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Something occurred to me while working on my upcoming Ipro Innovations session on ‘Who’s Making the Jump to the Cloud & Why?’ The fundamental role of IT was to create and maintain the dynamic technology infrastructure that supported the applications, connectivity and storage required by the business users. Over time, simple server-client applications evolved into customized enterprise platfoms that made strong IT department essential for competitive corporations and firms. Long standing virtualization and centralized storage trends have made these enterprise platforms relatively hardware agnostic, a key requirement for migration to a public Cloud environment. Now that CIO’s everywhere seem to be sending pilot balloons into the Cloud, is there a role for the traditional IT administrator? Many traditional processing/hosting service providers are asking the same question about their future role in the eDiscovery lifecycle. Are they needed when the ESI is created, collected, processed, reviewed and produced in the Cloud? Because that is the direction that companies small and large seem to be headed. It will be a couple years before Microsoft is giving away fully integrated Equivio Zoom functionality to all Office 365 customers, but sharp providers and IT should be looking at that road map and redefining their own roles if they want to stay relevant and employed. I will share some high points from my session or you can participate in person if you happen to be in Phoenix next week. Meanwhile, here is a fun graphic from my deck.

We had a customer question on whether they should/could disable read receipts in corporate email. There was little business value in their vertical for active use of read receipts (i.e. they did not have a large sales division) and a smart attorney on the stakeholder team thought that they posed more risk than reward. Doug Austin’s blog about Fox v. Leland Volunteer Fire/Rescue Department Inc. is a good read on the potential risks of ‘automatically authenticating’ the fact that a custodian saw a specific message, even if I can think of a dozen scenarios where read receipts falsely report custodian awareness. Shutting down read receipt functionality on Exchange or Office 365 is a simple Powershell Cmdlet:

For the last several years, eDJ has conducted surveys that confirmed the accelerating trend of companies moving their messaging, collaboration and other IG systems to the Cloud. This year I am interested in whether consumers are starting to actually conduct discovery in the Cloud as well. My ongoing eDJ poll ‘Where do you conduct eDiscovery’ has yet to turn up anyone who ‘knows’ that their eDiscovery is being conducted in the public Cloud out of the 16 respondents so far. I know that many popular hosted platforms and well known channel providers use the public Cloud (Amazon S3, Microsoft Azure, etc) for secured servers and storage. This makes me wonder if most customers are either not asking the right questions or if savvy providers have figured out ways to ‘rebrand’ the public Cloud with ‘private instances’. Sounds like I need to add some new features and categories to the eDJ Matrix to separate the apples from oranges.

Matter management platforms that are suitable for large enterprise customers are not as common as a simple Google search or general software purchasing site would lead you to believe. There are LOTS of home grown Saas offerings suitable for solo or small firms, but very few with mature, customizable workflow actually designed for corporate legal departments managing hundreds or thousands of legal matters. When Mitratech announced that their acquisition of Bridgeway would benefit these enterprise customers, I immediately wanted to see how many viable competitors were left in the market, which is not as easy as that sounds. I created a matter management category in our eDJ Matrix that found 9 solutions, but experience tells me that our categories require some research to tune and nudge the providers to update their listings. My quick impression is that one of the leaders in enterprise legal management (ELM) just absorbed another primary competitor. That leaves providers with broader offering suites such as Thomson Reuters, HP, Exterro and IBM. eDJ’s clients now have fewer options for matter management functionality without all the baggage.

Just as I was lamenting the shrinking field of Matter Management offerings suitable for enterprise level customers, the founders/execs of iManage announced that they have extracted their product from Autonomy-HP borg. I hope that the developers did not drink the IDOL Kool-Aid and are able to revert the database/index/analytics back to something practical for customers to deploy. This on the same day as U.S. District Judge Charles Breyer approved a $100 million settlement between a Dutch pension fund and HP over the Autonomy acquisition. Catch the Courthouse News Service article title, “Pensioners Get $100M for HP’s Takeover Flop”. Nice juicy terms such as “disasterous $10.3 billion purchase of Autonomy Corp.”, “botched acquisition” and “blamed former Autonomy executives for misrepresenting its revenue”. Fun.

