IBM Chases Compliance Dollars

Recognizing a headache for customers and a lucrative market for themselves, IBM Corp. (NYSE: IBM) today unwrapped a series of products and services to help companies comply with new government regulations.

The storage industry is struggling with solutions to tame the Cerberus-headed compliance monster of three recently enacted federal laws -- the Sarbanes-Oxley Act, the Health Insurance Portability and Accountability Act (HIPAA), and the Patriot Act -- as well as privacy issues resulting from other laws and regulations.

Analysts expect businesses will spend billions of dollars on compliance in the next few years, and IBM says its new tools will help them store and protect sensitive financial and private customer data.

"We're addressing what we call 'content and data retention,' " says Alan Stuart, IBM's senior strategist for storage software. "It's also known as 'compliance,' but it goes way beyond that."

IBM's new offerings include a Serial ATA (SATA) disk expansion unit that can provide up to 28 Tbytes of capacity for the TotalStorage FastT600 and up 56 Tbytes for a FastT900. IBM also plans to introduce Write Once Read Many (WORM) capability for its TotalStorage Enterprise Tape Drive 3592 in April. WORM technology helps with compliance because data stored on the cartridge can't be overwritten. Because tape is cheaper than disks and lasts longer, it could be the superior choice for storing records that must be kept for years.IBM's compliance software packages include the DB2 Content Manager for Data Retention Compliance, the Tivoli Storage Manager for Data Retention, and Lotus Workplace for Business Controls and Reporting.

IBM will also offer an Anti-Money-Laundering Service aimed at Patriot Act compliance; an E-Mail Archive and Records Management Service to address NASD and SEC regulations; an Asset Disposition Data Disposal service that includes disk wiping for situations when companies must make sure sensitive records are not left on retired hardware; and Data Retention solutions that use Serial ATA disks to archive data.

Except for the WORM TotalStorage Enterprise Tape drive, all the compliance offerings will be available by the end of the year. Stuart says IBM's compliance offerings are completely open and work with other vendors' products and services.

"This shows IBM has more toys than most of the competitors," says Stan Lepeak, an analyst with Meta Group Inc. "They're offering a comprehensive suite of tools. It's a holistic versus best-of-breed approach."

IBM Business Consulting Services today also released results of a survey that finds only one in 10 CFOs and financial executives of large U.S. companies view their internal controls as compliant with Section 404 of Sarbanes-Oxley. The deadline for such compliance is next June. The survey also found that executives consider records management, IT infrastructure, and accountability as the greatest compliance challenges."It's good to see a vendor doing fact-based marketing and then going to market instead of just trying to sell what they have," Lepeak says. [Ed. note: Yeah, we just hate that non-fact-based marketing.]

Stuart says companies face many of the same challenges as Year 2000 compliance, but the new compliance issues will stay with them longer.

"Y2K was a single event, while this is becoming part of the fabric of industry," Stuart says. "We're seeing a spending cycle of three years with these current compliance requirements. But like with Y2K, our customers are trying to determine if they're doing too much or too little."

Still, the groundwork companies laid on Y2Y could save them money on future compliance.

"Companies have these tools in place -- it's a matter of how to use them," Lepeak says. "It's not like Y2K, where you had to go buy an ERP system. You have ERP, it's about how you use it. The total dollars spent on products hasn't been great until now, and I don't think it will be great. I think it's a services play."And IBM is bringing the toys. ERP!

Dave Raffo, Senior Editor, Byte and Switch