Just prior to the ILTA “rev-elation” Conference in Nashville, HP announced its intent to acquire Autonomy for what has now ballooned into an $11 billion purchase. While many members of the tech press and industry pundits question the merits of the acquisition (e.g. Forbes, Huffington Post and Wikibon), others, including the NY Times, point out that HP has $12 Billion in overseas cash to pay for Autonomy avoiding US taxes in the process.
On paper the Autonomy deal gives HP instant parity in the enterprise information management (EIM) space with IBM, Microsoft and Oracle as well as an edge, for now, over EMC, Google, SAP and Symantec. Autonomy’s ediscovery business is only a portion of the prize as the IDOL search engine, the goose that lays the golden eggs, has been very successfully marketed and implemented as an enterprise-wide search and “meaning based computing” platform that serves the needs of compliance, customer service, HR, IT, marketing, records management as well as litigation support departments.
The move by HP signals the further maturation of the EIM space for which ediscovery is a very visible and lucrative portion. There is no question that the ediscovery solutions space continues to be the tail wagging the EIM dog as ediscovery enablement encompasses or draws upon many innovative technologies and computing techniques including analytics, classification, cloud computing, enterprise search, indexing, metadata management and security.
The $64,000 question is, “How much longer will the ediscovery solutions bull market last?”
NOTE: For the purposes of this post, Parity Research defines an “enterprise” as a private or public organization such as a government agency, Fortune 1,000 company, educational institution or non-profit whose primary business is NOT the law or creating and supplying ediscovery software or solutions.
Upbeat Mood at ILTA
The mood at ILTA was decidedly upbeat which the Autonomy news only enhanced – especially for the vendor community on hand. The HP news validates the continued growth potential for a software solutions space experiencing a perfect storm of more regulations on the horizon, increasing acceptance of computer assisted review by the courts and an increased appetite for enterprises to assume more responsibility for supporting ediscovery activities and deploying solutions that are managed by organizations themselves.
While ILTA has traditionally been an event for both in-house counsel and law firms, I encountered several IT managers chartered with evaluating technologies for their corporate litigation support teams. I also ran into recruiters looking to fill head count for ediscovery vendors trying to grow their enterprise ediscovery consulting practices. As one vendor employee put it, “It’s nice to be in a space where your skills are in demand”.
I also talked with two lawyers in their 30s who recently joined the ranks of a major ediscovery vendor “because computer assisted review is moving in-house and manual review is a stultifying process.”
For additional reading on the mood at ILTA try Chris Dale’s ILTA Post
Information Governance Buzz
As enterprises assume more responsibility for managing ediscovery in-house Information Governance(IG) programs are critical for creating policies, defining repeatable processes and engaging information custodians throughout the organization. While legal, by necessity, plays a major role, compliance, finance, IT, records management and lines of business all have skin in the game.
A major question for ediscovery vendors trying to expand their enterprise customer footprint is, “How do I address information governance in a broader context than just litigation support? What about broader governance, risk and compliance requirements?”
Several vendors who attended or exhibited at ILTA, including Digital Reef , StoredIQ and Recommind, have included IG in their enterprise messaging this year for the first time following the lead set by others including IBM which has a portfolio of products to support IG. Indeed, a Recommind spokesperson mentioned a forthcoming Information Governance product to be announced in September or October. Both Digital Reef and StoredIQ can make a good case for IG starting with the ability to easily find and retrieve what content and data you have in your enterprise.
On the heels of their initial successes with law firms and service providers, vendors such as kCura and Equivio have partnered to broaden their appeal to the enterprise as together they are a more formidable, platform-like offering. Both have done well with additional partnerships across the ediscovery lifecycle spectrum including an Equivio deal to supply KPMG Services with an API to enable their Discovery Radar solution to perform predictive coding – or at least their version of predictive coding also known as computer assisted document review.
Storage focused vendors such as BlueArc (recently acquired by HDS), EMC and NetApp see the IG opportunity as enterprise retention policies, more often than not, call for keeping “everything” electronic forever. Dedupe, compression and tiering are all enablers to manage ever growing content and data stores. EMC has a much broader IG play than just storage as they also offer what IBM would refer to as Information Lifecycle Governance (ILG) solutions including archiving, ECM, ediscovery and intelligent capture. IBM can add analytics to the list as well.
