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The True Lifetime Cost of a Box in Traditional Archival Storage

I. Introduction

Many businesses assume that imaging documents and archiving them on a cloud-based platform is significantly more expensive than placing these same documents into traditional, hard-copy, archival storage.  As a result of this assumption, most businesses have never seriously considered cloud-based archival storage and the cloud-based archiving industry has barely tapped into its enormous potential.  If businesses are persuaded to take a hard look at both cloud-based archival storage and the true lifetime cost of each box they send off to traditional archival storage, then they will realize that in many instances imaging documents and archiving them on a cloud-based platform will lower costs in addition to providing numerous benefits with respect to operational efficiency.  Moreover, businesses will also recognize that the true lifetime cost of each box they place into traditional archival storage consists of much more than simply monthly storage fees.

II. The Benefits of Cloud-Based Archival Storage

In addition to providing cost-savings, cloud-based archival storage can also offer a number of benefits over traditional archival storage.  The most important of these benefits is instant access to archived content.  In fact, since content that is archived on a cloud-based platform is instantly accessible, this content should not be considered archival content but rather active content that is available for immediate use.  Another benefit of cloud-based archival storage is that it makes it much easier for companies to carry out their record retention policies.  In many cases, companies who use traditional archival storage are unsure of what is actually inside each box that they have archived.  If this is the case, it is difficult for a company to make the final decision to destroy these boxes at the dates set forth in their record retention policy as they fear that if they do so they might destroy content that they will need at a later time.  Thus, this fear creates a scenario in which companies pay for off-site storage for their archival content for an indefinite period of time with no exit strategy planned because they are unwilling or unable to spend the time and money to retrieve and examine their archived content to find out what boxes can safely be destroyed.  If these companies utilized cloud-based archival storage, they would know exactly where all of their content is located and would be able to easily make the decision to destroy or retain archived content.

An additional benefit of cloud-based archival storage is that it eliminates the risk that boxes are sent off-site before they are ready for archival storage.  If companies send their boxes to traditional archival storage when these boxes should still be considered active content, then they will have to incur various fees and charges to take them back out of storage and access documents.  On the other hand, since content that has been archived on a cloud-based platform is instantly accessible, companies who use cloud-based archival storage do not incur any additional costs if they mistakenly send a box to archival storage when it still should be considered active content.  In fact, companies who send boxes to cloud-based archival storage when these boxes are still active content will actually see even more cost-savings as their employees will be able to spend less time searching through the content in these boxes and more time using it.  However, these cost savings are beyond the scope of this article.

III. Assumptions Used to Calculate the True Cost of a Box in Traditional Archival Storage

Since the cost of traditional archival storage depends on a variety of factors, including the prices charged by the storage facility, how many boxes are sent to storage at a time, how long boxes are kept in storage, and how often boxes are pulled out of storage, it is impossible to come up with a single figure for the lifetime cost of a box in traditional archival storage.  However, by using certain assumptions it is possible to come up with the lifetime cost of a box in traditional archival storage under a defined set of circumstances.  The assumptions used in this article are conservative assumptions that are being used so that the figure obtained for the lifetime cost of a box in traditional archival storage is not unrealistically inflated in any way.  As such, certain costs charged by some archival storage facilities, such as monthly administrative fees, fuel surcharge fees on certain pickups and deliveries, re-boxing fees, and labor fees, have not been considered.

The prices for the storage-related costs used in calculating the total lifetime cost of a box in traditional archival storage were obtained in April, 2011 from a major traditional archival storage company in the United States and are at a 30% discount from this company's normal prices.  In addition, the following assumptions were used in calculating the total lifetime cost of a box in traditional archival storage: 1) the box is a standard box with a volume of 1ft3; 2) the lifetime of the box in archival storage is 10 years; 3) after 10 years, the box will be shredded by the storage facility; 4) 1 in 2 boxes is taken out of storage during its lifetime so that its contents can be accessed; 5) 1 in 2 boxes has a file taken out of storage during the box's lifetime so that its contents can be accessed [1]; 6) boxes or files are taken out of storage for the purpose of locating a single document; 7) boxes and files are taken out of, and placed back into, storage one at a time while boxes are initially placed into storage in groups of 5; all of the boxes and files placed into or taken out of storage are received or delivered using the least expensive delivery method; and 9) the average labor cost for employees performing tasks relating to the documents, which could be attorneys, accountants, paralegals, consultants, and/or secretaries, is $50/hour.

