Recession Exacerbates Data Management Issues, but Could Make Investigations a Nightmare

Lora Bentley spoke with Craig Carpenter, general counsel and marketing VP at information management technology provider Recommind. Results of a recent Recommind survey reveal that many companies could be in trouble once the federal government makes good on its promise of more aggressive regulatory enforcement.

Bentley: What did Recommind's recent records management survey reveal?
Carpenter: From 50,000 feet, the survey found that employees of enterprises can't find information they need efficiently. It takes them way too long to find documents, and they can't begin to find expertise and foster relationships either.

Bentley: So what does that mean? What are the implications?
Carpenter: It's bad enough for a company that's trying to be efficient and effective when employees can't find what they need to do their jobs. It's worse in a situation like now when the recession is exacerbating the problem. Somewhere around half of the companies responding to our survey had experienced layoffs. So the people who are left are needing to do more work more efficiently, at the exact time the systems that they use to do their work are failing them.

And when you're talking about finding experts and location, it's exacerbated a step further because, say, for instance there was someone to whom you would go to ask a question or to find out about a particular topic. Now [after layoffs] that person might be gone. Once that person's gone, if you don't have some sort of system to help you find someone else you can ask, you're in trouble. So it hurts these folks when they're trying to help the company generate revenue and have greater profitability.

Bentley: What about when the recovery comes?
Carpenter: When you project forward ... those same companies aren't going to be able to grow nearly as quickly as they otherwise would because they don't have the systems in place so that when they start hiring again and doing new projects and making new investments, they can't disseminate information in any sort of effective fashion. That's the productivity side.

Bentley: And the other side?
Carpenter: Again, the high-level conclusion is that companies are not doing a good job of handling their data. If you have a company that can't handle its data for knowledge management purposes, what are they going to do when it comes to regulatory investigations and litigation? I'm sure you saw the fine that Intel was hit with by the European Commission, right? That is a wakeup call, certainly to everyone in this country, if not all over the world, that governments and regulators are getting much more active. They are literally getting on the record ... saying, "There are going to be more investigations and there are going to be more fines ... You need to be quick and accurate in your cooperation with us." In the vast majority of investigations, what that means is "we want to start looking at data immediately."

Going back to the initial problem of companies not doing a good job with their data ... if [a company] can't respond to a regulator effectively, the problem becomes even worse. You end up with angry regulators. You don't know whether the investigation will turn out well or poorly for you, you have no ability to negotiate with the other side, and it ends up costing more money. As opposed to being able to handle most of it in house, with systems and people and workflow and processes, you have to call in very expensive consultants -- the KPMGs and the PwCs and folks like that -- who charge you much more because it's the last minute and you're under the gun and you don't have a choice at that point.