Gartner announced their inaugural “magic quadrant” for the E-Discovery (eDiscovery) software market on May 13, 2011 and predicted that this market would reach $1.5 Billion in revenue by 2013. However, as anyone that reads my blog posts on a regular basis knows, I believe that eDiscovery is actually part of a larger market called information governance (IG). And, as Sunil Soares, the Director of Information Governance within the IBM Software Group indicated in a blog post on April 11, 2011 titled, Why Information Governance is a Market, Not Just a Process, “information governance is like the blind man and the elephant. Depending on which part of the elephant you touch, people define information governance to include master data management, data stewardship, data quality management, metadata management, business glossaries, information lifecycle management and security and privacy.”
I would actually include several other components as integral parts of IG in pursuit of my premise that if Gartner predicts that the eDiscovery market is going to reach $1.5 Billion by 2013, the information governance market is going to be many times this size. Or, in other words, more than likely the largest software and services market on the planet in the next five (5) years (Note that HP paid $11 Billion for Autonomy to play in the IG Market).
As such, if IG is going to be such a large market, and if (as I contend) many eDiscovery platforms already possess some of the capabilities to support the much larger IG requirements, it stands to reason that many of the current eDiscovery platform vendors are going to make an attempt to evolve into IG vendors. As such, the topic of my blog today is an overview of that potential evolution.
There are several challenges that face the current set of eDiscovery platform vendors in their quest to become bona fide members of the IG vendor community, including; (1) technology, (2) sales capabilities; (3) marketing; and, (4) partnerships and the channel. My opinion on each of these challenges is as follows:
THE TECHNOLOGY CHALLENGE
The natural evolution of any market will present different technology challenges at different stages in that lifecycle. And, it is also not unusual as technology vendors enhance and/or upgrade their platforms to meet these evolving challenges that they find that they have inadvertently developed the capability to potentially meet the challenges in additional markets. Such is the case with the eDiscovery market as it evolves to the point where it’s requirements are fundamentally very similar to the requirements of IG. And, therefore, as would be natural, there are several eDiscovery platform vendors that have developed technology that would be able to support some of the fundemental requirements of IG.
The fundamental requirements of eDiscovery: The fundamental requirements for an eDiscovery platform are to: (1) collect data, (2) process/normalize data, (3) index data, (4) analytics and reporting, (5) search and associated tagging, (6) first pass review, (7) support for standard export formats, (8) comprehensive document review; and, (9) production. Additional potential requirements include; (1) data mapping; (2) integrated legal hold, (3) data retention policy management, (4) workflow management , (5) Advanced analytics such as predictive coding and related machine driven intelligence, (6) collaboration, (7) federated data stores; and, (8) big data.
In my opinion, there are currently no eDiscovery platforms on the market that fulfill all of these requirements in a comprehensive and commercially viable way. Therefore, users currently utilize a best-in-class approach to cover the entire lifecycle. However, that being said, there are several eDiscovery platform vendors that have made great strides towards fulfilling the requirements of the entire lifecycle and should be able to do so within the next few releases (i.e. 6-12 months). The question for this blogger, which of these eDiscovery requirements and by extension, which eDiscovery platform vendors, will be able to cross over to support IG.
The fundamental requirements of information governance: as Sunil Soares, the Director of Information Governance within the IBM Software Group indicated, “information governance is like the blind man and the elephant. Depending on which part of the elephant you touch, people define information governance… differently.” As such, depending upon which “blind man” you talk to, information governance can be many different things.
As a place to start, Debra Logan of Gartner fame defined IG in a blog posting on January 11, 2010, titled, “What is Information Governance? And Why is it So Hard?, as “the specification of decision rights and an accountability framework to encourage desirable behavior in the valuation, creation, storage, use, archival and deletion of information. It includes the processes, roles, standards and metrics that ensure the effective and efficient use of information in enabling an organization to achieve its goals. It is derived from our definition of IT governance which ‘may be defined as the processes that ensure effective and efficient use of IT in enabling an organization to achieve its goals.”
Debra’s definition is definitely a mouth full. However, it is actually a very good definition from a conceptual standpoint. What it doesn’t do is explain the fundamental and specific requirements of an IG platform. So, in pursuit of attempting to investigate whether or not an eDiscovery platform could be used to support information governance, my list of fundamental requirements for an information governance platform are: (1) data mapping, (2) data usage policy management, (3) data retention policy management, (3) storage management, (4) collection, (5) indexing, (6) analytics and reporting, (7) information security and risk management, (8) compliance management, (9) fraud management, (10), data federation, (11) workflow, (12) advanced analytics such as machine driven search and analysis, (12) document review, (13) collaboration, (14) big data; and, (15) production.
