Reduce Your Records Storage Cost
A new report suggests commercial tenants in Toronto will be facing massive rent increases over the next three years, due to rising property values. Real estate company Jones Lang LaSalle predicts that rents in Toronto could rise as much as 50 per cent over the next three years. What’s causing rising property values? Lack of inventory combined with bidding wars between domestic and foreign investors. This article will bring your attention to how rising rent cost impacts your firm’s cost of document storage and provide you advice on how to reduce your document storage footprint.
Business records are operational—and sometimes strategic—assets. They have economic, legal, fiscal, risk-management, and competitive values. Many organizations, however, lack effective policies and procedures for systematic control of their recorded information. As a result, they keep some records too long or for no reason and spend too much to store them. Secondly, they waste time looking for misplaced information or recreating lost information.
The following content will help you understand whether:
- Your office is over-spending on records management
- You’re paying to store records that have no business value; and
- Whether your external storage cost is getting out of control
Is your office over-spending on records management?
Let’s start by looking at cost of internal storage in prime real estate office space:
A standard 4 drawer lateral filing cabinet takes up 6.9 square feet of floor space and requires another 6.9 square feet of floor space to function. At an office lease rate of $50 per square foot, the cost to house a single filing cabinet is $690 per year or the equivalent of $86 per banker box annually. If real estate analysts are right, and cost of office rent is going up by 50%; your cost in 3 years: $1,035 per filing cabinet or the equivalent of $130 per banker box each year. Total annual cost of storage for an office with 20 lateral filing cabinets is $13,800. In three years, this cost may be $20,700. Adding new cabinets comes at hefty cost of $800-$1000 per unit or $3000 to $4000 per unit if you’re buying fireproof cabinets.
Next time you create a file you should consider the cost of filing and the following research conducted by PRISM International and a Harvard University study.
- 90% of records, once filed, are never referred to again and should be transferred to lower-cost storage
- 95% of the references are to records less than 3 years old
- 40% of paperwork is useless and could be eliminated; and
- 37% of photocopies made are unnecessary and often results in double-storing.
And now let’s look at associated cost of misplaced information due to lack of effective records management policies and procedures
- Managers spend an average of 4 weeks a year waiting on misfiled, mislabeled, untracked, or “lost” information,
- Office workers can waste up to two hours a day looking for misplaced paperwork,
- At any given time, between 3 and 5 percent of organization’s files are lost or misplaced,
- The average cost of recreating a one-page document is $180, and
- 67% of data loss is directly related to blunders from untrained staff,
Lack of effective policies and procedures for systematic control of recorded information is costing organizations thousands of dollars every year.
Rising Cost of 3rd Party Storage:
At a cost of $0.24 to $0.52 per box per month and not $7.19 per month for internally stored records as assessed earlier. 3rd party long term off-site records management continues to be the most widely used service in records management. Unlike prime office real estate lease rates, industrial warehouses in the suburbs lease for 70-80% less. Its ceilings at 24 to 40 feet are a lot higher than your office space resulting in additional cubic volume utilized by floor to ceiling high density racking equipment. Users of this alternative records storage solution realize the benefits of outsourcing. They can now take advantage of the valuable space, freed up resources and finances, and dedicate these to other areas of the business.
Similar to your office space, industrial space rent cost is going up. There is lack of inventory and no significant construction scheduled. Bidding wars between domestic and foreign real estate investors. Warehouses which sold for $2-$3 million dollars five years ago are now selling for $5-$6 million dollars. For many, cost of third-party storage has gone up by 50% in the past three years. It maybe going up by another 50% in the next three years.
Though with rates at a fraction of storing internally, it’s natural that clients of 3rd party records storage facilities’ often treat it as dumping grounds for records and don’t properly manage their inventory. And the cost starts adding up. Here again, lack of policies and procedures results in storing records too long and adding to your cost of records management. Every week we come across organizations who outsource records storage, add more boxes every year and never hit the destroy request button on any part of their inventory. Most often this is due to lack of proper cataloguing at the time of boxing the files. The cost to have these boxes pulled and files reviewed to determine retention or disposition often exceeds the cost of retaining these boxes for a longer period to be sure retention obligations have been met.
We recently transitioned a law firm client who has been sending boxes of records to third party storage facility for over ten years, they had poor information on what’s in these boxes due to lack of a system to properly catalogue the information and were not able to confidently destroy records as retentions expired. Once the full inventory was transported to our facility, this client took advantage of all the boxes being at floor level, they sent a small team of people to assess their inventory. It resulted in 60% savings in their records storage cost as 60% of inventory was approved for destruction. A large portion of the 60% could have been destroyed years ago and added to total cost of records management.
So how do you take control of your records management cost?
Assess your current records storage practice and create meaningful strategy/policy on managing your information. Loyalty to your storage vendor is not always a mutual benefit and a bad cost reduction strategy. Get a second opinion on your current spend. Remember, if you don’t know what you’re storing, it’s likely that you’re overpaying for your internal and/or external storage needs.
Blue-Pencil is an information security company that has been serving the needs of clients in Canada since 2004. Learn more about Blue-Pencil >