IV. The Actual Lifetime Cost of a Box in Traditional Archival Storage

Based on the assumptions set forth above, the average lifetime cost of a box in traditional archival is $196.73, of which only $39.60, or roughly 20.13%, consists of monthly storage charges.  If companies realized that they were paying $196.73 per box in storage, not $39.60, then many of them would switch over to cloud-based archival storage for all or most of their archival needs going forward.

A. Storage-Related Costs

There are 5 different types of storage-related costs associated with the lifetime of a box in traditional archival storage: 1) the cost of placing the box into storage; 2) the cost of removing the box from storage to access content; 3) the cost of removing a file out of the box from storage to access content; 4) the monthly storage charge; and 5) the cost of removing the box out of storage and destroying it.  As set forth more fully below, the total storage-related costs for the lifetime of a box in traditional archival storage is $114.12.

Placing a box into storage: The cost of placing a box into traditional archival storage consists of fees for: 1) a pickup; 2) handling; and 3) receiving and entering.  The pickup fee is divided by 5, from $25.30 to $5.06, because of the assumption that boxes are shipped off to storage in groups of 5, the handling fee is $2.34, and the receiving and entering fee is $2.06.  Therefore, it costs $9.46 to place a box into traditional archival storage.

Removing a box out of storage to access content: The cost of removing a box from storage by itself for a brief period is $30.30, which consists of fees for:

1) retrieval: $1.33 ($2.66/box divided by 2 because only 1 in 2 boxes is ever removed from storage);

2) delivery: $12.65 ($25.30/delivery divided by 2);

3) delivery handling: $1.17 ($2.34/box divided by 2);

4) pickup: $12.65 ($25.30/pickup divided by 2);

5) pickup handling: $1.17 ($2.34/box divide by 2); and

6) re-filing: $1.33 ($2.66/box divided by 2).

Removing a file from a box out of storage to access content: The cost of removing a file from a box from storage by itself for a brief period is $28.88, which consists of fees for:

1) retrieval: $1.79 ($3.57/file divided by 2 because only 1 in 2 boxes ever has one of its files removed from storage);

2) delivery: $12.65 ($25.30/delivery divided by 2);

3) pickup: $12.65 ($25.30/pickup divided by 2); and

4) re-filing: $1.79 ($3.57/file divided by 2).

Monthly storage charges: The total monthly storage charges over the lifetime of a box in traditional archival storage is $.33/month for 10 years, or $39.60.

Removing a box from storage and destroying it: The costs associated with shredding a box after ten years in storage is $5.88, which consists of: 1) the cost of retrieving a box from storage, or $2.66; and 2) the cost to perform the shredding, or $3.22.

B. Labor Costs

The most commonly overlooked cost associated with traditional archival storage is labor, which includes expenses for employee time spent: 1) manually indexing and preparing a box for traditional archival storage; 2) retrieving a box, or a file from a box, out of storage to access content; 3) finding content in a box or file retrieved from storage; 4) sending a box or file back to storage; 5) finding misfiled content; and 6) recreating lost content.  As set forth more fully below, the total labor-related costs for the lifetime of a box in traditional archival storage is $82.61.

