I N F O R M A T I O N I M M E D I A C Y, D I S C O V E R Y & C O N T I N U I T Y

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M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y

White Paper

By Bill Tolson

Mimosa Systems, Inc.

May 2007

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M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y

CONTENTS

Executive Summary...2

Business Situation...4

Input Assumptions...5

Discovery Cost Calculations...6

NearPoint Solution Costs...7

Cost and Breakeven Analysis...8

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Mimosa Systems Inc. | 3200 Coronado Drive, Santa Clara, CA 95054 | www.MimosaSystems.com | 408-970-9070 R M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y 3

This customer is one of the largest manufacturers and marketers of healthcare supplements in North America with corporate headquarters in California. The company manufacturers several lines of orally ingested vitamin supplements and employs 3,400 employees in several states. The company wanted to solve two related problems: eDiscovery risk and cost and PST propagation.

Thirty Microsoft Exchange servers make up the messaging environment and they are located in the U.S. on a multi-gig Ethernet backbone with point-to-point and multi-point VPN WAN connections. The message store storage requirement is 350GB with 100MB mailbox limits for all employees. The current daily enterprise email traffic is measured at 150,000 emails per day with a per mailbox daily average of 42 emails. A recent check found 2.1TB of employee PST’s on com-pany network servers. The amount of employee PSTs on employee workstation is unknown.

The company does not have a published records retention policy but has an email server automatic deletion policy of 60 days; after the email has aged 60 days, it is automatically deleted from the email server. Employees are free to move emails into PSTs and store them wherever they desire. Because the company manufac-tures health “supplements” and not drugs, they are not currently subject to FDA regulatory requirements.

Key Findings

• Email is critical to the operation of the business and cannot be impacted with

additional performance overhead requirements.

• Litigation and especially discovery is a challenge and costly in both IT and Legal

department resources.

• As the company grows and along with it the complexity of the IT infrastructure,

discovery risk management is a must.

• Total annual discounted cost of email system archiving system is $295,236.

• Total estimated first year savings are $180,264.

First Year Cost of IT Related Discovery Activities $405,000

First Year Cost of Legal Department Related Discovery Activities $357,000 Total First Year Cost of Discovery Activities - Discounted 50% $381,000

Total Cost of PST Related Tier 1 Storage Consumption $94,500

Total Cost of NearPoint Archiving Solution $295,236

Estimated First Year Savings $180,264

Break Even Time 0.62 Years

Table One: Estimated First Year Savings with NearPoint

Executive Summary

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M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y

As the company’s product lines have become more successful, the number of lawsuits has risen to an average of 1.5 discovery requests per month. Almost all of the discovery requests target corporate email among other records.

The company’s current procedure for placing a Litigation hold on select email boxes and content is to send an email to those mailbox owners to stop message deletion until further notice as well as requesting the IT department to stop the deletion of the email dumpster for selected mailboxes. There is no follow-up with mailbox owners to verify that they received and understood the request.

When required to produce emails for discovery, the company had to search network storage and employee workstations for PSTs as well as restoring specific backup tapes to find responsive emails. This had proven to be extremely expensive and time consum-ing. (Figure One.)

Business Situation

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Mimosa Systems Inc. | 3200 Coronado Drive, Santa Clara, CA 95054 | www.MimosaSystems.com | 408-970-9070 R M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y 5

To estimate the total cost of ownership for various email system related activities for this com-pany, the following data points were collected:

Email Traffic Statistics:

The average size of an email message: 66KB

The average number of emails sent and received per day per mailbox: 42

The average number of emails per day enterprise-wide: 142,800

The average number of emails per year enterprise-wide: 35,985,600

Daily enterprise email storage requirement: 9.43GB

Annual email storage requirement: 2.38TB

Total tier 1 network storage consumed by employee personal archives (PSTs): 2.1TB Total employee workstation storage consumed by employee personal archives: Unknown

Litigation/Discovery Related Statistics:

Number of discovery requests against the email system per year: 18

Percentage of total email subject to eDiscovery per year: 2% of 35,985,600

Average number of pages per discovered email: 1.2 pages

Average number of backup tape restored per discovery request: 9

Total number of backup tapes restored per year: 162

Average cost to restore a single backup tape: $2,500

Employee Fully Loaded Salaries:

IT Administrator: $124,800

Paralegal: $100,000

Average employee: $72,800

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M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y

The company’s key costs associated with ongoing legal discovery of their email system consist of: IT costs for backup tape restoration, and costs of legal department personnel searching for and reviewing potentially responsive email messages. The discovery related costs for this company are shown in the table below:

Analysis of Discovery Related Costs

The first factor in analyzing annual discovery costs is the number of times the company will have to respond to an email system discovery request. For this company, the estimated number was 1.5 times per month or 18 times per year based on past history.

The next factor to consider is the percentage of the total email store that will be discoverable in the current year. Most discovery requests ask for very specific responsive emails from a select number of mail boxes. A discovery request for all email would be considered by most courts as a fishing expedition and be disallowed. The average is usually something below 3% of the total email store annually. Based on past experience, this company has determined that 2% of their total email store could be discovered. Another factor in determining email discovery cost is the average number of pages in an email that will have be reviewed by the legal staff to determine if the email is responsive to the discovery request. Again based on experience, 1.2 pages was determined to be an average email page count for this company.

