Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2010-06-08 08:40:09Format, images and links may no longer function correctly. In some further eDiscovery market shifting, Kroll Inc was acquired by Altegrity this week.  Kroll’s Ontrack division is one of the leading providers of eDiscovery solutions.  It’s no secret that Kroll was for sale (it wasn’t a great fit with parent company Marsh McLennen) and that the price was lower than shareholders would have liked.  Most of the pundits out there seem to think that Altegrity is a good landing spot for Kroll.  I don’t disagree, but I do wonder what the future holds for Kroll Ontrack, specifically.

Much of Kroll’s business is in security and investigative work and that will fit well with Altegrity.  The eDiscovery unit – Ontrack – might be somewhat different, though.  While investigative work is part of eDiscovery, the market is still fundamentally different.  Ontrack has been going down the road of offering software and services solutions, and that’s a road difficult to travel. Very few organizations are able to be both software companies and consulting companies.  And in a market as fragmented and specialized as eDiscovery, it’s that much harder to create differentiated tools without laser focus on a core competence.  Trying to be both a software and services provider often is a corporate distraction.

I don’t know the Kroll business well enough to say that Ontrack should be sold off or not, but it’s an interesting idea.  Ontrack is one of the larger (in terms of revenue) EDD providers.  If spun out on its own, it could evolve into a company very focused on eDiscovery and build the momentum that very few EDD providers have been able to do.  That momentum could come from being a large-scale distributor of partners’ tools or from creating original software tools – though, I do think EDD providers are often better off as distributors.

This acquisition is not exactly the other shoe dropping in the eDiscovery market, but sometimes these stories are pre-cursors to more and more M & A activity.  There certainly are opportunities for larger companies to buy up and coming eDiscovery solutions providers.  What’s more likely though is some internal market consolidation (players of similar size getting together for a 2+2=5 scenario) followed by the major market shake-out in about 18-24 months.  Certainly makes for interesting viewing.

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