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Tuesday, November 30, 2010

Where is eDiscovery Market Consolidaton Heading?

I had been meaning to comment on the excellent November 22, 2010 post on the eDiscoveryJournal site from Greg Buckles titled, "eDiscovery Market Consolidation".  However, I got distracted by Thanksgiving and therefore I am just now getting back to it.

In his post, Greg lists out the merger and acquisition activity over the past year and indicates that, "Merger and acquisition consolidation is a sign that eDiscovery is maturing and integrating into the larger corporate technology market."  I agree 100%.  However, I have to admit that I am completely puzzled by some some of the M&A decisions on both the go and pass side of the equations.

Autonomy is obviously on a buying binge.  However, you can't stuff 5 lbs of sausage into a 3 lbs casing and not expect it to break.  As such, it should be interesting to see what happens.  The EMC and Iron Mountain plays were interesting.  However, I am not convinced that they got what they thought they were buying and therefore will probably end up buying some more.  Integreon has also had an interesting year.  However, I am not sure that they ended up with what they thought they were buying either?  The PSS acquisition was interesting at best as I am not convinced that they had the best legal hold technology on the market.  However, I am sure that IBM will find somewhat of integrating it into their massive offering.  Finally, Thompson Reuters is up to something BIG and therefore it should also be interesting to see how THAT all unfolds.

Back to what Greg said, I agree that at the root of all of this M&A activity is the general paradigm shift of the market from service providers and law firms to the corporation with the assimilation of eDiscovery technology into the bigger IT infrastructure (I am a big Star Trek fan).   However, even given this eventuality, I believe that there is going to be a maturation of the market from where it is today to full enterprise integration and there will be lots of twists and turns along the way.  So, as everyone jockeys for position, the M&A activity will continue.

The full text of Greg's post is as follows:
My September post looked at the provider sponsorship of Legal Tech New York from 2008-2011 as an indicator of the how our industry has reacted to the economic recession. At the time, I noticed quite a few players who had either quietly disappeared or been acquired in the last couple years. Merger and acquisition consolidation is a sign that eDiscovery is maturing and integrating into the larger corporate technology market. I thought that it would be interesting to make a quick roll call of software or service providers that have either disappeared or been acquired since the recession put the squeeze on the market.

The first market sign that I recall was SPI Global Systems’ last second withdrawal from LTNY 2009 and immediate shut down of their eDiscovery operations. Onsite3 went through a fast bankruptcy and was gobbled up by Integreon. A quick check shows that Integreon has been taking advantage of the economic slow down with acquisitions of Grail Research, Datum Legal and CBF Group. It is interesting how one Knowledge Process Outsourcing (KPO) provider retreats from eDiscovery while another invests heavily.

MetaLINCS (i365) review platform was acquired back in 2008 by Seagate, but finally end-of-life’d the product when it could not get any market traction. Google jumped into eDiscovery with their appliance and then promptly dropped their eDiscovery marketing message when customers realized that not all search is eDiscovery ready.

So here is a fast list of the big acquisitions in the eDiscovery market:

Attenex by FTI
CTSummation by AccessDatCA’s governance unit by Autonomy
PSS Atlas by IBM
Trilantic by Huron Consulting Group
Daticon EED by Document Technologies, Inc
Serengeti Law by Thompson Reuters
eDirect Impact by IE Discovery
CaseLogistix by Thompson Reuters
Daegis by Unify
Mimosa by Iron Mountain
Kazeon by EMC
Interwoven by Autonomy (big fish)
Discovery Mining by Interwoven (little fish)
LitSoft LLC by Precise, Inc
Kroll by Altegrity
Discover ready by The Dolan Company
RLS/LIT Group by Scarab

As expected, the M&A has been primarily driven by the global software providers looking to add eDiscovery functionality into their enterprise systems. Basically, eDiscovery is slowly being recognized as a fact of life for corporations. If you cannot ignore it or make it go away, then you integrate it into your business process to gain efficiencies.

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