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Cloud Computing Gives E-Discovery a Lift

Firms are looking to cloud computing's utility model as a way to rein in the infrastructure costs required to support e-discovery capabilities and improve their regulatory response.

As the regulatory scrutiny on Wall Street intensifies, no company can afford to skimp on e-discovery capabilities. But few organizations can afford the enormous investment required to comply with e-discovery requirements. Some companies are finding a solution in the clouds.

"One of the key challenges of e-discovery is mining through huge amounts of information in an efficient manner," points out Rick Dales, the VP of product management at Proofpoint, a messaging security vendor that recently acquired Fortiva, which offers e-mail archiving services. Cloud computing is one way to improve the efficiency of the process, according to Dales, who notes that Fortiva's services combine an on-site appliance with cloud-based storage and management. "Companies aren't doing e-discovery every day," he says. "The amount of infrastructure you need to do this well is more than companies can justify. This way you can bring in all the computer power when needed, but as it's shared between customers it gives you less cost."

Getting on Regulators' Good Side

But more important than any efficiency play, suggests Tom Fread, director at broker-dealer Cowen & Co. and a Fortiva/Proofpoint client, is that "When regulators need to understand [our retention policies] and test them, I have access to a report catalog reflecting the archiving and supervision activities of the firm and addressing specific regulator concerns." The e-discovery cloud service "improves the firm's posture with the regulators tremendously," he adds.

Nonetheless Cowen & Co.'s decision to tap cloud computing for e-discovery was driven by a search for a hosted solution that offered lower cost of ownership. The company didn't have the appetite to manage the infrastructure necessary to adapt its supervisor record retention model to new teams, geographies and products, Fread relates.

Several capabilities led Cowen to select the Proofpoint solution, he continues. "We needed to make sure end-user archiving was a possibility, so we were looking for a solution that allowed us to grant employees access to their own archived communications," Fread says. "That is much more cost-effective than maintaining an employee archive in Outlook Exchange."

Cowen also was "very concerned about having message receipt verification, so we needed to make sure everything sent or received was captured," Fread adds, noting that Proofpoint offers this capability in real time.

"The discovery tool is very intuitive," Fread continues. "You can train business folks, equity traders, legal staff and executive staff on the use of the tool as part of their responsibilities."

Proofpoint's Dales points out that the cloud computing model allows his firm to apply e-discovery best practices in a cost-effective manner. "Most people can't afford to have two copies of data in two locations and keep it up-to-date. ... We keep two copies of data in two different data centers," he says.

"We have hundreds of computers already waiting to work on any request," Dales adds.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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