Preparing a box for traditional archival storage: An employee must perform more labor to prepare a box for traditional archival storage than to prepare a box for digital archival storage.  When an employee prepares a box for digital archival storage, all that he/she needs to do is make sure that the box and all folders in the box are labeled appropriately.  On the other hand, when an employee prepares a box for traditional archival storage he/she must manually index what is in the box so that when employees in his/her company are looking for archived content they will be able to figure out which box they need to retrieve out of storage.  The more folders that are in a particular box, the more time it takes to make a record of all relevant content and the longer it will take to prepare the box for traditional archival storage.  In addition, if the records of content in traditional archival storage are not detailed enough, multiple boxes will need to be retrieved out of storage to ensure that the correct content is located.  On average, it will take employees 15 minutes of labor to prepare a box for traditional archival storage.  Accordingly, the labor cost associated with preparing a box for traditional archival storage is $12.50/box.

Retrieving a box, or a file from a box, out of storage: In order to retrieve a box or a file from that box of storage, it will take an employee, on average: 1) 10 minutes to look through internal records to find the box in which the content is located; 2) 5 minutes to order the content from the storage facility; and 3) 5 minutes to put the box in the correct location when it is delivered to the office from storage.  This is a total of 20 minutes of employee time at a total labor cost of $16.67.  Since the assumption is that every box is removed or has one of its files removed from storage, this $16.67 labor cost is associated with each box sent to traditional archival storage.

Finding archived content from a box or file retrieved from traditional archival storage: When archived content is on a cloud-based archival system, it will take, at the absolute most, 5 minutes to access this content.  On the other hand, when archived content is in hard-copy form and located in a box or file that has been retrieved from off-site storage, it will take on average about 30 minutes to access this content, at a labor cost of $25/box.

Sending a box or file back to storage: Sending a box or file back to storage will take an employee, on average: 1) 5 minutes to repackage the box and bring it where it can be picked up; and 2) 5 minutes to notify the storage facility to pick up the box or file.  This is a total of 10 minutes of employee time at a total labor cost of $8.34/box.

Finding misfiled content: Studies from PricewaterhouseCoopers show that 3% of all documents are misfiled and that it costs $120 to find a misfiled document.  If a misfiled document is located on a cloud-based archival platform, it can be located at a negligible cost by running one or more text searches.  If a misfiled document is located in traditional archival storage, it will likely take, at a minimum, $120 to locate it [2].  Therefore, traditional archival storage adds an average cost of locating misfiled documents of $120 for 3 out of every 100 boxes in traditional archival storage, or $3.60/box.

Reproducing lost content: Studies from PricewaterhouseCoopers show that 7.5% of all documents are lost and that it costs $220 to reproduce a lost document.  If a misfiled document is archived on a cloud-based platform, it is not lost as it might be in traditional archival storage since it can be located by running one or more text searches.  Thus, traditional archival storage adds an average cost of reproducing lost documents of $220 for 7.5 out of every 100 boxes in traditional archival storage, or $16.50/box.

V. Conclusion

Although most businesses consider cloud-based archival to be too expensive for use at the present time, the above calculations demonstrate that cloud-based storage will often result in significant cost-savings in addition to improving employee efficiency and productivity.  Further, recent improvements to the speed and accuracy of scanners, as well as to scanning software, continue to make cloud-based archival storage more efficient and affordable.  While many businesses continue hold firm to the belief that cloud-based archival storage is not a practical solution, once they understand the true cost of a lifetime of a box in traditional archival storage they will realize that now is the time to switch to cloud-based archival storage.

 

[1] Thus, it is assumed that every box is either removed from storage or has a file from it removed from storage during its lifetime before it is shredded.  Since it is assumed that boxes or files are not removed from storage permanently or for an extended period of time, the assumption that content will be removed from storage does not affect monthly storage charges, which continue to be charged while content is briefly removed from storage, or require the calculation to account for additional withdrawal fees.

[2] For the purposes of this article, the $120 figure from the PricewaterhouseCoopers studies has been used as the cost to find a misfiled document in traditional archival storage.  In reality, the cost to find a document that has been misfiled in traditional archival storage is much higher than the cost to find a document that has been misfiled around the office as one or more additional boxes or files has to be taken out of storage, which results in additional fees and charges, and searched through.

About the Author

Krystian Macek is the Chief Technology Officer at LexiconDocs, which is a provider of cloud-based document review and archiving services that is based out of Boston, Massachusetts.

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