This headline scrolled through my feeds, “CACI wins $102M contract for litigation services.” So who is CACI and how did they beat out ‘market square leaders’ such as Epiq, DTI, D4, FTI and others with ample analyst budgets? CACI ranks 28th in the 2013 Top 100 Contractors Report, 12 slots below Booz Allen and 9 below HP. These are overall IT-Security service leviathans cruising the market depths for the big government scores while familiar sharks and killer whales battle for corporate and law firm victims. CACI does indeed do investigations and litigation support. They have an accredited forensics lab and their own cloud hosting platform (OMEGA) that stresses Section 508 security compliance for “specific collections” to supplement the usual tools – Relativity, Clearwell, Equivio, iCONECT, Axcelerate and Summation. This announcement is a good reminder that our view of the eDiscovery market can be a bit myopic. We live in the midst of the marketing trees and have to climb a government mountain to see the trees in proportion.

With the announcement of Roper Industries acquisition of practice management software provider Aderant for $675M, my rough tally of publicly disclosed investments in the eDiscovery/Info Gov market space hit $2.2B with a billion this week. Rob Robinson keeps a good chronological list of M&A activity here. A couple interesting notes for your consideration. 2014 had 34 announcements, but only quantified roughly $92M in press releases. I know that unquantified acquisitions of familiar private players such as Applied Discovery, TeamConnect and Falcon Discovery represent several times that total, but 2015’s higher rate of disclosure demonstrates more mature, outside investment in our market. We all discount HP’s 2011 $11B Autonomy acquisition as an aberration in the market, but 2015 shows that eDiscovery is slowly integrating into the global enterprise technology/services market space. Although Aderant does not publish their revenue, Roper’s bullish projection of $125M in 2016 revenue for Aderant leads me to ballpark their 2015 revenue around $100M. That give this deal a 6-7x multiple, which beats most deals that I analyzed in 2014. Nice to see the multiples creep back up and enough M&A to justify the $15B+ market estimates batted around between the ivory tower analyst shops.

Expect a barrage of press release headlines claiming triumph from Gartner’s new “Critical Capabilities for E-Discovery Software” ranking report. FTI is happy to furnish you a copy in exchange for your contact info rather than pay the $1,995 list price. The eDiscovery market has always been too broad to be realistically covered in one ‘Magic Diagram’ by either of the traditional analyst firms. That is why eDJ Group decided to focus on detailed market analysis of actual buying categories instead of over-simplified scatter graphs from the earliest days. Gartner’s new report ranks qualified providers (read analyst clients) in three eDiscovery usage cases by different weightings of rankings in six ‘critical capabilities’. Surprisingly, Gartner has actually published the raw and calculated scores along with the provider qualification criteria. My time as a ‘market analyst’ made me a serious skeptic of most analyst reports and ranking diagrams. It is nice to see a big firm make small steps towards the ideal of transparent, granular analysis aligned with consumer purchasing requirements.

As I conduct my 2015 Analytics research, I am asking interview respondents how they think the trend towards analytics and automation will impact eDiscovery careers and roles in the next five years. I have just finished my first round of interviews and already have a couple interesting tidbits to share. We all know that technology has the long term potential to replace, reduce or transform jobs in any field. My initial respondents certainly felt that automation of technical collection, processing and culling tasks would reduce technician headcount, but not impact ECA, search crafting and other tasks requiring human discretion. Interestingly enough, they did NOT think that PC-TAR review would eliminate full time paralegal or counsel positions. Instead, they felt that the swollen ranks of firm associates and contract attorney reviewers were vulnerable to market pressure instead. Not from PC-TAR adoption, but from proportionate, targeted collections resulting from maturing eDiscovery teams empowered by the new Federal rules and caselaw. You don’t need PC-TAR for a single skilled practitioner to tackle a couple thousand email and files with a modern eDiscovery platform like Relativity, IPRO, CaseData or others. A decade ago, savvy paralegals loaded small custodial self-collections using Summation’s eDocs & eMail module (sidenote: the requirements for that module were done on bev naps at my favorite SF bar – Plouf). Despite all the technical limitations and problems, that desktop software met the self service needs for most small matters without a huge eDiscovery budget. It is my view that the use of analytics on in-place enterprise data to make proportionate, defensible collections will return us to those days for a large percentage of matters. There will always be massive class action, EEOC, regulatory or IP matters that require large scale PC-TAR or linear review, but these should be the exception. Smart providers and practitioners will adapt their offerings and skills to meet the new demands. More insight as my interviews continue. I still have some time slots open for corporate or firm practitioners willing to share their perspective on analytics in eDiscovery, so send me an email or at least take the survey!

A recent RFP engagement reminded me how useful it is to be able to find SaaS-Cloud offerings without having to use the filters on my eDJ Matrix. So I created a new category for tech offerings that have a SaaS-Cloud purchase option. I am still updating listings for the new Online Purchase feature, but hope that providers will update their listings before I catch up.