Darren Lee, CEO of NextPage, talks about the challenge for compliance and records managers who must minimize the liability and risk of “smoking gun” documents that live on individual user’s desktop computers.

The following interview is a transcription of a vidcast published on RockyMountainVoices in June 2007.

Brad Baldwin: We’re here in Chicago, Illinois with Darren Lee, the CEO of NextPage. Welcome to the vidcast. Darren, can you tell us a little bit about your background?

Darren Lee: I've been the CEO here at NextPage for a few years and previously before that with a number of other software companies, various different applications, varies different roles. A lot of knowledge management and search background.

Brad Baldwin: What is NextPage's role in the records management space?

Darren Lee: It's actually multifaceted, so record management is really a critical area for us but that's heavily influenced by something in the market that we are seeing.  There are all of these desktops that are out there, we consider it the Wild West: completely untamed, a lot of chaos that takes place and a lot of risk to the desktop. Record management is where one of those risks manifest, because it's very difficult to capture records that are sitting at the desktop of users. Lots of software in large companies that provide solutions that you can drop these records into a repository and manage them there, which is perfect. We don't compete for that. Our role in life is to look at all of these other unmanaged areas like the desktop and the shared drives. There are these chaotic versions of documents and how do you manage them, how do you know about them, how do you get a retention schedule against them and how do you manage them through policy. That's completely what we are focused on at NextPage right now.

Brad Baldwin: Now when you say desktop, the majority of computers that knowledge workers are using aren’t really at a desk. Is that true?

Darren Lee: It's true in the knowledge areas where you've got highly mobile workforce. In the airplane, travel, so on. A lot of the key assets do set on a notebook desktop computer to them. When they are unharnessed from the network they present a risk. When it's time for a discovery effort you'll find that the desktop is the critical area where you’re finding the smoking gun documents. It's our role to know about those, that they are destroyed, if need be or that they are retained if need be; whatever the policy is.

Brad Baldwin: So, how do you go about doing that differently than some of these other big document management systems?

Darren Lee: Probably the biggest difference is that our focus is on that desktop. Most of the large vendors that are in the market actually do a really good job. They are very feature complete.  But, you have to move those documents into the repository. When you do that you have got a change management problem. It's very difficult to get users to do it and in some cases even impossible. Once you’ve got it into the repository, they do terrific. Our role again is that it's hard to do and our job is to ensure that all of these desktops are completely in line from a legal and regulatory perspective. You don't have to worry about what might have to be sitting there because NextPage has completely tracked it and you can know and account for what is there at that point.

Brad Baldwin: What systems are what are you doing to actually provide that reporting? How does that work?

Darren Lee: Technologically what we are doing is placing a software agent resident on every single desktop. We can out track a document, all versions of it, where it's stored, if it goes to a USB key drive, if it gets sent out as an e-mail attachment somewhere. We can watch that where it moves out of its entire lifecycle throughout the enterprise. In addition to that, if it were sent to a shared driver depository, we know that as well. At the center we have a very lightweight service that you can now deploy a policy against each of these documents, once you've known their classification. You can now either move them to a location where they need to be, you can destroy them, etc. Legal holds, legal freezes, these are really big areas, as well.

Brad Baldwin: Statistically what is happening? You talked about the Wild West which is, of course, wild and you need a six shooter to play in that game. But more importantly, it mentions that this is new territory. Is that right?

Darren Lee: It's brand-new territory, which creates space for companies like ours to participate in the market. If you're actually looking in the market, you'll notice a few points. A little bit over 7 billion documents are created annually. Of those documents that get created on an annual basis, anywhere from 25-30% are subject to legal or regulatory compliance. These are high-risk. As these things float around, the real challenge is how you capture them. How do you harness that in order that you eliminate the risk?

We did a survey in conjunction with CIO Magazine and what we found is that 60% of the companies interviewed actually had a retention policy in place. However, fewer than 30% of them have enforced it. That's where we try to step in and help them enforce it. Overall as a market, it’s a terrific market to be in. Software, depending on the category, has matured quite a bit. This happens to be both big and growing. Today, it’s a little bit over $1 billion market and most estimates would put it just under $5 billion over the next five years. So, you’re looking at a 25-30% compounded annual growth rate. That's a real solid market to be playing in.

Brad Baldwin: What do you see as the changes happening? What is driving the industry? Is it trying to catch up with compliance regulation?

Darren Lee: On the one side is catching up with in a regulatory environment. We are seeing a much bigger driver, which is in fact the litigation environment. In fact, I met with one of the largest firms in the country and the partner over all of litigation. His quote to me was, “When it comes to a discovery, we lick our chops when it's time to look at the desktop. Because that is where we always find a smoking gun.” The servers are usually clean, the e-mail policies are fairly mature now, but the desktop is still wild, untamed and problematic. That's the big driver. How do you get rid of those smoking guns? You have less volume in a discovery effort and a lot less risk. That's what we’re seeing, actually.

Brad Baldwin: How do you get started with an application like NextPage?

Darren Lee: At NextPage, we focus on a desktop and take one piece into account, which is the end-user experience. What you'll find is that it's very lightweight to get started with NextPage. It's a simple piece of software that is dropped onto the desktop, very low impact to the user. Then the service is up and running. Our client now disconnects and you can be up and running in a few minutes. Obviously, if you're doing a meaningful implementation, you might take some time around design, but this is not like trying to deploy an enterprise resource planning like SAP. It's quite simple.

Brad Baldwin: How does the end user interact with these managed documents or records?

Darren Lee: The user is really only going to see this one time and that is the point where a new document gets created and it needs to be classified. There will be a little drop-down box and we ask what is this document: finance, HR, or whatever classification. The point that that is known, we never have to talk to that user again. In fact, it can be a folder on the hard drive and we know that any document and new folder is an HR document. In that case, the user actually never sees us at all. So it can be that small.

Brad Baldwin: Interesting stuff going on here NextPage. Where would you recommend that people go to get more information about what you guys are doing?

Darren Lee: I'd head to the website, NextPage.com, and feel free to call us directly. We’d love to speak with anyone who's dealing with these issues in the interim and would love to have contact.