Publication Date: February 28, 1997

COLD Storage Remains a Hot Commodity

By Anita J. Freed

Among document storage options, COLD remains a hot technology.

COLD, or Computer Output to Laser Disk, is a means of recording electronic documents as images for storage and retrieval. Whereas imaging systems create images of paper documents through scanning, COLD systems capture data already on a computer and create copies of computer-generated documents exactly as they would appear in printed form.

It's not a new technology: Niche vendors introduced COLD systems about a decade ago as a way for companies to replace paper or microfiche for document storage. Early adopters, naturally enough, were institutions that produce reams of paperwork, such as health care and financial services. But COLD has garnered increased attention in the past few years, as more companies recognize the potential for savings and as larger vendors—IBM, Wang, Kodak and FileNet among them—see the value of being in the marketplace.

By the end of 1995, 15,000 COLD systems had been installed worldwide, says Mason Grigsby, principal with Output Strategies Consulting in San Francisco. According to his calculations, the COLD market was worth $325 million in 1995 and a projected $454 million in 1996, and is growing at an annual rate of about 60 percent.

Fueling the interest, no doubt, is the potential for significant returns on investment. "A company can expect a hard-dollar payback of less than 12 months," Grigsby says.

As an example of a successful move to COLD, Grigsby cites the investment service Charles Schwab, which had been spending $40,000 a month on microfiche to store about 15 million pages a month. By installing its $1 million COLD system, the investment service not only eliminated microfiche costs; it also improved productivity and cut labor needs for some customer service functions in half. Where it once could take minutes to retrieve a document stored on microfiche, it now takes an employee just seconds to call up a document on his or her desktop PC. Furthermore, a customer service worker can retrieve the exact same document that was sent to a client, making it easier to answer customer queries. Employees can even send duplicate documents to customers via fax from their desktops.

A COLD system can cost anywhere from about $50,000 to several million dollars, depending on size and volume. A basic system will include software for recording, indexing and retrieving documents; a server; and a storage mechanism, such as CD-ROMs or RAID (redundant arrays of inexpensive disks).

Grigsby says there are no real disadvantages to COLD, though the major thing companies overlook is volume, focusing on how fast documents can be stored rather than how quickly they can be retrieved. "The biggest error in COLD are users who have purchased a system that under-serves users in terms of document retrieval and indexing," he says.

An Expanding Market

To some in the industry, "COLD" is a misnomer, as the market has grown beyond document storage and retrieval. Today, COLD systems are moving toward integration with document imaging systems and are being used in conjunction with workflow, data warehousing and data mining tools.

"COLD is old; it's getting older by the day. More companies are saying that there is more that they want to do with their systems that just retrieve documents," says Alan Blume, president of Filemark Corp., in Natick, Mass.

"In the old days, you would ask a COLD system for a page and a page would appear. Today, you might say: I would like to retrieve all of my telephone bills for the last year for this account that have calls to Hawaii on them. Then you could take that information and export it into an Excel spreadsheet and show it to a client who's questioning the number of calls made to Hawaii," Blume says.

Blume, who uses the term "HOT," or Hybrid Output Technology, to describe the newer systems, is a strong supporter of cross-platform functionality and systems that use industry standards for databases, indexing and compression. "Choices are important, but businesses shouldn't be forced down a path they don't want. Nothing should be proprietary," he says.

Market trends lend some support to Blume's advocacy. Ron Bertrand, research director with the Gartner Group in Stamford, Conn., sees vendors moving away from proprietary systems toward cross-platform support with Internet/intranet browser capabilities. Browser-enabled systems are unlikely to be "production ready" until 1998, he says, but, "we believe that's going to become the common paradigm. Vendors will have to offer that capability. If not, they will die."

The Gartner Group also sees COLD converging with report distribution systems and the Computer Output to Microfiche/Replacement market into a broad category it has named DARS, for Document Archival and Retrieval Systems. Gartner pegs the value of the North American DARS market at $600 million in 1996, with compounded growth rates of 30 percent projected through 2001.

"It used to be that these marketplaces were separate. But it's clear from our conversations with clients that the borders between these marketplaces are being crossed," Bertrand says.

Not surprisingly, Bertrand also expects that convergence will lead to a consolidation of vendors. More than 300 fall into the DARS market now, but the business analyst projects only 20 to 25 of these existing vendors will survive consolidation. "As the requirements for competing in the marketplace become more complex, and the product requirements become more complex, you will need the larger revenue base to compete," he says.

Anita J. Freed is an Internet project manager for DCI.

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Mason Grigsby and Alan Blume were featured speakers at DCI's Doc World event. For the latest programs on database, data warehousing and data mining topics, please see the online brochures for DCI's Database & Client/Server World and DCI's Data Warehouse World.

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