The eDiscovery Paradigm Shift

The Perfect Storm: eDiscovery and Cloud Service Providers

2012-01-25T09:59:00.000-08:00

The market for Cloud Service Providers (CSPs) is very sunny. Forrester Research predicted in a research report published earlier this year titled, “Sizing the Cloud” that the global cloud computing market would reach $241 billion in 2020 compared to $40.7 in 2010. And, Gartner Predicts that the eDiscovery market will reach $1.5 Billion by 2013. However, based upon the research that I have completed over the past sixty (60) days, Cloud Service Providers (CSPs) and their clients are ignoring eDiscovery as an important component of a standard cloud service offering.

I have some theories in regards to why this is the case:

CSPs DON'T UNDERSTAND eDISCOVERY
Over the pat five (5) years Cloud Service Providers (CSPs) have been busy focusing on their core offerings of Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS), honing their value propositions and trying to figure out how to differentiate themselves from the pack. Overwhelmed with the rudimentary issues of what to offer and how to make a profit , eDiscovery has not been a requirement that has reached the road map of any CSPs that I have interviewed.

Most of the reasons behind this is the fact that eDiscovery is actually a "latent pain" that the CSP's clients and prospects are not asking for (I will cover this in more detail in the next section). However, part of the reason may be just plain semantics. I have found that when you ask a CSP business development executive if their clients are asking about eDiscovery, the answer will be no. However, if you change the question and ask if their clients are asking about information governance, compliance, business analytics or something even simpler like universal or federated search, the answer may be yes. This subtle difference is confusing to most in the eDiscovery market and therefore it is no wonder that it is very confusing to the CSP market.As In indicated in my Blog post on September 15, 2011,titled, "Evolving from Information Governance to eDiscovery", I believe that eDiscovery is actually part of a larger market called information governance (IG). And, as Sunil Soares, the Director of Information Governance within the IBM Software Group indicated in a blog post on April 11, 2011 titled, Why Information Governance is a Market, Not Just a Process, “information governance is like the blind man and the elephant. Depending on which part of the elephant you touch, people define information governance to include master data management, data stewardship, data quality management, metadata management, business glossaries, information lifecycle management and security and privacy.”

I would actually include several other components as integral parts of IG in pursuit of my premise that if Gartner predicts that the eDiscovery market is going to reach $1.5 Billion by 2013, the information governance market is going to be many times this size. Or, in other words, more than likely the largest software and services market on the planet in the next five (5) years (Note that HP paid $11 Billion for Autonomy to play in the IG Market).

So, maybe CSPs need to think of eDiscovery as Information Governance and concentrate on the fact that information governance is potentially the single biggest market on the planet in the coming years?

CSP CLIENTS DON'T UNDERSTAND eDISCOVERY
Another interesting fact emerged from my recent study on eDiscovery in the CSP market. It appears that most CSP enterprise clients don't understand eDiscovery. Come to find out, a very high percentage of the standard CSP client base are actually "renegade" business units with global 2000 enterprises that were unhappy being held hostage by their IT organizations and decided to outsource their information management to a CSP. Unless the business unit in question is the legal department (which is highly unlikely), the stakeholders within these units have no idea what eDiscovery or information governance is or would they know to even ask their CSP if it can be supported if the need were to present itself.

After further investigation into this market dynamic, the story actually gets even more interesting. If one of these global 2000 enterprises is sued and is presented with a request to produce information (ESI) or some governance regulatory entity asks for proof of compliance, the request is normally handled by the General Counsel (GC) and legal department. More than likely the first place the GC will go is to the IT department asking for its help in producing the requested data (Please note that most global 2000 enterprises are now relatively adept at the process of internal eDiscovery). However, the GC may not even know to ask about the data (ESI) from the renegade business unit and if they do, the renegade business unit is not going to know how to comply with the request and their IT department is probably not going to help since they are no at all happy that they went to a CSP for IT services in the first place. Given all of this, the business unit executives or the GC may call the CSP and ask for help. However, since the CSP doesn't really understand eDiscovery, they aren't going to be much help. Basically, at this point the entire eDiscvoery process can get pretty ugly. The GC is under a legal obligation to respond (i.e. Federal Rules of Civil Procedure) under a fairly limited time frame with financial and other sanctions are real possibilities for non-compliance with the request.

THE PERFECT STORMSo, unfortunately, what I have determined to be the current status in the Cloud Service Provider (CSP) market is the perfect storm of neither the CSP or the CSP's client base understanding the need for eDiscovery. However, there are solutions and there is hope.