A major factor in determining IT discovery related costs is the average cost to restore and search one backup tape and the number of backup tapes which will need to be restored. For this company, it was determined that a total of 162 backup tapes would need to be restored and searched on an annual basis with a cost of $2,500 per backup tape. The total IT related discovery cost for this company is $405,000 annually. Another aspect in determining discovery costs is the cost of legal professionals to review each recovered email message to determine its responsiveness to the discovery request. Corporate lawyers will agree that turning over non-responsive emails can cause more problems in the long term. Based on the annual fully loaded salaries for Paralegals, Most discovery requests

ask for very specific responsive emails from a select number of mail boxes.

Discovery Cost Calculations

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Mimosa Systems Inc. | 3200 Coronado Drive, Santa Clara, CA 95054 | www.MimosaSystems.com | 408-970-9070 R M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y 7

each page of email, this company’s projected annual cost of legal review of potentially responsive emails is $357,000.

The legal related IT costs and the legal department discovery costs are combined to give a total estimated annual discovery cost of $762,000. If the above cost numbers are based on estimates, instead of actual numbers, it is a good practice to discount the total cost number by 50% to present a much more conservative cost estimate. This cost number will be a major factor in determining solution breakeven time.

The costs associated with adopting a Mimosa NearPoint email archiving and eDiscovery solution consist of the following: archive servers, the archive application, the eDiscovery option, any professional services related to installation, the annual cost of software support, additional storage requirements, and any additional annual hardware support cost.

In this company’s case, we determined that only one email archive server would be required at an estimated cost of $10,000. The other additional hardware cost comes from the additional low cost, tier 3 storage. It was determined that the first year’s annual email archive storage requirement per employee would equal 700 MB or a total first year tier 3 storage requirement of 2.38 TB. This number should be considered a maximum based on the fact that single instance storage savings from the NearPoint archive has not been included in the calculation. Based on industry cost averages, the tier 3 storage should cost approximately $9 per GB totaling $21,375 for the first year. Including the other costs associated with the NearPoint Email archive solution, the total cost equals $295,236 in the first year.

NearPoint Solution Costs

Based on industry cost averages, the tier 3 storage should cost approximately $9 per GB....

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M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y

Cost and Breakeven Analysis

A current cost breakdown of this company’s situation includes IT related discovery activities, legal department discovery activities, and the costs associated with the tier 1 storage consumed by employee PSTs. These costs are shown below. There are several other costs related to a company’s email system including IT and employee productivity and backup/disaster recovery costs. For this white paper, these additional costs were not included in the possible savings and breakeven analysis.

To calculate the total estimated savings and breakeven time, we estimated the total first year cost of purchasing a NearPoint Email Archiving and eDiscovery solution. The total costs of the solution were estimated to be $295,236 which included all the software, hardware, professional services and annual support costs. To calculate the total projected savings from adopting the NearPoint solution, we subtracted the total cost of purchasing the NearPoint solution from the sum of the first year discovery activities and the PST storage cost. This gave us a projected first year savings of $180,264 with a breakeven time of 0.62 years or about 2/3 of a year.

First Year Cost of IT Related Discovery Activities $405,000

First Year Cost of Legal Department Related Discovery Activities $357,000 Total First Year Cost of Discovery Activities - Discounted 50% $381,000

Total Cost of PST Related Tier 1 Storage Consumption $94,500

Total Cost of NearPoint Archiving Solution $295,236

Estimated First Year Savings $180,264

Break Even Time 0.62 Years

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Mimosa Systems Inc. | 3200 Coronado Drive, Santa Clara, CA 95054 | www.MimosaSystems.com | 408-970-9070 R M A T I O N I M M E D I A C Y , D I S C O V E R Y & C O N T I N U I T Y 9

The company in this example wanted to solve two related problems: eDiscovery cost and associated risk and the employee PST propagation problem. This company was experiencing an average of 1.5 discovery requests per month mainly targeted at their email system. Legal risks of inadvertently not turning over all responsive emails triggering destruction of evidence or spoliation claims was becoming more of a possibility. Because the company had no email retention policy aimed at more effective discovery, their annual discovery costs were skyrocketing.

By purchasing a NearPoint email archive solution and eDiscovery option, they were able to create a secure central email archive that captured all email, attachments, calendar entries, contacts, and task lists which negated the need to search through backup tapes, network storage and employee workstations. Because of the central email archive, email boxes could then be put on retention hold immediately and quickly searched without the need to restore and search through backup tapes. The search capability in the eDiscovery option let the company’s legal department quickly pair down potentially responsive emails to just those that actually met the discovery order without having to read through thousands or millions of emails.

NearPoint can help an organization reduce the cost of managing an Exchange environment, improve user productivity and reduce corporate risk.

Figure Two: Simplified Email Discovery Using NearPoint

For more information about Mimosa NearPoint for Microsoft Exchange Server, contact your Mimosa Sales Representative at (408) 970-9070 or visit our web site at www.mimosasystems.com.

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