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Companies 'wasting millions' with bad file management

Smaller firms waste more per person

Enterprises are estimated to be paying an average of $2.1 million (£1.3 million) a year as a result of inefficient file management systems for their unstructured data, with smaller ones paying the most per head.

The Ponemon Institute, on behalf of networking and data management firm Novell, looked at the compliance costs of managing business data at 100 firms.

The 'Compliance cost associated with the storage of unstructured information' report said the proliferation of unstructured data, such as emails, documents, presentations and spreadsheets is creating critical storage, control and compliance challenges for customers.

Ponemon found that smaller-sized organisations were susceptible to a proportionally high rate of compliance costs associated with the storage of unstructured information.

The average cost for organisations with fewer than 5,000 employees was $1.23 million, while the average cost for organisations with more than 75,000 employees was $2.71 million, indicating that smaller businesses pay six times more per employee than larger businesses.

Heavily regulated industries such as financial services, pharmaceuticals, communications and healthcare were susceptible to the highest compliance costs, incurring an average of $2.5 million annually.

The most expensive compliance costs associated with the storage of unstructured information include e-discovery, access governance and internal auditing activities. Together, these activities cost businesses over $1.9 million annually on average.

"Evidence suggests that companies deploying enabling technologies that reduce the complexity of file management can decrease the overall compliance costs associated with the storage of unstructured information," said Larry Ponemon, chairman of the Ponemon Institute.

Automated file management systems to control data access based on identity are one type of system that can help bring down costs, he said. With social media playing an ever more important role in helping to run companies, the increase in unstructured data is set to spiral.

But too many organisations do not have comprehensive compliance policies in place for its use, according to analyst house Gartner. By the end of 2013, said the analyst house, half of all companies will have been asked to produce material from social media websites for e-discovery needs. So enterprises need an overall governance strategy for all applications and information used on social media platforms, it said.

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