It has often been said that recession is good for business. In the ranks of eDiscovery software vendors there are few who will argue as recent research by Gartner (news, site) shows companies moving to in-house eDiscovery and a corresponding, consistent growth in sales of eDiscovery software.
Contained in this year’s MarketScope for E-Discovery Software Product Vendors report, Gartner estimates that revenue in worldwide enterprise eDiscovery software was US$ 808 million in 2008, with an annual growth rate from here on in of 21% to 2013.
The purpose of the research, Gartner says, is to give those thinking of going down the in-house route information to build a business case.
From a vendor point of view it gives an overview of a market that is extremely volatile even now. It also says that if you’re not in by now it’s probably already too late. The market is:
. . . no longer composed of tiny start-ups or megavendor e-discovery "wannabes," the market now contains a number of credible solution providers that can meet enterprises' discovery needs either in part or fully”.
Bigger Market, Less Players
Recent industry moves bear this out. This year, Gartner added EMC (news, site), CT Summation (Wolters Kluwer) and Concordance (LexisNexis) with EMC's acquisition of Kazeon (news, site) lumping the two together for evaluation purposes.
On the negative side in this respect i365 exited the market, while Nuix, which competes with Clearwell, Autonomy and other vendors that cover processing and early case assessment, did not meet the revised revenue criteria for inclusion.
In fact, by 2011 there will be 25% less players with consolidation based not only on business achievements, but around common features and functions.
Gartner’s eDiscovery Top Five
In all, 18 different companies are included on the list, none of which fell below a positive rating and five of which fell into the top category of ‘Strong Positive’.
Those that made it into the top rank include:
- Autonomy (news, site) which has been addressing and building its eDiscovery software since 1992. Its Zantaz suite covers all aspects of the EDRM from Information Management to Legal Hold.
- Clearwell (news, site) which, focuses on eDiscovery, covering the identification, processing, review, analysis and production phases of the EDRM, as well as early case assessment.
- FTI Technology, which provides processing, analytics, review and production. It sells both on-premises software and hosted services for processing, analytics, review and production. It has recently added early case assessment
- Symantec, which specializes in e-mail archiving and used it to move into eDiscovery. Symantic launched Discovery Accelerator in 2004 providing preservation, review and workflow of archived content to legal users.
- ZyLAB (news, site) popular in government and law enforcement agencies addresses eDiscovery images, video and text. It also has a paper conversion and management capabilities.
Out of the other 13 companies that fall into the other categories many will be familiar including EMC, IBM, Open Text and Mimosa.
EDRM And Vendors
Like previous years, Gartner uses the Electronic Discovery Reference Model (EDRM) for inclusion in the report and is categorical about vendors addressing three of the listed functions.
The result is that over the course of the past two years, and in particular over 2009, three categories of vendors have emerged including:
- Information governance vendors
- Identification, collection, preservation and processing vendors
- Vendors focused on processing, reviewing and analyzing documents
Show Us The Money!
Not surprisingly the move in-house is driven by financial considerations with business looking for cost reductions through in-house eDiscovery by:
- Reducing money spent on outside review
- Cutting data passed on to further steps in the eDiscovery process
- Easy and repeat access to files
- In-house refining existing data set
Gartner says its analysis of legal reviews indicate cost savings of up to a factor of 10 when technology is introduced as a culling agent, with savings particularly noticeable with early case assessment.
In the case of moderately priced eDiscovery software (US$ 100,000 to US$ 500,000), or even more expensive software (costing more than US$ 500,000), companies recouped the cost in less than six months.
So it is not really surprising then that the market is growing. In fact, growth over the year has been sustained to such a degree that Gartner changed the criteria for inclusion this year.
Last year, it says, the emerging nature of the market justified the inclusion of smaller vendors, but because of consolidation, growing revenue bases and business evolution this year’s criteria include those that:
- Have a software product that can used inside a company's firewall
- Carry out at least three EDRM functions.
- eDiscovery related revenue of at least US$ 15 million.
The recession has been good to the eDiscovery market with companies examining all areas of expenditure not to mention other catalysts like regulatory changes and government pressure for greater transparency.
With all of those factors still at play now, Gartner’s prediction of continued growth in this sector is more when, rather than if.