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Wednesday, April 23, 2008

Will SaaS Surge in the eDiscovery Market in 2008?

As I continue to report on the status of adoption of the Software-as-a-Service (SaaS) delivery model in the eDiscovery market, I thought it would be interesting to review an article by Phil Wainewright titled "Eight reasons SaaS will surge in 2008" that appeared on ZDNet Software as Services Blog January 2, 2008.

Mr. Wainewright put forth the following reasons for why SaaS will surge in 2008:

  1. SaaS is just part of a wider move towards Internet-based automated services
  2. Mainstream opinion says ‘yes’ to SaaS
  3. Software vendors stampede into SaaS
  4. Virtualization makes it easy to go SaaS
  5. SOA and SaaS become bedfellows
  6. Economic factors favor SaaS
  7. Enterprise IT embraces SaaS
  8. SaaS platforms proliferate

So, how does this list do when judged in the eDiscovery market?

SaaS is just part of a wider move towards Internet-based automated services
A SaaS solution by another other name is still a SaaS solution. However, I beleive that the broader move to Internet-based automated services includes lots of pretenders that have done more than provided an Interet-based front end to clunky and outdated client/server applications. This is paramount to putting lipstick on a pig.

Mainstream opinion in the eDiscovery Market says ‘yes’ to SaaS
Even though some components in the litigation/case lifecycle are a natural fit for SaaS applications and even though I believe that the eDiscovery market is taking a very close look at SaaS, I still believe that SaaS adoption in eDiscovery is lagging behind the market as a whole. However, I would like to point out that as my Blog namesake indicates, the eDiscovery Market is going through a paradigm shift and therefore the resulting chaos presents a classic opportunity for the "leap frog" effect which enables a technologically lagging industry (i.e. one that is still using WordPerfect) to embrace a very leading edge technology such as SaaS thereby virtually leap frogging the general market.

Software vendors in eDiscovery stampede into SaaS
I am not sure that I would call what is happening in the eDiscovery market as a stampede. However, as I have pointed out in various posts on this Blog, most of the industry leading vendors are at least offering some type of an online alternative and there have been a few new vendors enter the market with very interesting pure SaaS applications.

Virtualization makes it easy to go SaaS
The virtualization options listed by Mr. Wainwright will provide the same opportunities in the eDiscovery market as in the general market.

SOA and SaaS become bedfellows
As the legal departments and IT departments of the Fortune 5000 attempt to cobblestone together records retention, compliance and litigation readiness policies, SOA technologies may be able to provide some of the needed support to bring together disparate data and process to complete this enormous tasks.

Economic factors favor SaaS
I think that economics are going to be the major factor in accelerating the proliferation of SaaS in the eDiscovery market. As I and many other have pointed out, the changes to the Federal Rules of Civil Procedure (FRCP) have created a tremendous financial burden on the eDiscovery Market and therefore the economic advantages of properly implemented SaaS solutions should provide some needed relief.

Enterprise IT embraces SaaS
I am not convinced that Enterprise IT has embraced anything having to do with litigation, eDiscovery, compliance, records management or litigation readiness and therefore I would have to say that they certainly have not embraced SaaS based eDiscovery. However, I predict that before the end of 2008 and into 2009, as they are forced to support the legal aspects of their respective enterprises and also embrace SaaS in general, they are going to find that the eDiscovery and the related requirements are a great place to start utilizing SaaS.

SaaS platforms proliferate
The proliferation of SaaS platform options as listed by Mr. Wainwright will provide the same opportunities in the eDiscovery market as in the general market.

So, in summary, I believe that the eDiscovery Market it probably a little behind the general market as a whole. But, I still contend that it presents the best opportunities for realizing the real long term value of SaaS.

Mr. Wainwright’s full article is as follows:

The coming year is going to be a pivotal one for anyone involved in software-as-a-service. For everyone else, it’s going to be the year when SaaS becomes impossible to ignore. Here’s why.It’s all about services. I’ll start my list by repeating the prediction I made at the beginning of last year:

SaaS is just part of a wider move towards Internet-based automated services
The megatrend that powers SaaS is the same one driving Web 2.0, SOA and every other expression of today’s increasingly Web-connected world. Fundamentally, the infrastructure of the Web allows us to cut out much of the location-dependent friction that gets in the way of communicating, collaborating and trading. Software used to be delivered in boxes and had to be installed in the same building as the people that used it. The Web removes those constraints, enabling SaaS — and SaaS in turn becomes the foundation for innovative new ways of interacting and doing business.

