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No hosting center?
Need to scale infinitely?
Go web services!
One encouraging trend that we saw at LegalTech (and at a few meetings before and after) are new systems that bring incredible speed and responsiveness to the eDiscovery processing and review platform market. We’re not talking about small increases, either—we’ve oohed and ahhhed over massive speed increases for searching, filtering, and even loading data. The bigger news is that these new systems offer hot-rod performance at prices in the double-digit per GB loaded range. That price is often assessed monthly, so that it combines processing with hosting, but that’s still usually below the range of what some established providers are charging for hosting alone.
All this is nice, but “better, faster, cheaper” has never been actual news in the eDiscovery world (no matter how much we might claim it as such). The real news is how these new products are achieving these unprecedented savings and speed: massive parallel processing. Some of these systems use massive numbers of cheap virtual machines in-house, in private cloud data centers, but several are completely SaaS based, typically through Amazon Web Services or Microsoft Azure. It’s not just newcomers, either; we’ve recently seen moves by at least one long-time vendor to update its architecture to take advantage of AWS.
SaaS based delivery models are nothing new in this industry, and I remember well my days at Stratify, one of the early leaders in this regard. However, these vendors are playing a whole new game—not just SaaS but really IaaS – “Infrastructure as a Service” –that eliminates one of the longstanding major costs to eDiscovery service providers. At Stratify, we were seemingly always buying new servers, new networking gear, and more and more hardware to support client needs. We were also constantly hiring new people to run it all, and that was an even bigger cost than hardware.
IaaS allows technology providers to eliminate most of that investment and so it changes the game for providers. Far lower overhead in turn means a far lower need to recoup costs through the four-figure per Gig load charges of the past or the many “ancillary” charges (e.g., filtering, hosting, TIFFing, PC/TAR, etc.) of the present. Even when the hardware is owned and maintained in-house, using hordes of cheap, virtualized machines, it’s still dramatically cheaper to operate than old-school massive, constantly expanding data centers and the headcount needed to manage them. Providers that refuse to ditch their old-school data centers are likely to find it increasingly difficult to compete on price.
Massively parallel systems also result in massive gains in speed. Such systems can scale up immediately and nearly without limit because they readjust the processing loads on the fly; they bring enormous computing power to bear when and where it is needed—and only then. For this reason as well, vendors that can’t – or won’t – abandon the costs sunk into their infrastructure may be hard pressed by competitors that can meet sudden changes in client demand (both up and down) essentially on demand.
What’s the downside of these new systems? Some attorneys will claim that they can’t trust the data to be processed on systems they can’t see and that these solutions may not be legally defensible. These will be the same attorneys who send, with the full blessing of the ABA, unencrypted emails to their clients every day. These will probably be the same attorneys who send eDiscovery service providers client data over email, no matter how many times they’re reminded to use their provider’s secure FTP system or to FedEx their provider an encrypted hard drive (I can’t even begin to count the number of times my colleagues and I have seen this—and keep seeing it).
What’s my bottom line? cloud infrastructure introduces some additional risk, even if incredibly small and poorly defined (much less understood by lawyers). Outsized fear of this new approach will likely create some pushback within the incredibly risk-adverse lawyer community, but experience tells us that there is one thing that can trump risk, and that’s a corresponding price drop so huge it simply can’t be ignored.
To get past Luddite lawyer objections, we are going to need Crazy Eddie, “these prices are insane!” kinds of change. And that is what we are seeing now. Some of these new vendors are promoting cost savings of 90% over “traditional” rates. That’s going to get past a lot of risk-premised pushback.
Greater use of parallel computing and web services will hopefully have other benefits, too. If this trend keeps going at its current performance increasing / price decreasing rates, we might even get to the point of being able to provide, as my colleague Christine Taylor has astutely pointed out, eDiscovery for the “other 85%” of the market—smaller disputes that lack the budget for old-school eDiscovery approaches. That, indeed, would be actual news.
Michael Simon – eDiscovery Expert Consultant – Seventh Samurai
Contact Michael at Michael.Simon@Seventhsamurai.com
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