THE ROADMAP FOR SUCCESS FOR CSPs
The roadmap to success for the CSPs is actually not that complicated. CSPs need to get serious about providing eDiscovery and/or information governance as a component or their standard offering.

In a January 8, 2012 blog post titled, "Cloud Computing Architecture and eDiscovey", I stated that "It is within the Platform-as-a-Service (PaaS) layer where eDiscovery services belong. In fact, this may be a good time to coin the term eDiscovery-as-a-Service (eDaaS)... And, since providing eDaaS as a standard option for any PaaS offering makes so much sense and could provide a first mover and key competitive advance for Cloud Service Providers (CSPs), I predict that we will see several eDaaS offerings before the end of 2012. And, I also predict that once the eDaaS offerings hit the market, the legacy eDiscovery platform providers will be forced to re-evaluate the value propositions of their non eDaaS offerings in the cloud."

CSPs can contact me at cskamser@ediscoverysolutionsgroup.com for additional insight on which technology vendors currently have or are about to announce eDaaS offerings.

THE ROADMAP FOR SUCCESS FOR CSP CLIENTS
The roadmap to success for the CSP clients is also actually not that complicated. First of all, enterprise business unit stakeholders need to add eDiscovery and Information Governance to their list of requirements for the CSPs. And, they need to seek out and collaborate with their legal and IT departments in regards to a plan to follow when an eDiscovery and/or compliance event occurs. It just make sense and its not complicated.

Enterprise stakeholders that are contemplating or already working with a CSP can contact me at cskamser@ediscoverysolutionsgroup.com for additional insight on what to expect from their CSP and what best practices to follow when an eDiscovery and/or compliance event occurs.

CONCLUSION
Both the cloud and the eDiscovery / Information Governance trains have left the station and therefore it is no longer an option for either Cloud Service Providers or their clients to ignore the legal requirements and business benefits. The current practices to address the issues of eDiscovery or Information Governance are ugly at best. However, the roadmap for success is not that complicated. And, the rewards for both the CSP and their clients is well worth the investment.

The Dangers of Do-It-Yourself eDiscovery: A Warning to Lawyers and Business Leaders.

2012-01-21T16:04:00.000-08:00

The goal of eDiscovery is to acquire relevant electronically stored information (ESI) and admit relevant and useful ESI into evidence. While ESI may be used for other purposes, such depositions or settlement negotiations, if the ESI is not gathered properly, it will not be admissible into evidence. Such a result would waste both the time and cost expended to obtain the ESI. Lawyers should not gather ESI personally and the person who does the collection should be qualified to do such work. Otherwise, the ESI may not be admissible and significant damage may be done to a party’s case.

The Lawyer as a Witness. Lawyers who gather ESI directly face several dilemmas and dangers. One of the largest concerns is the lawyer becoming a witness in the case. American Bar Association Model Rule of Professional Conduct 3.7 prohibits the lawyer from acting as the lawyer in the case and being a necessary witness. Rule 3.7 states:

(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered in the case; or
(3) disqualification of the lawyer would work substantial hardship on the client.

(b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9.

The comment 2 to Rule 3.7 states:
The tribunal has proper objection when the trier of fact may be confused or misled by a lawyer serving as both advocate and witness. The opposing party has proper objection where the combination of roles may prejudice that party's rights in the litigation. A witness is required to testify on the basis of personal knowledge, while an advocate is expected to explain and comment on evidence given by others. It may not be clear whether a statement by an advocate-witness should be taken as proof or as an analysis of the proof.

In the D.C. Bar in Ethics Opinion No. 228 expanded upon the purpose of this rule:

Beyond the confusion that this combination of roles might create, the rule is justified on at least three other bases: (1) it is necessary to prevent the possibility that, in addressing the jury, the lawyer will appear to vouch for his own credibility; (2) it will prevent the difficult situation that occurs when an opposing counsel must cross-examine a lawyer-adversary and seek to impeach his credibility; and (3) the rule also will prevent the implication that the testifying lawyer is distorting the truth for his/her client’s benefit.

Citing Culebras Enterprises Corp. v. Rivera-Rios, 846 F.2d 94, 99 (1st Cir. 1988), citing Bottaro v. Hatton Associates, 680 F.2d 895, 897 (2d Cir. 1982); International Electronics v. Flanzer, 527 F.2d 1288, 1294 (2d Cir. 1975); MacArthur v. Bank of New York, 524 F. Supp. 1205, 1208 (S.D.N.Y. 1981).

