Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2011-04-14 08:25:01Format, images and links may no longer function correctly. Greg Buckles’ post “Is ECM The Death of Service Providers?” triggered some long-dormant thoughts in the deep recesses of my brain (okay, so maybe it’s the not-so-deep recesses, but I digress…).  In the 2005-2006 timeframe, Accenture announced a $100 million investment in an information management practice.  Around this same time, IBM was investing $1 billion in its Information on Demand initiative, so information management was fairly hot.  At the time, I met with the partner in charge and it looked like eDiscovery was going to get some play within this practice.  The reality was that Accenture – at that time – was more interested in what was making money, e.g. deployment of Vignette Portal (seriously, Accenture had a ton of implementation deals for Vignette).

The larger vision was for Accenture to offer full business process outsourcing (BPO) around content-centric processes.  eDiscovery fits here well, especially since EDD service providers were making a ton of money at the time.  I remember thinking, “eDiscovery can hit the big time if some big systems integrators (SIs) get in the game.”  After all, when I was at Forrester Research, one of the things we looked at when evaluating a software vendor was the number of relationships it had with large SIs because SIs are such an important (and large) channel.  Therefore, I figured that the big SIs would move into the eDiscovery game and move the market along.  To date, that still hasn’t happened.

There are many reasons that the large SIs have not moved into eDiscovery with full force.  First of all, proper execution of eDiscovery requires legal advice – plain and simple.  There is too much potential liability for a large consulting firm to come in and tell a company what it is “reasonable” and “good faith” for eDiscovery efforts.  Second, there is not necessarily a large, multi-million dollar software deployment that will always go along with eDiscovery.  The Accentures of the world are used to dropping off a bus of consultants to spend months deployment enterprise software.  In the eDiscovery world, consumers can spend $80K on a collection and processing appliance.  Hard to convince a company to spend millions when it can spend less than $100K (NOTE:  the low-cost in-house appliance model does nothing to help a company better manage enterprise-wide eDiscovery, but it has been known to stop the bleeding at times, so companies have been loathe to spend more money.  I’m not advocating the appliance approach; rather noting it as a barrier to larger software deployments).

The competitive environment in the eDiscovery consulting arena is also very fragmented, which scares away the big SIs.  There are large consulting companies like KPMG and Ernst & Young with practices, but they can’t do this work for their audit clients.  There are other well-known consulting firms like Navigant and Huron directly in the eDiscovery game, but there are also a lot of small, independent consultants that offer expertise.  There are two other sources of consulting expertise that muddy the waters.  One is the EDD service providers and the other is law firms.  EDD service providers,  although not law firms, feel that their experience with processing chain of custody issues entitles them to give advice to others as to how to do it, while the law firms under whose direction service providers usually work also feel free to opine on EDD work processes and IT operational issues. Since Discovery IS a legal process, with law firms, the presence of other lawyers gives the General Counsel something of a warm and fuzzy feeling.  In fact, we’ve written before about the changing business models of law firms as services become an important part of an offering.

In general, I believe that both law firms and EDD service providers will continue to build out services and eventually become the SIs of the eDiscovery space.  There have been some small acquisitions already (e.g. Iron Mountain/Stratify), but nothing that has set the world on fire.  Perhaps when one entity builds a large enough practice and outshines the competition, a company like Accenture or HP will buy them.  But, such a scenario is likely so far in the future that it will have no effect on how our market operates today.  What do you think?  Let us know…


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