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The eDiscovery Paradigm Shift

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Tuesday, September 22, 2009

VC Funding for SaaS Solutions on the Rise

I just got an email with a link to an article on the Information Week Cloud Computing page indicating that venture capital investment in Software-as-a-Service (SaaS) based solutions is on the rise. The article Posted by Mary Hayes Weier @ 10:49:AM on Sep,18, 2009, titled, "VC Funding Is Dead? Tell That To Eight Newly Wealthy SaaS Startups," states that more than $60 million has been pumped into SaaS startups in the past couple of week.

For anyone that reads my Blog on a regular basis knows that I am a SaaS bigot of sorts ( and therefore beleive that most investments in solid SaaS based technology are going to provide above market returns in the coming years. And, with the accellerating increase in the volume of ESI and the subsequent emergance of the eDiscovery market, I beleive that the investment with the highest returns are going to be SaaS based solutions in the eDiscovery and/or GRC (Goverance. Risk and Compliance) space.

Having spent that last year examining all of the SaaS based solution startups or restarts in the eDiscovery market in detail, I can tell you that there are some very exciting SaaS based eDiscovery solutions that are going to turn this industry upside down, give the legacy vendors a run for their money (literally) and provide some tremendous opportunities for investors.

I have already begun to work with several SaaS based vendors with new technologies in legal hold, chain of custody mangement, next generation file transfer security, project/case/matter management and workflow, Early Case Assessment (ECA), EDD processing and of course online review tools. Over the next twelve months, I am planning to either find or develope a SaaS based solution that seamlessly covers the entire EDRM model and maybe even pushes left into document retention and archiving. Further, as you have also heard me contend on this Blog, I beleive that the ultimate SaaS based solution for ESI management will actually be within the GRC space with eDiscovery as a subset of the requirement (

The full text of the post by Ms. Weier is as follows:

Venture capital funding is at a historic low, yet at least eight software startups announced VC funding in the past two weeks for a total of more than $60 million. Their products are all very different, but they have one thing in common: they're delivered in a software-as-a-service model.

This is significant, because it shows that when VCs are thinking about what software companies to fund, they recognize value in the SaaS model. Some apps are just easier to sell and deploy as a SaaS, and are likely to gain better traction in a tough economy.

And $60+ million in two weeks is impressive, considering the National Venture Capital Association reports that VC investments in the second quarter of this year dropped to levels not seen since 1996.

Here are eight SaaS companies that have publicly announced VC funding so far this month; certainly there are others:

1) Accept, a SaaS for idea and portfolio management, designed to help businesses quickly bring their best product ideas to market, raised $17 million in Series B financing from StarVest Partners, Jefferson Partners and the Entrepreneurs Fund.

2) Apptio, a SaaS for IT financial management, raised $14 million in Series B financing from Andreessen Horowitz Fund, Shasta Ventures, Greylock Partners and Madrona Venture Group.

3) Jobvite, a SaaS for job recruitment, raised $8.25 million in Series B financing from ATA Ventures and CMEA Capital.

4) NextBio, a SaaS used by life science researchers at universities, and businesses such as Eli Lilly, Merck, and Johnson & Johnson, to find and share information, raised $8 million in Series C financing in a round led by Newbury Ventures.

5) Sonian, a SaaS for data management, raised $5.6 million in Series A funding from Prism VentureWorks and Summerhill Venture Partners.

6) HealthHiway, a Bangalore, India-based SaaS for hospital patient data and billing, raised $4 million from Greylock Partners.

7) OptionEase, a SaaS for fair market value accounting and compliance, raised $3.5 million in Series A financing from Miramar Venture Partners and others.

8.) A marketing-related SaaS provider has completed a round of Series C financing. The company and its VC will announce details on Sept. 22.

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Monday, September 21, 2009

Gartner Humming the Proactive eDiscovery Tune with Five Step Process for Better Use of Enterprise Search in eDiscovery

Although I believe that it is stating the obvious, I was pleased to read that Gartner is now preaching the concept of enterprise IT being proactive in their approach to eDiscovery as means to increase efficiency and to reduce the overall cost of litigation. In a September 17, 2009 press release titled, "Gartner Says Enterprises That Fully Document Their Search Processes in E-Discovery by 2012 Will Save 25 Percent on Their Collection Processes," Gartner stipulated five steps to improve the eDiscovery process. These five steps actually came from a pretty good Gartner report "Five Steps for E-discovery to Improve Search and other processes." The report was generated as part of the e-discovery workshop that Gartner conducted with leaders in e-discovery, such as Robert Brownstone, law and technology director at Fenwick & West LLP, at the Gartner Risk Management and Compliance Summit, April 29-May 1 of this year. The report is available on Gartner's Web site at

Having spent most of my career assisting IT departments worldwide provide more business relevant support to their business units, I have been very interested in following the paradigm shift that is going on within the IT deparments and their bretheran in the legal departments as they collectively deal with eDsicovery.