Authentication of ESI. Any person who gathers ESI must be able to authenticate and lay a foundation for that ESI. “Authentication” simply means that the person called to admit the ESI must prove that the ESI is what he or she claims it is. That person must be able to lay a foundation for the ESI.

To authenticate the evidence, the person called to testify may need to establish the following, depending upon what is sought to be introduced and the issues raised:

How the ESI was gathered.
Where the ESI was stored.
Who had access to it.
Establish the chain-of-custody
Whether other ESI was also located.
Whether a thorough search was conducted.
Whether the ESI sought to be introduced was altered from its original state.
Other essential details.

Who should be entrusted with the responsibility to gather the ESI? Who should take the witness stand to testify at trial? Certainly, the law firm’s paralegal, secretary and investigator should not conduct the ESI search unless that individual is qualified to establish the above-listed details and will lay the appropriate foundation for introduction of the ESI.

When gathering evidence it is usually not clear whether the evidence will be challenged when the party seeks to introduce it. Thus, the evidence should be gathered in a thoughtful manner that will withstand future challenges.

If ESI is gathered improperly and a party is unable to lay an appropriate foundation to authenticate the ESI, that evidence will not be admitted into evidence. This could be devastating to the case, depending on how critical the ESI was.

Just as experts are hired to provide opinions and establish essential facts, experts should be used to gather ESI. Ideally, the expert will have both technical are needed to search for, gather and introduce ESI.

The person who gathers ESI should also be a good witness. Parties must generally take witnesses as they come. There is very little control over who witnessed particular facts. However, when gathering evidence, parties are given the opportunity to select the witness. So, there should be some assurance that the person who gathers ESI will be a competent witness who can be depended upon. This witness may end up being the critical witness in the case.

Do-It-Yourself eDiscovery Software Tools. Some eDiscovery software tools are marketed directly to lawyers and this is clearly a terrible idea. A lawyer should not gather ESI if he wants to remain the attorney in the case or introduce the ESI into evidence. If the lawyer chooses to gather ESI, he may even be committing malpractice. Do-it-yourself software tools were intended to reduce the cost of eDiscovery and place direct control over the ESI in the hands of lawyers and business leaders. However, they may have unintended consequences.

The lawyer cannot use these tools to gather ESI or she may be disqualified as the lawyer in the case. Only a person qualified to testify at trial should use these tools to gather ESI. Ideally, this person would be an expert.
Thought must be given to who and how ESI should be gathered before it is obtained. A little bit of caution early will be rewarded later.

Cloud Computing Architecture and eDiscovery

2012-01-08T11:22:00.000-08:00

Cloud computing is now the defacto Information Management (IT) architecture that enterprises are either already utilizing or have plans to utilize in the near future. The goal of this Blog post is to provide an overview of cloud computing, it's effect on the practice of eDiscovery and what eDiscovery in the cloud really means.

From a pure conceptual standpoint, cloud computing is actually a marketing term for technologies that provide computation, software, data access, and storage services that do not require end-user knowledge of the physical location and configuration of the system that delivers the services. From an end user standpoint, conceptually not having to worry about where your data is located is a tremendous benefit. However, from an eDiscovery collection perspective, conceptually not knowing where data may be located could prove to be an issue or at the very least a concern.

Cloud comping is also a delivery model for IT services based on Internet protocols, and it typically involves provisioning of dynamically scalable and often virtualized resources. It is a natural byproduct and consequence of the ease-of-access to remote computing sites provided by the Internet. This may take the form of web-based tools or applications that users can access and use through a web browser as if the programs were installed locally on their own computers. Saleforce.com is the best known example of this type of application of cloud computing. There are also several eDiscovery vendors that now offer a web-based option and most, if not all of the remaining vendors will be doing so in 2012.

At the foundation of cloud computing is the broader concept of infrastructure convergence, consisting of services delivered through shared data centers, which appear to users as a single point of access for their computing needs. This type of data center environment allows enterprises to get their applications up and running faster, with easier manageability and less maintenance, and enables IT to more rapidly adjust IT resources (such as servers, storage, and networking) to meet fluctuating and unpredictable business demand. From a pure conceptually standpoint, infrastructure convergence enabling the flexibility of meeting the inevitable demands of eDiscovery processing would seem to be the natural next step. However, in practice, with much of the legacy eDiscovery technology locked into appliances and complex software configurations that don't lend themselves to the advantages of virtualized computing, there are only a few eDiscovery technology vendors that are positioned to truly take advantage of cloud computing and the flexibility of infrastructure convergence.

