Iron Mountain did not disclose the price when it revealed the acquisition at its analyst day in New York but said RMS is a $27 million company. The 30-year-old Southfield, Mich.-based RMS helps convert physical records into electronic images.
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The acquisition fits with Boston-based Iron Mountain's recent strategy of small pickups to build out its digital business as it tries to diversify beyond a company that vaults – and occasionally loses – backup tapes. Iron Mountain spent $260 million on 13 transactions in the first half of 2007 on acquisitions. Most of that went for ArchivesOne Inc. in May. Iron Mountain also added Accutrac Software Inc. for its e-discovery capabilities and records management firms Societa Italiana Archivi in Italy and Gesellschaft fur beleglose Dokumentenbearbeitung gmbh (GbD) in Germany this year.
By buying RMS, Iron Mountain is continuing a trend of moving into what Carney calls "micro segments" of records management. Forrester identifies healthcare as the third biggest records management vertical behind federal government and financial services. In this case, active files are the micro segment.
Mark Rempe, Iron Mountain's vice president of Health Information Services, defines active files as those pertaining to recently discharged patients. Iron Mountain handles active files as part of an overall healthcare services but does not have a dedicated service for active files, as does RMS.
"They were a direct competitor, but their main focus is active files, where we are across the spectrum with active files, inactive files and tape," Rempe said. "More and more institutions are looking to move those active records off site sooner. But the records are still relatively active because the patient has just been discharged."
RMS services about 120 hospitals, and Rempe said there is overlap with the 2,000-plus hospitals that use Iron Mountain services. But, he said RMS and Iron Mountain services usually show up in different departments of those hospitals.
RMS CEO Ed Santangelo will become president of Health Information Services Consulting for Iron Mountain, and RMS' approximately 400 employees will be retained, Rempe said.
Storage companies have been moving into records management, going back to EMC's 2003 acquistion of Documentum. CA Inc. bought records management firm MDY Group International Inc. and Xiotech Corp. picked up Daticon LLC last year.
"It's hard to believe that paper could be sexy, but given amount of money people are investing in this segment, paper is sexy," Forrester's Carney said.
The RMS deal was likely in the works for a while, with Iron Mountain waiting for analyst day to announce it. CEO Richard Reeves hinted at the acquisition during Iron Mountain's last earnings call in August. "There are certain verticals we will invest in near term, particularly the healthcare vertical," Reeves said then. "In healthcare, we have a couple of big problems we're out to solve in terms of managing physical, as well as digital records. You'll probably see us doing something there."