Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2010-07-14 00:25:50  One of the more common questions that comes up with clients is, “what are companies doing in terms of eDiscovery purchasing?”  This question is cringe-worth simply because it’s very difficult to answer.  The reality is that, while there are some common trends, every company is different and the disconnect between legal and IT is so large that gauging eDiscovery purchasing habits is complex.Covering the eDiscovery market is way different than analyzing the market for ERP or CRM applications.  Those markets have a bit more straightforward supply and demand models.  eDiscovery encompasses not only multiple applications, but very diverse ways to execute and practice tactics.  For example, one company might want to know what kinds of collection and legal hold applications make sense and look at what peer companies are doing as a comparable.  But, it’s not that simple – what peer companies are doing is dependent on a wide variety of factors:

  • Litigation profile – simply put, if companies feel like litigation is not a big problem for them, they are unlikely to spend much on eDiscovery applications (even if they should simply because proactively managing information provides ancillary benefits like improved knowledge sharing)
  • Balance of power between legal and IT – if a General Counsel is the dominant personality in an organization, the company might not spend anything on eDiscovery applications because legal tends to want to get rid of information; if a CIO has all the power, the company might build up it’s infrastructure for information management.  The reality is that much of the purchasing is based on personality and power rather than on logic and true benefit.
  • Risk tolerance – some companies want to manage risk and therefore aggressively pursue initiatives like legal hold and early case assessment (ECA); others would rather incur risk than cost.  It can be very difficult to predict which company will do what.

This is not a complaint about how hard it is to be an analyst in the eDiscovery industry.  Actually, this situation is part of what makes this market so much fun to cover – it’s unpredictable and it’s very necessary to look beyond the obvious and examine every angle.  Clients still look for trends even though they can be hard to spot and may not be an exact fit.  To that end, I’ve tried to graphically convey some of the shifting purchasing trends in the eDiscovery world.  As the following chart shows, IT features are becoming the priorities in the eDiscovery applications market.  Bells and whistles for legal users are still important, but as enterprises start to deploy eDiscovery tools, they will look more and more for stable, scalable applications.eDiscovery Buying CriteriaAgree?  Disagree?  Let us know what you think.

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