Once an enterprise decides to go down the cloud computing path they can either implement the concept of infrastructure convergence and shared resources as an internal private cloud, an outsource their IT infrastructure to a third party public cloud through a Cloud Service Provider (CSP) or they can choose a hybrid approach which utilizes both public and private cloud infrastructures. However, as I stated in the previous paragraph, there are only a few eDiscovery technology vendors that are positioned to truly take advantage of cloud computing and the flexibility of infrastructure convergence. Therefore, at this point, even though the enterprise decides to implement cloud computing, unless they embrace the new generation of eDiscovery platforms that can "live and work" in the virtual world of the cloud, they may have to leave their eDiscovery processing behind and continue to collect and process data outside the cloud.

Amazon Web Services (AWS)
One of the first and better know Cloud Service Providers (CSPs) is Amazon Web Services (AWS). Launched in July 2002, Amazon Web Services  is a collection of remote computing services (also called web services) that together make up a cloud computing platform, offered over the Internet by Amazon.com. The most central and well-known of these services are Amazon EC2 and Amazon S3.  Most of these services are not exposed directly to end users, but instead offer functionality that other developers can use. In June 2007, Amazon claimed that more than 330,000 developers had signed up to use Amazon Web Services.Amazon Web Services’ offerings are accessed over HTTP, using Representational State Transfer (REST) and SOAP protocols. All services are billed on usage, but how usage is measured for billing varies from service to service. Please note that as of the writing of this Blog post, AWS had not responded to numerous requests to officially comment on how they are currently handling eDiscovery requests from thier clients.

CLOUD ARCHITECTURE LAYERS
Cloud computing architecture is categorized into three (3) layers; Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS).

Software-as-a-Service (SaaS)
Software-as-a-Service (SaaS) is the best known of these layers as it is the most visible to users. Simply put, Software-as-a-Service (SaaS) enables software vendors to deliver software as a service over the Internet, eliminating the need to install and run the application on the user's own computers and simplifying maintenance and support. SaaS is actually a more mature delivery architecture than many realize and is an integral part of cloud computing. According to a Gartner Group estimate,SaaS sales in 2010 reached $10B, and were projected to increase to $12.1b in 2011, up 20.7% from 2010. Gartner Group estimates that SaaS revenue will be more than double its 2010 numbers by 2015 and reach a projected $21.3b. Customer relationship management (CRM) continues to be the largest market for SaaS. SaaS revenue within the CRM market was forecast to reach $3.8b in 2011, up from $3.2b in 2010.

And, as indicated earlier in this post, there are a number of eDiscovery tool vendors that offer SaaS delivery options. However, don't confuse SaaS delivery with providing eDiscovery in the Cloud. There is a major difference.   Since it is highly unlikely that the eDiscovery platform is in the same physical location as the data, eDiscovery SaaS providers requires users to physically collect data and move it the data center (physical location) that houses the eDiscovery platform.    Once loaded onto this platform, the data is processed and then users can access it over the internet. I contend that this approach of moving data to the eDiscovery platform is not that different that what has occured over the past 5-10 years with other enterprise data and is not eDiscovery in the cloud. True eDiscovery in the Cloud requires the eDiscovery software to reside in the cloud. This implementation would in fact be considered SaaS but is much different than the current generation of eDiscovery SaaS platforms.

Platform-as-a-Service (PaaS)
Platform-as-a-Service (PaaS) is a category of cloud computing services that provide a computing platform and a solution stack as a service. In the classic layered model of cloud computing,the PaaS layer lies between the SaaS and the IaaS layers.Various types of PaaS vendor offerings could be extensive and will include a total application hosting, development, testing, and deployment environment, along with extensive integrated services that consist of scalability, maintenance, and versioning.PaaS offerings may also include facilities for application design, application development, testing, deployment and hosting as well as application services such as team collaboration, web service integration and marshalling, database integration, security, scalability, storage, persistence, state management, application versioning, application instrumentation and developer community facilitation.

It is within the Platform-as-a-Service (PaaS) layer where eDiscovery services belong. In fact, this may be a good time to coin the term eDiscovery-as-a-Service (eDaaS). Unfortunately, as of the writing of this Blog post there are no eDiscovery vendors that offer eDiscovery-as-a-Service (eDaaS). However, there are several vendors that I am aware of that are working on offerings to be released in early 2012. And, since providing eDaaS as a standard option for any PaaS offering makes so much sense and could provide a first mover and key competitive advance for Cloud Service Providers (CSPs), I predict that we will see several eDaaS offerings before the end of 2012. And, I also predict that once the eDaaS offerings hit the market, the legacy eDiscovery platform providers will be forced to re-evaluate the value propositions of their non eDaaS offerings in the cloud.