So, with the exception of data usage policy, storage management and security and fraud management, there is not really much of a difference between the fundamental requirements of IG and eDiscovery. And, at some level, it would be appropriate to conclude that eDiscovery requirements are actually a subset of the requirements of IG.
Conclusion on technology: Therefore, without getting into a long and drawn out discussion about focus, release creep, support and other application development and support issues, I am going to conclude that there are in fact some eDiscovery platform vendors that have platforms or are close to having platforms that could provide support for at least part of the IG lifecycle.
THE SALES CHALLENGE
It is a natural evolution of any market lifecycle to have different sales requirements at different stages in that lifecycle. And, the litigation technology and services market is no exception. What started out as a market requiring vendors to sell copying, scanning and coding to law firms has quickly evolved into a market requiring a comprehensive eDiscovery platform for global 2000 legal department and possibly even the IT department.
This dramatic change is evident in the eDiscovery offerings moving from services to a combination of services technology, in the type and length of the sale cycle, in pricing and in the buyer. As a result, this paradigm shift has has a dramatic affect on the type of sales professional that can be successful with these market dynamics.
The litigation Services Sales Executive: Most of the current eDiscovery tool vendors have sales organizations stocked with sales personnel that “cut their sales teeth” in the litigation services industry. This sales executives understand how to process and code paper documents, and extract Electronically Stored Information (ESI) from tape. They know the dynamics of copying, scanning, coding, document review and even online document review and associated storage and can quote the economics in their sleep. Swimming in what quickly became a commodity based market, these sales executives established relationships within the lower levels of the litigation services groups of law firms years ago and have made a living from leveraging these relationships.
However, as the litigation technology market evolved from scanning to online document review to Early Case Assessment (ECA), the stakeholders within the law firms began to change and as a result these early litigation services sales executives had to “move up the buyer food chain” and establish relationships with new and more sophisticated buyer sand learn to work through a more complex and technically centric sales cycle. They were still selling to the law firms, but they were now having to explain technology stacks, support for data types and databases and connectivity options (i.e. LAN, WAN or the Internet). Selling also began to move from a relationship based model to more of a customer centric and/or solution selling model based on a combination of technology, services and support.
The Computer Forensic Tools Salesman: Another group of sales executives grew up in the computer forensics and data collection industry selling technology and the associated services to extract Electronically Stored Information (ESI) from computers and “downstream it” to the service providers and/or law firms to integrate into a larger dataset of scanned data. This group of sales executives are actually fairly technical as they understand the details of where and how ESI is stored and the complexities of extracting it in what has become to be known as a “forensically sound manner”. They also understand the concepts of metadata and probably understand the technology (as opposed to just the concepts) of de-duping, de-nisting and flattening out and unpacking ESI. Swimming in the strange waters of computer forensics, these sales executives learned to sell to the very niche market of law enforcement, private investigators and the really technical nerds sitting in the basements of law firms and corporate legal and/or IT departments (for those of you who watch the TV series Bones, the FBI refers to this group of practitioners as squints).
Over time and with the consolidation of technology vendors, many of the independent technologies that were were initially sold as computer forensic tools have now been integrated into larger Early Case Assessment (ECA) or entire eDiscovery lifecycle tools. And, this consolidation will accelerate as the eDiscovery market moves to the cloud.
The new sales cycle: Historically, the litigation tools and service sales cycle was reactive and project based and therefore had short sales cycles with a buyer that a had a very easy to identify pain (e.g. he/she had a bunch of paper that needed to be processed). Even as eDiscovery technology became a more significant part of the sale (e.g. online document review and ECA platforms), because many of the eDiscovery platform vendors were providing a package of technology and services, the sales cycle was still primarily reactive and project based. And, although selling into the litigation service provider channel did have more of a standard technology sales cycle, most of the eDiscovery platform vendors still wanted in on the project revenue and therefore priced their offering with an annual license fee plus a per gigabyte processing fee component that put their sales teams back in the project hunt. I guess that it is hard for a zebra to change its strips?
However, as the eDiscovery platform vendors began to target the eDiscovery buyers within the global 2000 legal departments, the sales cycle has changed to more of a standard technology sales cycle. And, as these same eDiscovery platform vendors and their sales organizations attempt to sell information governance to the business and IT stakeholders within the global 2000, they are going to find themselves right in the middle of a standard technology sales cycle very similar to the sales cycle for selling ERP or other multi-million dollar software and services.
