Morgan Stanley knows a lot about financial investments and credit cards, but the company hasn’t done so well with the task of handling e-mails. In the opinion of the Securities and Exchange Commission, the financial services giant should be fined $10 million for failing to hold on to e-mails that the SEC wants to see as part of an investigation. Three years ago, Morgan Stanley was fined $1.65 million for its poor record-keeping.

The message seems clear, but a recent survey by Chicago-based Cohasset Associates Inc. suggests otherwise – 59 percent of the companies responding said they have no formal policy on retaining e-mails.

Here in Central Iowa, a few computer consultants have gotten in on the ground floor of what figures to be a booming field, including QCI in West Des Moines and Sogeti USA, a division of the Capital Gemini Group, in Clive.

“The first companies to come to us are the ones in a lawsuit,” said Larry Fritz, the Omaha-based leader of risk and compliance practices for Sogeti Upper Midwest. “Even though we’ve been working on this for 10 or 15 years, it’s just in the past two years that companies have been doing something about it.”

As e-mail use has exploded in recent years – Fritz said studies show it’s doubling or tripling every year – preserving these electronic documents has become a computer storage space issue as well as a legal one.

“Information technology folks look at how to store e-mails better or cheaper,” said Wade Dewald, a senior vice president at Sogeti. “They delete e-mails to increase disk space. For the legal department, it’s a records management issue; they want to know how to pull e-mail in with other documents and how long to keep it.

“But legal people never talk to IT people. The communication gap between those two departments is the biggest challenge.”

Karl Fultz, the general manager of enterprise infrastructure services at QCI, said most e-mail archiving customers are companies with 500 computer users or more. “The problem they’ve had is the amount of e-mail they receive,” Fultz said. “It becomes an issue of manpower – how many people can they throw at it to meet the requirements of a court?”

Problems can arise if a company deletes too much information or keeps it but has trouble finding it when it’s needed. “It depends on the company and their line of business,” Fultz said. “Some legal departments say get rid of everything as quickly as possible; others say keep it, because it could save us when we need to prove we didn’t violate any laws.”

The simplest form of archiving is to save everything that was received over a given period of time, usually several months.

“There are two types of archiving that we see,” Fultz said. “Just getting people’s e-mail out of their mailbox and into an offline vault, or archiving every piece that goes through the company’s system, like in a financial services environment where they’re doing stock trading.”

It can take about two weeks to archive a large company’s existing e-mails and provide for future archival, Fultz said. “The ballpark cost for this service is about $4,000 per week,” he said, but that doesn’t include the software package that does the actual archiving. “Those products range from $10,000 to hundreds of thousands, depending on the number of users they have,” he said.

More elaborate archival methods are also available. Sogeti’s Fritz said, “If you’re just looking at e-mail archiving, it’s almost a backup solution. There are situations where that can be done for less than $250,000. But when you go to records management, the biggest challenge is having your users really make it a record (that can easily be located when needed). The right software automates that process; instead of the employee making the decision, the system looks at properties of the e-mail and makes the decision.”

“Ninety-five percent of e-mails are not worth saving for long,” Dewald said. “Five percent are truly records. Some software can look behind the scenes at subject matter or key words and automatically place those into the record repository.”

Getting to that level of organization can cost more than $1 million for an average-sized company, Fritz said, or several million dollars for a large one.

E-mail archiving could prove to be a lucrative operation for companies such as QCI and Sogeti. A recent report by The Radicati Group, a technology market research firm based in Palo Alto, Calif., estimated that vendors of e-mail archiving software will share in $465 million in revenues this year and that the total could become nearly 10 times greater in the next five years.