Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2010-09-20 12:39:33Format, images and links may no longer function correctly. eDiscovery is one of those markets that feels like it fits into the traditional software world, but has enough idiosyncrasies to require expert services.  Those services have usually come from law firms, EDD service providers, or consulting companies.  Such companies offer experienced litigators, forensic examiners, project managers, and other eDiscovery-related experienced professionals that are critical to executing processes correctly.  These experts are experienced with the software tools that are exploding onto the market today.

On the corporate playing field, there is a dearth of experienced eDiscovery professionals that can help get in-house activities such as collection and preservation managed and under control.  This creates an opportunity for the services companies to provide real value to clients.  Imagine an EDD service provider being able to install tools that allow their experts to manage eDiscovery for clients either on-site or remotely and get data quickly to the review phase?  If the service provider can sell the on-site software, they can make money on what would otherwise have cannibalized their processing business.

What gets interesting is the potential market direction based on solution provider competition.  Service provider companies have been creating their own software solutions in response to customer requests.  These companies, though, are not enterprise software development organizations.   Creating tools that compete with best-of-breed applications that are already on the market is tough.  What the service providers have, though, is the relationship with the corporate General Counsel…and that is what the software companies are trying to build.

The combination of a leading service provider with the right software application could be a very appealing one.  Companies have tried this with varying levels of success, but the market certainly seems to be ready for such a combined solution.  The devil, as always, is in the tactical details.  What in theory feels like a great combination may cause a lot of headaches.  For example, many service providers feel like they will simply become a channel sales agent for software applications and instead want to own the software.  Meanwhile the software providers want to partner with as many resellers as possible.  The trick will be for the right two providers to be at the same point in a lifecycle and get married – assuming one can afford to buy the other.  That’s the other big problem in this industry.  Many small vendors with fairly small revenue have heavy venture investments, meaning prices are often too high for a potential acquirer to justify.

The market is ripe for a success story, however, and we’re finally seeing examples of service providers and law firms investing in the right infrastructure to provided managed eDiscovery services to clients.  There will be a good marriage of services and software and from that success story will flow others.  The smart bet seems to be owning as much of the eDiscovery lifecycle as possible.  We’ll continue to watch the evolution here, but are interested in what you’re seeing.  Please comment or email me privately and we can compare notes.

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