Conclusion on sales challenges: I am going to conclude that the eDiscovery platform vendors are going to have to retool their sales and channel organizations to effectively sell IG into the global 2000.
POSITIONING AND MARKETING CHALLENGE
Positioning, messaging, marketing and the resulting “perception” in the market, in most cases, is more important to the success of a technology offering than the actual technology itself. The technology “junk yard” is littered with leading edge technologies that failed because they did not create an adequate perception in the market. And, on the flip side of this argument, there have been many very successful technology companies that have has spectacular marketing and less than spectacular technology. In fact there are actually a couple of these success stories that have occurred in the the eDiscovery market.
The current state of marketing within the eDiscovery platform vendors: That being said, many of the current eDiscovery platform vendors have revenues less than $25M per year and therefore have realistic economic limitation on what they can spend on positioning and marketing their products. Further, I am going to contend that, given the rapid changes in the litigation technology market, that the eDiscovery platform vendors are already challenged with developing and delivering a focused message that makes sense to law firms, service providers, consulting groups and the legal departments within corporations. In most cases, what the market sees from the eDiscovery platform vendors is a combination of independent positioning and market for each market with little or nor coordination and integration across the disparate markets segments.
The positioning and marketing requirements of IG: Although the technologies between eDiscovery and IG are similar, the IG market is completely different from the eDiscovery market. The corporate buyer is a much different animal than the eDiscovery vendor marketing teams have ever seen. The value propositions and Total Cost of Ownership (TOC) arguments are much more business oriented. There are probably multiple stakeholders within different groups or divisions with different agendas. There are corporate gatekeepers. The sales cycles will be long and complicated and require patience and big IT sales expertise. Given all of this, positioning and marketing are going to be paramount for the eDiscovery platform vendors to even get invited to the IG party.
Further, as with any new market, the IG market “waters are fairly bloody” as the vendors and buyers try to figure out what they are doing. Finally, there are some very large sharks with really big marketing budgets like HP, IBM and Oracle that play in these waters. All told, it is definitely not a place for the inexperienced, uninformed, confused or unaware to be swimming.
Conclusion on positioning and marketing challenges: I am going to conclude that the eDiscovery platform vendors will face a major challenge to develop and deliver a coherent and effect IG marketing message to the global 2000.
PARTNERSHIPS AND THE CHANNEL
Partnerships and channels have become one of the major distribution and support vehicles for many of the big IT providers throughout the world. Direct sales organizations are expensive and it is very difficult to develop and maintain expertise in every one of the vertical markets that and IT provider may want to play. As an example, Cisco just announced that, “it will put its money where its mouth is and invest $75 million in new resources for the channel during its fiscal 2012.”
Partnerships and the channel in the eDiscovery market: The eDiscovery market has been no exception when it comes to partnership and channels. Most of the eDiscovery platform vendors have developed partnerships and associated channels of distribution with the litigation service providers and consulting organizations.
In addition, most of the eDiscovery platform vendors have established OEM type partnerships with each other, filling in technology short comings in their product lines and in pursuit of developing comprehensive support for the entire eDiscovery lifecycle.
Partnership and channel requirements in the IG market: As indicated throughout this blog post, the IG market is big and is already occupied by some of the largest IT players in the world. As such, major partnerships and channels of distribution have already been established among some of the bigger players. The big storage vendors are aligning with the big IT players and the big consulting players are aligning with the big IG providers.
Conclusion on partnership and channel challenges: I am going to conclude that many of the current partnerships and channels of distribution that the eDiscovery platform vendors have developed are not going to be of much use in the IG market as these partners do not have relationships with the IG buyers and are not even currently selling into the global 2000 IG market.
I believe that there are currently several eDiscovery platform vendors that have platforms or are close to having platforms that could provide support for at least part of the IG lifecycle. However, I have concluded that these eDiscovery platform vendors are going to have to retool their sales and channel organizations to effectively sell IG into the global 2000. Further, I have concluded that these eDiscovery platform vendors will face a major challenge to develop and deliver a coherent and effect IG marketing message to the global 2000 and many of the current partnerships and channels of distribution that the eDiscovery platform vendors have developed are not going to be of much use in the IG market as these partners do not have relationships with the IG buyers and are not even currently selling into the global 2000 IG market.
In conclusion, having said all of that, I firmly predict that several of the current eDiscovery platform vendors will rise up to meet these challenges and become major players in the IG market within the next five (5) years. As a result, some of them will be acquired along the way and other will remain independent. The rest of the eDiscovery platform vendors will continue to successfully ride the wave of project based eDiscovery and associated services for many years to come. After all, not every organization in the world is going to jump on the IG bandwagon.
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