Hybrid software and services companies such as CaseCentral and Daegis continue to do well in enterprises with multi-matter requirements as legal departments shift their focus from pure risk mitigation to risk and cost containment. Daegis consultants, called eDACs, provide essential identification, collection and review skills for undermanned or inexperienced in-house legal departments.
Despite the reality that improving an organization’s ediscovery workflow is an intrinsic part of every ediscovery solution, vendors like kCura and Exterro tout the enhanced workflow capabilities of their offerings. Exterro, for instance, emphasizes the fact that ediscovery is a “bespoke process” and part of a bigger picture, that cooperation is critical throughout the enterprise - which includes key roles for legal, IT, records management and lines of business all of whom are data custodians on some level.
Mitratech has a platform approach to enterprise matter management and a great play for the GRC (governance, risk and compliance) space which Parity believes will become more important as organizations look to deploy IG initiatives. Traditionally law firm and service provider focused vendors such as IPRO will shortly announce new products to meet enterprise customer needs including combining early case assessment (ECA), review and processing into a single product with a web interface. Meanwhile, ZyLAB has been focused on EIM and bringing the ediscovery platform in-house for some time now.
Forensics continues to be a strong component of the ediscovery business with AccessData and Guidance Software as the leaders in the space. Access Data also purchased Summation last year, which has web-based review, to round out its cataloguing, classification and indexing capabilities in addition to more than a dozen other ediscovery related products for the enterprise.
Symantec’s acquisition of Clearwell earlier this year was a move to help drive more adoption of their market leading Enterprise Vault on-premise enterprise archiving solution and they have been putting more resources behind the combined brands. Mimecast continues to grow with its hosted archiving and message continuity approach for enterprises that have Exchange, Lotus Notes or GroupWise implementations.
eDiscovery Still Hot, But What’s Next?
Parity strongly believes that as the enterprise ediscovery market matures, organizations will look to vendors with broader capabilities and less so to point solution providers.
While, there is still strong demand for “reactive” ediscovery services and solutions, enterprises are or will be looking for solution suites and platforms that meet more than just their litigation requirements.
Beyond vendor consolidation and product enhancements, Parity believes that a broader view of technology enabled information management and, by association, information governance lies with the enterprise’s ability to manage much larger data sets than what ediscovery solutions and tools provide today – whether they be primarily based in the cloud, on-premise or a hybrid solution.
Solutions that can quickly find, index, classify, store or delete, merge and analyze different content and data sources regardless of the format or location within the enterprise (including laptops and mobile devices) are the future. Today, unfortunately, these capabilities reside within multiple solutions so the enterprise either has to pull these capabilities together on its own or with the help of a systems integrator. Alternatively a service provider has to pull all of these capabilities together as a hosted solution or most likely a combination of both.
In this scenario the ediscovery process functions as a subset of a larger information management framework or capability. Meanwhile, most organizations are still in “react” mode and do not have IG initiatives in place. However, these same organizations aspire to cut costs and reduce their IT complexity. They want to pursue paths that will continue to mitigate risks, increase employee productivity and improve the knowledge worker’s user experience.
Key to the Enterprise: Land and Expand
1 – The “reactive” enterprise ediscovery solutions space still has legs but users are starting to expect more from their vendors and from their own organizations. Modular solutions that can be purchased in pieces as part of a suite is still how most organizations prefer to buy, for now.
2 – As the enterprise ediscovery solutions space matures, organizations are and will be looking to their trusted vendors for solutions that can be leveraged beyond just a legal application.
3 – At some point, perhaps by 2014 or sooner, enterprise ediscovery solutions will be viewed as one of the EIM toolkits for managing information across the organization not a stand-alone or highly specialized tool relevant only for legal departments.
4 – Vendors with enterprise optimized solutions that appeal to more than just legal departments have a decided advantage over vendors who are perceived as providing point solutions to solve a specific problem, something the founders of Autonomy understood - which is why they were able to command an $11 billion price tag from HP.
5 – Emphasis on information governance within the enterprise is an understanding that a change in strategic thinking about how to deploy technology along with improving policies, processes and workflows benefits the entire organization.