Storage software giant Veritas is moving its customers deeper into email archiving through its agreement to acquire KVault Software (KVS). The move will increase competition between Veritas and storage giant EMC, which became a major software force by purchasing Documentum and Legato Systems last year.

Founded in the UK five years ago by former Digital software engineers, KVS was a pioneer in email management even before corporate governance rules made such tools important to demonstrate compliance with best practices for communications.

The £225m purchase, due to be completed by the end of this month, will help Veritas supply tools to store, manage, backup and archive corporate email and data. KVS's UK customers include British Gas, Vodafone, Gloucester City Council, Sony UK and Luton Borough Council.

Many firms are rushing to install so-called information lifecycle management software that creates an audit trail of communications to help firms comply with rules such as the Combined Code on Corporate Governance and the US Sarbanes-Oxley Act. Analyst firm Gartner forecasts that email archiving systems will grow at a 57 percent compound rate until 2007.

Veritas said it will integrate KVS technology into its data protection products, and migrate users of its Data Lifecycle Manager to KVS's Enterprise Vault. Gary Bloom, Veritas's chief executive, said that email management requires specific solutions. "This creates an environment the competition will have to respond to," he added.

Experts said email management systems have become crucial to help firms demonstrate that they are following best practices. "Financial services firms in particular have had major challenges in this area for years," said Jim Fleming, director of CStarr, a regulatory consulting practice. "Firms that are taking corporate governance seriously are doing an awful lot to equip themselves with data recording and recall systems that demonstrate good governance."

Many customers will now choose between Veritas and EMC for storage software strategies, but some will continue to mix and match. KVS is already a popular software option on EMC Centera hardware.

KVS is the third large purchase by Veritas this year, as the firm seeks to bolster its backup and storage management and develop performance management offerings.