Mainstream opinion says ‘yes’ to SaaS
The world is starting to wake up to the potential of SaaS. Fellow-analyst Jeff Kaplan has nailed this cogently in his own great post on Top Ten Reasons Why On-Demand Services Will Soar in 2008. As Jeff points out, everyone from Nick Carr to Wall St is falling in love with SaaS.

Software vendors stampede into SaaS
A year ago, you could still find plenty of SaaS naysayers amongst the mainstream software vendors. Now even SAP and Oracle are keen to show off their SaaS credentials [update: I’m giving a keynote at an Oracle industry summit on SaaS later this month. See disclosure]. Hundreds of lesser names in the software business have realized it’s time to follow suit. In a research alert on Key Trends in SaaS: 2008 and Beyond (PDF, registration required), industry analyst Saugatuck Technology asserts that “approximately 15-20 percent of application ISVs have already either begun new skunk works initiatives or gained access to SaaS assets and development experience through M&A activity. However, over the next 12-24 months we anticipate this number to rise dramatically, as a tougher economic climate will only exacerbate an already challenged on-premise and traditional perpetual license model.”

Virtualization makes it easy to go SaaS
One of the factors making it much easier for independent software vendors (ISVs) to adopt SaaS is the emergence of virtualization technology. Late last year I described how people management vendor WorkStream uses VMWare, for example, and I reported on how some SaaS vendors are using Amazon’s EC2 cloud computing platform. There are many other examples out there, including Joyent’s astonishing giveaway of application hosting accounts to 3,500 Facebook developers. Virtualization will be a big factor this year in helping many ISVs, large and small, get their first experience of delivering software in a service model.

SOA and SaaS become bedfellows
I’ve always believed SOA and SaaS were two sides of the same coin — their common currency being the services model. So much so that, in the hiaitus between the ASP bust and the resurgence of SaaS, I produced a website about SOA called Loosely Coupled. During that time, I got to know Jeff Schneider, one of the most insightful and knowledgeable practitioners blogging about SOA. Imagine my surprise and delight when I read his Top 100 SOA Predictions for 2008 this week: #1 - The incredible value of SaaS is realized and buyers want in#2 - The buyers realize they need enterprise SOA to effectively pull off SaaS#3 - #100 are irrelevant.

Economic factors favor SaaS
Although a recession — if that’s what’s on its way — will pose challenges for SaaS vendors too, the majority of observers seem to think conventional ISVs will be worse off. InfoWorld, counting down the “top underreported software stories” of 2007, goes as far as holding SaaS largely responsible for the pricing pressures ISVs will face in the coming year. Certainly, the low-risk, pay-as-you-go model will give SaaS vendors a big competitive advantage if capex budgets are slashed, according to Goldman Sachs: “The ability to quickly and easily turn on new applications with a significantly lower initial cost of ownership makes SaaS an attractive offering … these benefits are likely to be key in a slower economic environment where purchasers of software may be increasingly skeptical of significant upfront investments which we anticipate to characterize 2008.”

Enterprise IT embraces SaaS
Here’s an interesting take from Microsoft SaaS architecture expert Gianpaolo Carraro: “Similarly to what happened about 10-12 years ago where the growth of the Intra-net was faster than the Inter-net (certainly in terms of $ if not in global terms), in 2008 SaaS … will grow faster inside the corporate boundaries than outside.” Of course, it’s in Microsoft’s interests to see enterprises deploying SaaS internally (and thus having to buy more server licenses to do so) than it is to have them consuming SaaS externally (especially when the external SaaS vendors are typically running Unix-based data centers and using open source platforms). In my view there will also be a lot of the latter going on, because contrary to popular opinion, many IT folk like the low-cost, low-maintenance, low-resource profile of externally delivered SaaS applications. But if others want to try deploying their own SaaS applications internally, I’m not going to stand in their way. It’ll be a great learning experience for them and for the platform vendors they work with.

