Outsourcing Records Management and Archives: A hypothesis in search of evidence

Records Life Cycle consisting three stages: cr...

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In today’s financially constrained times, there is a search to find ways to do more with less yet increase efficiency and effectiveness with records management.  One area where savings and efficiencies have been promised is in records management.***  In particular, the promise of the digital age, where paper is reduced and all records can be tagged, searched, and held securely, offers that type of hope.  One is tempted to say hype, but the reality is that for many organisations is digital.  Yet, paper, and the paper-based record, remains the backbone of many organisations even if their central nervous system is electronic.  Thus, they have a records management requirement to handle large volume of paper records.

 

Local authorities in the United Kingdom have to find creative and effective ways to manage their business records. Their task is to make the digital and the paper work together.  For some authorities, they solve this by outsourcing their records management function.  For others, they solve the issue by retaining an in-house records management function.  Both have their merits and drawbacks.  Yet, there is a relationship that is often overlooked. Some organisations are public records depositories.  They have a legally prescribed archival function. What do they do about records management?

For these authorities, there is an inbuilt archival function.  As such, they may face constraints if they decide to outsource the records management function.  In local government, the smaller authorities are not public record depositories so they do not face this issue.   The challenge raised the following hypothesis for me. I am now in search of evidence to test it.  The hypothesis has some further implications for the choice between internal and external provider records management function.

My hypothesis is this: Are authorities that are public record depositories more likely to have in house records storage function than authorities that are not public record depositories?

On one level, there should be a strong positive correlation. However, there could be strong negative correlation because they are seen as two distinction functions within an organisation.

I would be interested to know how authorities that are public record depositories handle their records management.  Do you have both in house? Alternatively, do you have your business records (day-to-day storage requirements) externally provided?

My hypothesis is based on a basic division between records management and archives.  By this, I mean that what is in the depository is “archived”. The records are inactive business records.   By contrast, the semi-permanent “active” business records, which may be needed on a daily basis, are ones that need to managed for access and control purposes.

If the two are strongly correlated, organisations that have the “archive” responsibility also have an in-house storage, what are the outcomes? Do they find that it is more cost effective and efficient to keep them together? Alternatively, is that effectiveness and efficiency less than what is found for those who keep the two separate?  If they are negatively correlated, so that “archive” responsibility is in house and “active” documents are managed externally, are the more cost effective and efficient than those who join them together?  Finally, for organisations that have no archival function, does the hypothesis stand up? Are you more or less likely to keep your records in house? If you do, is that more or less effective and efficient than if you made it external?

I would be interested to know the experience of others on this issue. Is it a good business case for in house or external records management?  The decision may depend on whether they are strongly positively or negatively correlated *and* if the offer (or fail to offer) efficiencies and cost effectiveness.

Whatever the outcome, the authorities that are public record depositories have a particular challenge in integrating it, if at all, with their records management function.

***Here is a sample of companies offering services that will outsource records management.

http://www.tab.com/Implementation-Services/File-Room-Management.aspx

http://www.dahill.com/esolutions/Software-Solutions/DocuShare/pdfs/xgs_whitepaper_records_management_outsourcing.pdf

http://www.prweb.com/releases/2011/9/prweb8792592.htm

 

Please note that I am not endorsing these services or products. I found these first with an online search.

 

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About lawrence serewicz

An American living and working in the UK trying to understand the American idea and explain it to others. The views in this blog are my own for better or worse.
This entry was posted in knowledge worker, local government, management, records management. Bookmark the permalink.

4 Responses to Outsourcing Records Management and Archives: A hypothesis in search of evidence

  1. I think if you were to take data from 6 organizations that have gone each way, you’d find that it takes a number of years before there are cost benefits from outsourcing the management of active records… and there are a number of reasons for this.

    Initial costs are high- the packaging, indexing and transfer of records to an outside provider, including their “ingestion costs” on a new contract are steep. Labor and effort to pack and inventory/index existing records, combined with carton costs alone (depending on overall volume) are not trivial. In addition, most vendors charge a fee for pickup and initial receipt, including entering data into the system for tracing your assets….this is also non-trivial.

    Re-purposing of existing space- the shelving or cabinetry has to be disassembled and removed, sent for some other use elsewhere and/or sold. It will likely not garner as high a price as the labor associated with removing it from the current use, and it will be FAR less than the initial purchase price. The space, if previously designed for storing records properly will generally not be suited for much other than storage. It will generally be windowless, built adjacent to the core of the building, not have many electrical service outlets and will have a non-standard air supply and exhaust system designed to suit low humidity requirements for records.

    Direst costs for storage and services- any request to pull records from storage will result in a remove from shelf, pack, transport, and ultimately a return fee. You will also have to establish a practice for tracking the records while removed from storage to ensure they return, or if destroyed, the record is updated to indicate this. You’ll also have a charge for destruction- even if you remove the cartons/files permanently and decide to destroy them yourself, you have to pay an ADDITIONAL fee for this ‘Permanent removal” (check your T&C if you doubt me!) You will also incur a charge monthly for the storage of cartons or files, and a decision has to be made about how to allocate the cost for these new direct charges- back to the ‘owning departments’ or as an overhead charge? And how do you budget for this if you don’t know the volume or activity?

