Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2012-02-07 16:26:31 Today, Guidance Software announced the acquisition of CaseCentral, a provider of EDD processing and review. According to the press release, “under the terms of the agreement, Guidance Software will acquire CaseCentral for upfront consideration of approximately $17.1 million, consisting of $8.3 million in cash, $8.3 million in Guidance Software common stock, and the assumption of $0.5 million of debt, net of cash. Depending on CaseCentral’s SaaS revenue growth, Guidance Software may pay up to an additional $33 million in cash over the next three years.”The combined companies hope to deliver eDiscovery solutions with the an approach of on-premise Encase eDiscovery for identification, preservation, some processing, and early review and more advanced EDD processing and review in The Cloud. This is the first move in what will likely be more eDiscovery market consolidation throughout 2012.Both companies’ eDiscovery products have a multi-case architecture, meaning the products can reuse content across matters. The belief is that the ability to do this from end to end in the eDiscovery life-cycle will be a differentiator.It will take time for the companies to integrate the products into a truly unified eDiscovery platform. For example, Guidance Software estimates that within 6 months, there will be automation of the process of uploading from Encase on-premise to CaseCentral with a simple right-click. Granted, such a feature will be dependent on the amount of data involved and the bandwidth available. Chances are, many cases will still require shipment of data on encrypted hard drives. But, the ability to automate the movement of data from on-premise to the cloud should be of real value.Within a year, Guidance plans for the system to be bi-directional, capable of accepting information such as privilege tags from the cloud-based review system back to the on-premise eDiscovery system.eDJ’s quick take on this acquisition:
- This news has very good timing. The Cloud is a hot topic and many are trying to figure out where it fits into the eDiscovery life-cycle. Guidance now has a good story about the ability to put the on-premise tools where needed while offering the efficiencies of cloud computing for EDD processing and review. This will force on-premise competitors to hurry up and get a Cloud story and will force Cloud vendors into potentially weak stories about on-premise collection products or partnerships.
- The growth of this combined entity needs to be monitored carefully by customers and prospects. In theory, the combination of the two companies looks like a very nice fit. However, it is still a combination of two companies that have yet to completely dominate their respective markets. Guidance is big in forensics, but not necessarily the market leader with Encase eDiscovery. Likewise, CaseCentral has a solid reputation as a mid-sized service provider, but the the question has always been whether or not the company can grow consistently. Will the combination of the two companies be a case of 2+2=5? There are some further details the market will need in order to answer that question.
- There are still a lot of questions left unanswered. Again, this combination makes a lot of sense on paper, but the devil is in the execution. Guidance talked of being able to speed up the upload of data from on-premise to The Cloud, but didn’t offer any details of how that would happen. There has not been a detailed plan of how the companies plan to integrate their architectures. Is a multi-case architecture enough of a differentiation to get a customer’s attention and be a swaying factor in a purchase decision? There is also the question of whether CaseCentral really a cloud eDiscovery provider at all. CaseCentral reports having the multi-tenant architecture critical to being a cloud provider. Some argue that CaseCentral is more of an application service provider that keeps each client on it’s own dedicated hardware in the data center. CaseCentral will need to prove that it can scale to handle the largest cases and that the economics of its Cloud can be competitive with solutions that are being built out on public clouds such as Amazon AWS.
Ultimately, Guidance Software is smart to add a review platform to its eDiscovery offering given the emergence of the eDiscovery platform that can handle more and more of the eDiscovery life-cycle. That the review platform is a cloud-base one is quite the interesting wrinkle and should serve as the foundation for a competitive battle with many of the other on-premise collection vendors. Guidance now has a jump start, but the runway won’t be long. Look for competitors to respond in kind. What do you think of the acquisition? Please comment below.