451 Group client event last week

Later than I intended, I wanted to give you a quick update of last week’s client event and information management’s presence at it. Kathleen, Simon, Henry, Matt and me were engaged in many 1:1s – I had 15 over the two days, which were very useful for me and more importantly, from feedback we’ve had, useful to the other person as well. Some of our analysts were booked back to back, doing 20+ meetings; that level of engagement is one of the main values we deliver at our conferences.

On the presentation and panels front, Kathleen did a great job of laying out her vision of how collaboration and social software are finally impacting content technologies, moving beyond just things that enable you to create content, to enable organizations to better handle the risks that can create. Some people who weren’t able to hear her live have asked to hear it by way of a followup – if you do, please get in touch.

My panel was great, comprising Sid Probstein, CTO of Attivio, Stephen Whetstone of Iron Mountain-Stratify and Nicole Eagan, CMO of Autonomy. We were in the after lunch slot but given we were talking mainly about eDiscovery, the future of search and the effects of the credit crunch on information management, we still got people’s attention.

Anyway, don’t take my word for it, listen to what Sid says about it, plus his thoughts on other aspect of the event here and here. I couldn’t have put it better myself!

See you in Boston next year, I hope.

Autonomy and eDiscovery

Amidst the usual explanations of margins, day sales outstanding, average deal sizes, organic growth rates and other financial minutiae (which we like, btw), Autonomy used the following slide during its Q3 earnings call yesterday, ramming home the importance to it and other software companies like it of eDiscovery and the Electronic Discovery Reference Model (EDRM), from which this is adapted:

And these ducks in a row sat there while the management took questions from the financial analysts, while berating a few of them in the process for questioning its organic growth model, which Autonomy laid out for all to see. Our quick take on Autonomy’s earnings is here for 451 clients.

EDRM also, in part the basis of our upcoming eDiscovery report, which will take a thorough look at the current future states of the eDiscovery and eDisclosure (as it’s known in the UK) software and services market.

Please get in touch with me if you would like to know more about that.

What we are learning about eDiscovery

My posting here has been light because we’re head-down writing  a major report on eDiscovery which will arrive in November, followed by a webinar. Here’s a few of the things we’ve learned along the way, some of which we suspected in advance, some of which were totally new to us:

  • This is a highly fragmented market – there is no clear leader.
  • The market has been shaped as much by US civil procedure rules and US privacy laws – or lack thereof –  than any technology innovation.
  • However, technology innovation still has a big part to play in this market’s future direction.
  • End users are growing tired of paying by the gigabyte – new models will emerge.
  • Purchasing influence is shifting rapidly from law firms to the corporate legal departments (those large bills have focused their mind in a hurry).
  • End users are very reluctant to talk publicly about what they’re doing (but boy, are we trying to persuade them to!)
  • Some (but not all) of the large information management vendors that should have a strategy in this area don’t have anything of the sort (see first point).

Anyway there will be more where that came from when the report is out, and we’ll make sure the webinar details are posted here ahead of time. Plus we’ll be talking about this at our annual client event, which is November 10-11 in Boston, MA. See you there!

E-discovery: the results are in – for now

We’ve knuckled down on our upcoming e-discovery report – thanks for the many responses to the blog post. Even though e-discovery has been around for years, the current market activity proves the party’s just beginning – and it’s going to be a barn-burner.

As we saw a few weeks ago with Interwoven’s acquisition of Discovery Mining (log-in required), SaaS is emerging as a viable option, and may be a playing-field leveler for smaller vendors. Also last week, PwC and Iron Mountain / Stratify announced a strategic e-discovery partnership. Then yesterday IBM released its new E-discovery Manager for its content management and email archiving platforms – 451 clients can expect upcoming coverage.

There are a number of established tier-one players. But where there are large players, there is room for smaller alternatives. And because some large vendors, consultants and services firms are playing catch-up in the boom, there is still plenty of potential for acquisition, particularly because the e-discovery process covers several disparate areas of technology: email archiving, storage, records management, search and text analysis. In this race, the market is just hitting its stride, there are probably too many vendors vying for the business and the players shift frequently.

The latest Socha-Gelbmann survey results bear this out. They’ve swelled the ranks of “Top electronic discovery software providers” from 11 to 15 overall. Autonomy and Clearwell have reached the top tier, along with incumbents FTI Consulting, Guidance Software, Inc. and LexisNexis. Of the second tier, 2006 winners Cataphora, DocuLex, ISYS and Oracle are out entirely, Attenex (recently acquired by FTI) and CT Summation are down from tier one, and Epiq systems, iConect and Symantec are first timers to the list. Third tier is all new for the category: AccessData Corporation, Equivio, Kazeon Systems, Inc., Kroll Ontrack and MetaLINCS (owned by Seagate) – note that many of these were previously present on other best-of’s for service or specific software type.