If you read my Blog with any consistency, you know that I believe that eDiscovery is part of a bigger issue called Goverance, Risk and Compliance (GRC). And, if addressed from a proactive standpoint with ESI archiving and leading edge enterprise search and analysis from forward thinking technology organizations such as Orcatec and ContentAnalyst, eDiscovery will eventually become a commodity process.

And, although Gartner has not exactly said this same thing, it is nice to know that they are at least begining to hum this same basic tune.

The full text of the Gartner press release is as follows:

By the end of 2012, enterprises that fully document their search processes in e-discovery will save 25 percent on their collection processes, according to Gartner, Inc. Enterprises of all sizes, and those facing any number of legal actions annually, should have a simple set of practices to follow anytime they need to embark on an e-discovery process in the near future.

Although no single relevance model or cocktail of relevance models will be effective in the next five years, Gartner predicts that by 2014, lawyers and technologists will use a customary means of recording search processes in e-discovery.

"Addressing the ongoing challenge of the IT perspective of litigation management demands both that the technologies be acquired and that procedures for using them be established," said Whit Andrews, vice president and distinguished analyst at Gartner. "Companies need to own the products that will be necessary for them to address litigation and understand that those products will not have the same positive impact unless they are supported by repeatable, effective, systemic processes for lawyers and IT to follow."

Gartner identified five guidelines to ease the first steps of addressing e-discovery for litigation:

Open communication wide, and include potential custodians. The legal team, or teams, and IT must be able to communicate throughout the process. At the first threat of litigation, IT and the lawyers representing any company or government enterprise should initiate a planned round of meetings as though the e-discovery phase of litigation were a project with phased deliverables and expectations.

Get a senior litigator involved immediately. High hourly rates are compensated for through effective decision making.Waiting for the final product to be ready for delivery to opposing counsel is a mistake. A senior litigator, engaged at an early stage, will be able to advise on what document and data sources should be searched and examined, how to structure initial queries and what information should be searched, and how to record processes so that they are more defensible in the case of an inquisitive judge.

Analyze the corpus of documents and data early.Understanding the underlying content of the case holistically will allow IT workers and lawyers to discuss meaningfully what the impact will be of any collection strategy. It will also give the senior litigator the ability to call whether the case should proceed or be settled.

Estimate the price scale for collection based on what it will cost to pursue strategies of different degrees of intensity. Budgeting the cost of collection will allow IT workers and lawyers to work together to determine a proportional expenditure on e-discovery that is proper for a case, given its significance and the financial exposure it represents.

Document your decisions. Terms and methods of querying them should be saved in a grid such as a spreadsheet file for simplicity. Lawyers, in particular, continue to hope for a specific means of conducting searches that would allow them not to examine search processes as granularly as they must now. However, for the immediate future, lawyers' involvement will be critical to achieve recall that will be acceptable to the bench and opposing counsel.

"Codifying these guidelines in order will further enhance efficient proceedings and improve the successful resolution of litigation," Mr. Andrews said.

Additional information is available in the Gartner report "Five Steps for E-discovery to Improve Search and other processes." The report was generated as part of the e-discovery workshop that Gartner conducted with leaders in e-discovery, such as Robert Brownstone, law and technology director at Fenwick & West LLP, at the Gartner Risk Management and Compliance Summit, April 29-May 1 of this year. The report is available on Gartner's Web site at

Mr. Andrews will provide additional analysis at the Gartner Symposium/ITxpo, October 18-22, in Orlando, Florida. In the session "Gartner Magic Quadrant and MarketScope: Information Access Technology and E-Discovery," Mr. Andrews will offer a visual snapshot of e-discovery's direction and maturity, as well as the leading participants.

Gartner Symposium/ITxpo is the world's most important gathering of CIOs and senior IT executives. It is the industry's largest and most important annual gathering of CIOs and their senior IT leaders. This event delivers independent and objective content with the authority and weight of the world's leading IT research and advisory organization, and provides access to the latest solutions from key technology providers. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. They rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use IT to address business challenges and improve operational efficiency. Additional information is available at

Members of the media can register for the event by contacting Christy Pettey at

About Gartner:

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit

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