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E-mail retention used to be a matter of internal company policy and (more often than not) the whim of the administrator. In the last few years, all this has changed, mainly due to the passing of the Sarbanes-Oxley Act, which requires publicly-traded companies to retain correspondence for up to seven years. This has forced many Exchange administrators to look into various methods of archiving e-mails in Exchange, either by using Exchange's native archiving features or a third-party product.
Exchange's built-in archiving is simple, but not particularly elegant. You can automatically forward all e-mail in a given mailbox store to a specified mailbox (probably in another store, for the sake of logistics). That mailbox can then be backed up using whatever backup tools would normally be used for Exchange.
This method is simple and fairly effective, but it has a few major downsides. The biggest one is that the archives are not organized in any way -- everything is in one mailbox.
The only way to look for something by a particular user, for instance, would be to perform a search against the mailbox's contents, which might be inordinately slow. If part of the reason for archiving e-mails is to allow users or supervisors to search for a specific user's e-mail quickly, this is not the best approach.
Third-party products are the best solution for long-term retention, especially when the resulting archives need to be inspected or searched periodically.
One of the most useful is GFI MailArchiver, which exports e-mails to SQL Server and performs many intelligent optimizations during archiving (such as storing only a single copy of an attachment sent to multiple recipients). Searching for old e-mails can be done through a Web browser, and no changes need to be made to Exchange itself.
If you already have a SQL Server installation (for instance, if you've been using Office 2003 Small Business Server Edition), this may be one of the most cost-effective options ($399 for up to 50 mailboxes).
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