Socha-Gelbmann does offer the caveat that “anyone who makes buying decisions primarily on these rankings is a fool,” although we haven’t seen the quote included in many vendor press releases.

So how then do software purchasers choose a vendor, and what does it mean for the market? We plan to address these questions in our upcoming e-discovery report, in which we’ll be looking at a number of users, vendors and service providers with a range of experience and across sectors, keeping our collective eye on new developments and a view of where the market is headed from here.

What we can tell you as a preview is that it’s exciting to watch such a dynamic market. Now that more companies are becoming familiar with the demands of storing, managing, searching and producing Electronically Stored Information (ESI), they’re no longer buying nick-of-time service. The new standards of the amended Federal Rules of Civil Procedure (FRCP) are not a one-time inconvenience, but require a legally-defensible methodology and the speed to produce on-demand in a number of days. Users are investing in long-term plans for all types of litigation. IT is developing comprehensive strategies for approaching various ESI repositories. Preventive measures are available for monitoring ESI distribution in potentially litigious areas – stopping trouble before it starts in high-litigation operations. These developments are reflected in corporate structure, where IT and legal have more overlap and greater cross-functionality.

Stakes are high, the time-frames for discovery are short – one services exec told us “fast in this business is FAST” – the competition is crowded, and the need is ubiquitous. We’re looking forward to continuing the conversation with many of you – and if you have yet to get in touch, please do so.

E-discovery discovery

We’ve been covering the e-discovery big guns and usual suspects here at The 451 Group in one way or another for about five years now. But we’re looking to get more systematic about it in part in preparation for a long-form market overview of this sector to come this fall. There are certainly no shortage of vendors targeting this market, as anyone attending the LegalTech conference this year would tell you.

We currently have several analysts looking at this market from different angles: Nick and Katey cover the search and text analytics vendors, Simon and Henry keep track of storage and archiving, and Kathleen looks after records management and content management aspects.

But with this approach, we wonder who we’re missing. Where are the up-and-comers? Are there any start-ups or new emerging companies you’ve had your eye on? Let us know in the comments or via email so we can make sure our e-discovery coverage is more comprehensive.

Legal – IT backwater no more

I’ve been attending LegalTech here in New York for the past few years, but this year things seemed to be different.Firstly, and most noticeably, every inch of available space at the New York Hilton on 6th Avenue was taken, spread across three floors. The corridors, which in less busy shows simply lead you to rooms, were lined with stands as were the exhibition spaces. It reminded me of the annual SIFMA Technology Management conference, which is a bit of a zoo and in the same location. But unlike the financial services industry, the legal industry and general counsel offices of corporations haven’t traditionally been seen as major buyers of IT, let alone cutting edge stuff.But there’s nothing like regulations to fuel a surge in the market. The changes the Federal Rules of Civil Procedure (FRCP), which took effect in December 2006 and mandated that all electronic records were discoverable and that parties needed to be ready within 120 days of the start of a lawsuit to discuss their eDiscovery terms. This made eDiscovery a very hot market in 2007 (and helped Stratify to a nice valuation when it was bought by Iron Mountain in July 2007 for $158m).

But one of the messages I picked up pretty loud and clear is that law firms and legal departments have their eye on a much bigger problem, currently being done largely manually, but ripe for automation: document review. Figures of a $15bn market for document review now and a bill of $40bn by 2011 for overall review expense raised more than a few eyebrows among some prospective customers of document review vendors (many of which are also eDiscovery vendors, a market pegged at about $3bn). Jay Brudz, senior counsel, Legal Technology at GE, put it bluntly, “you know how many freaking lightbulbs we’ve gotta sell to pay for that?,” before making it clear that he had no intention in paying what vendors are asking.

The other point of tension I’m picking up is the one between intelligent archiving and search – the battle of ideas between those that think it’s better to do all the tagging at archive time and do some culling at that point (to avoid storing dupes and garbage) and those that think you should store everything and develop smarter search engines.

It’s clear – admittedly without any empirical evidence to hand – that protagonists in this space, be they general counsel departments, outside law firms or the vendors feel the rate is increasing so fast, their ability to cull the data at archiving time to make it more easily discoverable later can’t keep pace. There’s clearly somethig to that, given how rapidly talk has moved from gigabytes, to terabytes to petabytes to something an IBMer who handles data governance strategy for the company told me his clients call Goog-bytes – a generic term to mean so much data they can’t get their heads around it. After all, at this rate it won’t be that long before we talk of yottabytes in this arena, and what comes after that?

Search and archiving is something we at 451 Group have spent a lot of time on already and that is sure to continue in 2008.