How Much Data Storage Is Too Much?
The lifecycle of information management refers to the determination of which information and data your small business must preserve and protect and over what period of time. It is not productive for any small business to secure and back up information that has become obsolete. (It also raises the risk of human error, as your employees may inadvertently work with files that have aged out of use!) This requires some discipline for properly disposing of out-of-date electronic files. As you develop a strategy for lifecycle information management, here are some of the issues you should consider:
Liability management. The more sensitive customer data you store, the greater your liability for a breach of data. The news media report that computer hackers may have accessed up to 100 million customer records of Heartland Payment Systems, a credit card processor. They are not the only payment processors to report possible data breaches; RBS Worldpay and CheckFree have also been exposed, as has Monster.com, an employment site. These breaches are costly: $202 per compromised customer file, according to the Ponemon Institute, an organization that researches and consults on privacy and information security matters. What accounts for this cost? Customer attrition is one source of loss, as Ponemon found that health care businesses lost 6.5% of customers and financial businesses lost 5.5% of customers after data breaches. In addition, after a data breach, the affected company must undertake expensive security and legal procedures to deal with the intrusion and offer, at its expense, credit monitoring services to the customers whose data may have been compromised. In some states, there is a legal requirement to offer such a remedy; in all cases, it is a good business practice.
Marketing needs. Customer data may be a valuable asset for new product development, customer retention and customer acquisition. At the recent Information Security Best Practices Conference held at the Wharton School of Business of the University of Pennsylvania, marketing professors Eric Bradlow and Peter Fader discussed the conflicting needs of liability management versus marketing needs. As personally identifiable data are increasingly a liability for companies, Professors Bradlow and Faber recommend a “data minimization” strategy: keep the customer data your business needs for competitive advantage and purge all other data. Too many businesses, they believe, are data pack rats, storing information that serves no marketing purpose.
Legal and compliance requirements. Your business may be subject to certain legal or regulatory requirements for preserving data over a certain period of time. It is best to seek advice from legal counsel when developing your lifecycle information strategy.
