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Iron Mountain going back to roots in storage services

Company changes direction, considers selling off digital business

April 27, 2011 06:00 AM ET

Computerworld - A week after Iron Mountain announced that it had replaced its CEO, the company said it's considering selling its archiving, e-discovery, and online backup and recovery business to return to its roots in document and tape storage services.

"There's no guarantee a deal will get done, because we're still early in the process, but we have good interest. And as you can imagine, these processes take a matter of a few months before we know it will unwind itself," said Richard Reese, who abruptly took over as CEO on April 14.

Over the past decade, the company has focused on building out its own storage software offerings in support of cloud services, but in the future it plans to use third-party applications to provide those services, said Reese.

Reese replaced Bob Brennan, who had been CEO since February 2008. Brennan has also resigned as a director on the company's board.

A spokesman said Brennan will stay on for the next few weeks to help with the transition of leadership.

If Iron Mountain sells its digital business, its online backup offering that includes the LiveVault online server backup service and Connected desktop backup service would go with it.

Also included in its digital business would be its digital archiving products, including NearPoint, the Total Email Management Suite, and its Digital Record Center for Compliant Messaging service; and its e-discovery products, including Legal Discovery and eVantage.

Iron Mountain would retain its service power by using third-party software, such as Digital Record Center for Images, an archive for digitized copies of physical records, as well as its Digital Record Center for Medical Images, a backup and archiving solution for MRIs, CT scans and other medical images.

It would also continue to offer physical media storage (such as tape and removable disks), and its core services for paper, including secure shredding.

Iron Mountain entered the digital business 10 years ago to address a clear customer need, Reese said, but that business has not been profitable.

"We've got good margins. The problem is, we eat them all up in the redevelopment costs," Reese told investors. "We were not successful at building an efficient development shop. Or, said another way, it just cost us too much to continue to develop and redevelop our own technology."

Another trend affecting Iron Mountain's decision was the cloud, Reese said, which created an unwanted atmosphere of competition.

Reese said cloud vendors want his company to use their software technology married with Iron Mountain's distribution channels "to get access to markets deeper than they can get into."

"It makes no sense for us to compete with [others] that are coming into the market. We're going to play nice with them," Reese said. "The way that people think about iPads and handheld devices and what that's going to mean to data, and how it's stored, and how it's managed -- there's a lot of shifting coming. This will create clarity."



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