    Misplaced, lost or destroyed files- while they are in YOUR direct control, you can establish policies, practices and mechanisms to avoid any of these concerns. When they are with a third party, along with thousands of records belonging to others, the possibility of commingling or improper handling goes up astronomically. There are numerous examples of fires up to and including total warehouse losses occurring when records are stored with third party providers and again, check your T&C, but their liability is typically limited to $1 per carton MAXIMUM. If you desire a higher level of protection, sometimes you can purchase this… but the provider has to be able and willing to provide it. But how do you estimate the value of records and is it worthwhile to purchase some form of insurance to cover this?

    Routine processing of short term retention records- a large volume of ‘active’ records belonging to organizations have a “current year plus 2 years (CY+2) ” retention. The costs to pack, ship, ingest, service, pull and destroy these over a 2 year period is likely to be MUCH higher than any costs you would incur internally for handling them. This is especially true if they are accessed multiple times during the 2 years they are in storage. You need to calculate a break even point to determine if it’s even worth considering them as candidates for transfer to offsite storage.

    Depending on your total volume, activity and retention periods, there may be cases where you will see a reduction in overall costs after 5 or more years, but it would be limited cases where you would see a direct benefit any sooner. And how do you calculate the risks? If you have sensitive records that you have to be concerned about the content being exposed during transfer or while in storage, you can only pass along so much of that liability. Ultimately, it still falls upon you, because YOU made the decision to contract it to a third party. And in the event of some catastrophe or disaster where you need near immediate access to your records that are stored elsewhere, what will the cost to your organization be of the delays in access?

    Years ago, when I ran a consulting service for records management and clients would ask about this issue I would help them identify the benefits and risks, and there were very few cases where contracting it out was the recommendation. My advice to them was “Do what you do best; Contract the rest”. About the only things that went offsite were the records that had a statutory or legal long term retention requirement (25 or more years) that were essentially NEVER accessed once they had reached a period of inactivity. But even in these cases, they had to consider the cost of “in and out”, shipping and storage over 25 years to determine how much per carton it cost them to store with w 3rd party as opposed to a dense storage situation within their own environment.

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  2. David Taylor says:

    Let me declare my interest from the outset and state my position as the CEO of a Records Management service provider (full managed services – not archival storage), although l have also been the records manager of many state and federal govt Departments in Australia covering 30 years.

    Having seen an archive facility established for a major government department (charging a fee for storing for several other smaller agencies as well), in preference to engaging an external provider appeared attractive when first undertaken in 1996 and ran reasonably well for the first 12 months. The shine soon started to wear off as the hidden costs (security installation and monitorinig, rodent & pest control, building maintenace, lost revenue on the govt owned building, staffing etc) soon started to creep in, along with the labour intensive processing and cordination role. Over a period of 5 years it became evident that the costs (known and hidden) made the excercise unsustainable in comparison to enagaging an external provider. It was also an acknowledgement that we could not have capital investment for specialist equipment such as high lift forklifts to manage the volume effeciently or effectively. The initial investment, plus ongoing costs actually exceeded the standard commercial rate for storage and the archive was closed.

    Rushing however out to an external provider and throwing your consignment to them is not the answer either. These are service providers and operate for profit like any other business in our economy. Careful consideration of requirement and robust contract negotiations need to be undertaken such as the removal of the standard “final withdrawal fee” equal to 1 years storage costs, penalty fees for loss, delays or errors is also a strong incentive. Strong contract management over the term of the agreememt is also imperative to ensure the best value to acheived for your agency. Poor contract often equals poor service provision and high costs. The size of your consignment also dictates your negotiation power and smart management of your records can reduce the in/out costs as well as courier fees.

    I totally afree with Lawrence in that “do what you do best, contract the rest”. In government in particlar we are / were policy makers and strategic coordinators of services providing the best possible services into the community at the lowest available cost to the public. That is our strength and what we do best. Governments should not be competing with the private sector and providing services of which it does not specialise, and provides no real tangible benefit.

    As an RM profession, we should be developing the strategy and direction of the activity and ensuring that compliance to standards is maintained for the protection of the organisation we serve. The backroom processing is often a noise or distraction and offer little benefit by having it in-house but posses many issues such as staff managemnet, leave issues, performance, costs etc. Ease of access and security can also be maintained by having your service providers operating on site if that is an important issue to you.

    It is never an easy issue to address and is often met with internal resistence and scepticism, but researching your costs and benefits realistically and managing your service / contract effectively will be your best and most defensible approach.

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    • lawrence serewicz says:

      David
      Thank you for a detailed and thoughtful post. There are a number of good points to consider. I really appreciatewd the point about managing the contract as too often it is signed and forgotten.

      I agree with Lawrence that we have to find a way to manage or focus on what we do best and outsource or shift the rest.

      What remains though is making that a reality when political or organisational imperatives limit or shape that option.

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