­tured. There are sev­eral rea­sons for this; (1) there are few real Hunters on the street sell­ing RIM ser­vices, many of the hunters are the own­ers (this rarely works well because of the lack of atten­tion to detail and other pri­or­i­ties in their busi­ness, (2) own­ers get lazy when they get to 200,000 boxes, cash flow rev­enue just flows in with­out a great deal of effort, (3) lack of cap­i­tal at the smaller records cen­ters for new sales­men and build­ings and racks.
• 75% of CRC’s world­wide are less than 200,000 boxes and have lit­tle or no extra cap­i­tal for growth
• New Start-ups today are fre­quently well funded and have the cap­i­tal to grow their busi­ness to an exit strat­egy in 7 years.
• We are mov­ing to a dig­i­tal par­a­digm. We are in the mid­dle of a 40 year shift based on all signs that I can fore­see. There are three main rea­sons why we aren’t paper­less yet; (1) not enough money, most busi­nesses con­vert one appli­ca­tion at a time and have sev­eral appli­ca­tions; (2) man­age­ment time and busi­ness dis­rup­tion makes it dif­fi­cult, (3) man­ag­ing data on servers is dif­fi­cult at best (busi­ness records require secu­rity, con­fi­den­tial­ity and integrity) for long peri­ods of time. You find me some­one that can guar­an­tee that and then it will hap­pen. It just isn’t ripe yet but I sus­pect with gov­ern­ment reg­u­la­tions like they are it will hap­pen but It will be some time.
• Gov­ern­ments will lead the way to dig­i­tal with require­ments like Obama’s health care ini­tia­tive and the stim­u­lus pack­age for each Doc to scan records. One appli­ca­tion at a time will fall to dig­i­tal, but along with it will be many tech­ni­cal secu­rity and integrity prob­lems.
• The Cloud is an imper­fect beast.

These are just a few of the obser­va­tions that I am work­ing on.

• My advice CRC Indus­try Play­ers is to diver­sify your ser­vices to include the five pri­mary ser­vice groups; (1) records man­age­ment ser­vices, (2) dig­i­tal access solu­tions, (3) shred­ding and destruc­tion ser­vices , (4) data pro­tec­tion ser­vices and (5) spe­cial project ser­vices
• Hunt, hunt, hunt for new busi­ness with at least 1 full time hunter and man­age the hunter to your expec­ta­tions … there is lots of busi­ness out there
• Cross sell ser­vices with an effec­tive CRM pro­gram … this requires focus, hard work and a PLAN.
• Build your busi­ness to sell in a 7 year exit strat­egy, (regard­less if you are think­ing about sell­ing). Make you busi­ness valu­able to the buy­ers, we already know what gives the best return on invest­ment for sell­ers.. Then go to the French Riv­iera and enjoy your life.

These are the things I am research­ing for the article.

By the way if any­one said that this is an easy busi­ness … they were lying. It is a good busi­ness but it isn’t easy.