SaaS platforms proliferate
Last month, SaaS Week reported BEA’s launch of Project Genesis: “BEA claims that Genesis will be the first open enterprise-class SaaS application platform to address the challenges that ISVs face in creating, operating, and governing dynamic business applications.” Genesis is not as original as its name suggest. Progress Software also offers a SaaS platform. Oracle is drawing together the elements of its own SaaS platform — its products are already in use at many SaaS ISVs. Microsoft is working to make its own server products SaaS-ready. The more mainstream SaaS becomes, the more these vendors will be forced to offer effective platforms for ISVs and enterprises that want to build SaaS applications. All of that is in addition to the separate emergence of hosted SaaS platforms, which Saugatuck highlights in the research alert I mentioned earlier: “the powerful growth, presence and influence of SaaS within user enterprises are driving the growth of ‘build in a SaaS environment’.” Saugatuck goes on to suggest that such platforms will gain favor not only because they fit in with SOA initiatives, but also because they conform to “green tech” aspirations because of their resource efficiency.

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Monday, April 21, 2008

Can Electronic Data Discovery be Supported under a SaaS Delivery Model?

With the Size of the Electronic Data Discovery (EDD) Market continuing to grow at an accelerating rate (Socha Survey Results from 2007) and therefore the overall cost of EDD processing also continuing to rise, I have been investigating the markets appetite for a less expensive and more efficient EDD solution that is delivered via a Software-as-a-Solution (SaaS) model.

History, EDD has been the domain of the big box service bureau that processed your data and sent you back the results. This model has been working very well for a number of years and have made several of these vendors very wealthy. And, for the most part, any lawyer with even a medium amount of ESI for any case of any size monetarily, has relied on the big providers in this market to get their work done. As the old saying goes for deciding which vendor to choose, "you are never going to loose your job for choosing IBM or in this case one of the big established service bureaus in the EDD processing space". However, it is my opinion that the technology behind these solutions is old, required a tremendous amount of hand holding and is in need of a complete rewrite.

As an alternative, brave users, smaller service providers and EDD consultants have also had the the option to take on this task themselves locally. The have been able to purchase a software license and an annual maintenance agreement, purchase and setup a local computer or computer network, attend extensive training classes and then attempt to complete EDD processing themselves. This model seems to be working for end users and third party service providers for projects with small amounts of data and not too many technical complications. However, I have to admit that I have talked to several users in this category over the past six (6) months that have expressed concerns about the legal liabilities that now come with processing EDD yourself or even as a service provider (i.e. when it is not your primary business).

So, with these two alternatives firmly entrenched and the cost of EDD processing continuing to rise across the board, I have wonder what the markets appetite for a less expensive and more efficient EDD solution that is delivered via a Software-as-a-Solution (SaaS) model?

After talking to hundreds of lawyers from law firms and the legal departments of their Fortune 1000 clients, I have come to the conclusion that there there is indeed an appetite for a "next generation", less expensive and easier to use EDD solution. However, when I have posed this same question to litigation technologists and the IT departments of these same Fortune 1000 clients, I have been met with skepticism regarding the ability of the current state of technology to support a truly SaaS based EDD solution. The main concerns seem to fit into one of the following categories:

1. The physical capabilities of efficiently moving massive amounts of data over the Internet.

2. Security concerns regarding SaaS solutions (as I have previously posted on this Blog, I believe that any security concerns regarding SaaS are completed unfounded and to a certain extent rooted in urban legend).

3. The appetite of any of the current big box service bureaus to disrupt their current models by introducing a new solution.

4. The financial investment it would take for a new vendor with a SaaS based solution to make to unseat the current leading vendors in EDD market.

5. The real financial value of building an EDD solutions on the SaaS model.

There is no doubt that these are all legitimate concerns that would need to be addressed by anyone planning to enter this market with a SaaS based EDD solution. However, I believe that some of the answers have already been address with the emergence of the email achieving solutions and I think that I have at least a plausible answer to the remaining questions.

I plan to post my answers over the next week. But, before I do, I would encourage feedback so that I could incorporate your answers and comments into my next post on this subject.

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