IronMountainSnaresStratify

Inwhatmaybethefirstofmanysuchmoves,IronMountainonWednesdayacquiredStratify,aleadingvendorofe-discoverysoftware,for$158millionincash.Thepurchasecouldinaugurateanumberoftechnology-relatedacquisitionsfortheiconicrecordsmanagementandstoragecompanyoverthenextfiveyears:IronMountainisattemptingtoreplicateitsdominanceinthephysicaldocumentmanagementindustrywiththefast-growingdigitalrecordssector.Stratify'sLegalDiscoverysoftwareincorporateselementsofstatisticalanalysis,patternrecognitionandlinguisticsanalysis.Forcompaniesentangledinlegalorregulatorydisputes,thesefeaturesspeedandrefinetheprocessforreviewingelectronicdocumentslikee-mail.Forexample,it'scostlyforbusinessestodealwithemployeestock-optioninquiriesfromtheSecuritiesandExchangeCommissionorSarbanes-Oxleyaccountingcomplianceissues.Companiesroutinelyspendmillionseachyearinattorneyfeesdirectlyrelatedtothetediousprocessofcullingthroughmountainsofinternaldocumentstosatisfythesesortsofe-discoveryrequirements.Accordingly,Gartnerexpects50percentofGlobal2000companiestoimplemententerprise-widerecordsmanagementsoftwareby2010,upfromabout25percentin2005.Increasedregulatoryoversight,particularlyforpubliclyheldcompanies,meansthesenewrecordmanagementsoftwaresystemswillhavetoculldatanotonlyfromcontentrepositoriesbutalsofromfilestores,archivesandawholeslewofbusinessapplications.JohnClancy,presidentofIronMountain'sdigitaltechnologyunit,saidStratify'ssoftwarebringsstructuretothisseaofunstructureddata.Hesaidthetechnologyallowsattorneysorparalegalstosearchthrough200to300pagesofe-mailsinanhour,ratherthanthetypicalrateof50to75pagesanhour."Ourbusinessisbasedaroundstorageasaservicetocapture,storeandusethedata,"ClancysaidinaninterviewwithInternetNews.com."The'use'pieceisusuallyablackhole.Thisacquisitionwillallowustotakeittothenextlevel,lettingourcustomersfindthoseneedlesinthehaystack."AndIronMountainwillbeprovidingplentyofpitchforks.AtthesametimeitannouncedtheStratifyacquisition,thecompanyalsoannouncedstellarthird-quarterearningsandconfirmedplanstospendbetween$500millionand$1.5billiononacquisitionsoverthenextfiveyears.Inthequarter,IronMountainpocketed$51.3million,or25centsashare,onsalesofalmost$702million,easilyhurdlinganalystestimatescallingforaprofitof18centsashareandsalesof$687millioninthequarter.ClancysaidthatwhileIronMountainis"expanding"itsdigitalrecordsbusiness,itscorepaperandphysicalstoragewillstillaccountforabout94percentofthe$2.6billionto$2.7billioninsalesitexpectstoclosethisyear.Still,thatremainingsixpercentindigitaldocumentmanagementandstoragerepresentsabout$160million,upfrombetween$30millionand$40millionjustthreeyearsago."It'snotatransitionbutanexpansion,"Clancysaid."Ourhistorysince1951hasbeenaboutprotectingandstoringinformationinphysicalform—boxesandpaperandtapes—andwejustcompletedour75thconsecutivequarterofincreasedstorage.Thatbusinessiscrankingandwillcontinuetocrank.Buttoday,somuchisbornandlivesitslifecycledigitallyandwe'vemadeacommitmenttogoafterit."ClancyhimselfisaproductofIronMountain'srelativelynewfixationwithdigitalrecordsmanagement.Beforeassuminghiscurrentrole,heservedaschiefoperatingofficeratConnected,aproviderofbackupandrecoveryspacefordesktopdatathatIronMountainsnappedupinOctober2004for$117million.Stratify,whichprovidesitshostede-discoverysoftwaretoFortune500companiesaswellasmanyofthecountry'slargestlawfirms,willbecomeadivisionofIronMountainDigitalwhenthedealclosesattheendofthefourthquarter.Gartnerreportedthatworldwidespendingforenterpriserecordsmanagementsoftwarelicensesandmaintenancetotaled$350millionin2006andisprojectedtoincreaseabout30percentayearthrough2011.ThisexpecteddemandismusictotheearsofIronMountainexecutivesaswellasestablishedcontentmanagementsoftwareproviderslikeEMC,IBM,OpenTextandemergingplayerssuchasMimosaSystemsandAutonomy,throughitsJulyacquisitionofcontentarchivingpioneerZantaz.Earlierthismonth,OracleunveiledUniversalRecordsManagement10gRelease3,itse-discoveryanddigitaldocumentmanagementsoftware.IronMountainclaimsitholdsmorethan300,000customercontractsfrommorethan100,000corporatecustomersandisresponsibleforstoringandmanagingmorethanninepetabytesofcustomerdata.IronMountainsharesralliedup$2ashare,or6percent,tocloseata52-weekhighof$34.70ashareinWednesdaytrading.