There's no going back

It’s a bit trite to say the secure destruction industry and the entire records and information management (RIM) sector is undergoing change. After all, change is inevitable. All industries blossom, fragment, consolidate and, in general, mature all the time. That’s to be expected and, since it is so predictable, those paying attention can deal with it. At the other extreme is disruptive change, where the rules are effectively changed overnight. This type of change is almost impossible for the small incumbent player to respond to. If you owned a small chain of video rental stores, you cannot start your own version of Netflix, for instance.

If the continuum runs from “anticipated maturation” at one end to “disruptive change” at the other, where do the RIM service industries find themselves today?

My answer is somewhere in the middle but closer to the “mature market” end of the scale. Pricing pressure, consolidation and reductions in capacity are obvious signs of a maturing industry. The Shred-it/Cintas merger is a notable recent example. And, while the expanding market overcame previous cycles of consolidation, the market is no longer significantly expanding.

That said, our industry is not without disruptive forces, most significantly, radically escalating compliance and liability concerns. Ironically, this disruption provides the key to continued success, even in the face of a matured market.

In April, after years of dismissals, the courts began allowing class action data breach lawsuits to proceed. This immediately, and for the first time, led to a rash of multimillion dollar settlements, and the pipeline is full. Also in April, the courts backed and emboldened the Federal Trade Commission’s mandate to enforce data protection as a fair trade issue. It might not sound like it, but this has huge ramifications. And, full-on random audits and mandatory investigations of covered entities and business associates under the amended Health Insurance Portability and Accountability Act (HIPAA) are being rolled out right now.

The ability to assist in fulfilling the compliance requirements of the customer will be the most significant market differentiator of RIM services over the next 20 years. There is no need to go the way of Kodak or Blockbuster unless you’re not prepared.

And, whether it’s Downstream Data Coverage, the Compliance Toolkit, Employee Training Program or Shred School, NAID’s job is help our members be prepared.

Bob Johnson is CEO of the National Association for Information Destruction. He can be reached at rjohnson@naidonline.org.