Please note that I am working on a research paper investigating how the CSPs support the eDiscovery requirements of their client bases and what next generations tools (eDaaS) are going to be available to assist the CSPs with these requirements.

Infrastructure-as-a-Service (IaaS)
Infrastructure-as-a-Service (IaaS) is the least glamorous of the cloud computing layers but provides the real technical "infrastructure" to enable cloud computing to exist.  Infrastructure-as-a-Service (IaaS), simply stated, provides a physical yet virtual processing environment along with raw (block) storage and networking. Rather than purchasing servers, software, data-center space or network equipment, enterprise clients instead buy those resources as a fully outsourced service with the ability to scale up processing, storage and even networking as may be required. There is a lot more technical details to IaaS. However, for the purposes of this post, my definition is adequate to get my point across.

CONCLUSION
Cloud computing is now the defacto Information Management (IT) architecture that enterprises are either already utilizing or have plans to utilize in the near future. Cloud computing architecture is categorized into three (3) layers; Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). It is within the Platform-as-a-Service (PaaS) layer where eDiscovery services or eDiscovery-as-a-Service (eDaaS), belong . Unfortunately, as of the writing of this Blog post there are no eDiscovery vendors that offer eDiscovery-as-a-Service (eDaaS). However, there are several vendors that I am aware of that are working on offerings to be released in early 2012. And, since providing eDaaS as a standard option for any PaaS offering makes so much sense and could provide a first mover and key competitive advance for Cloud Service Providers (CSPs), I predict that we will see several eDaaS offerings before the end of 2012.

Enterprise App Store in the Cloud

2012-01-07T12:16:00.000-08:00

If you are using the iPhone, iPad or one of the Android portable devices, you are already familiar with the concept of an "App Store".

The Apple App Store opened on July 10, 2008 via an update to iTunes. On July 11, the iPhone 3G was launched and came pre-loaded with iOS 2.0.1 with App Store support; new iOS 2.0.1 firmware for iPhone and iPod Touch was also made available via iTunes. As of June 6, 2011, there are at least 425,000 third-party apps officially available on the App Store.As of January 18, 2011, the App Store had over 9.9 billion downloads and at 10:26 AM GMT on Saturday, January 22, 2011, the 10 billionth app was downloaded from Apple App Store. As of late 2011, 200 million iOS users have downloaded over 18 billion apps from its App Store.

And although the Android platform is a relative new commer to the App market, it now boasts 400,000 Apps with over 10 billion downloads.

So, the paradigm shift has occurred. Mobile devices users (which before too many more years will make up the majority of computer users) now expect to be able to search for an App in the cloud and then download it to their device, pay for it with a credit card and start using it immediately. It is just the way "things" are suppose to work. So, why aren't we doing this in the enterprise software market?

Software-as-a-Service (SaaS)
Software-as-a-Service (SaaS) is the closest thing to the App Store model in the enterprise market. SaaS, sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally, typically with a Cloud Service Provider (CSP) or directly from the software vendor, and are typically accessed by users using a thin client, normally using a web browser over the Internet.

SaaS has become a common delivery model for most business applications, including accounting, collaboration, customer relationship management (CRM), enterprise resource planning (ERP), invoicing, human resource management (HRM), content management (CM) and service desk management. SaaS has been incorporated into the strategy of all leading enterprise software companies. Please note that the term software as a service (SaaS) is considered to be part of the nomenclature of cloud computing, along with Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) which is the topic of my next Blog post.
According to a Gartner Group estimate,SaaS sales in 2010 reached $10B, and were projected to increase to $12.1b in 2011, up 20.7% from 2010. Gartner Group estimates that SaaS revenue will be more than double its 2010 numbers by 2015 and reach a projected $21.3b. Customer relationship management (CRM) continues to be the largest market for SaaS. SaaS revenue within the CRM market was forecast to reach $3.8b in 2011, up from $3.2b in 2010.So, where is the Enterprise App Store that houses and enables users to download Enterprise Class SaaS Apps?

The Enterprise App Store
The Enterprise App Store doesn't really exist, to any great degree, because the infrastructure and business model is much more complicated in the enterprise market than it is in the consumer market. And, due to the quarter over quarter financial pressues, the legacy software vendors are "dragging their feet" on moving to this model as it will completely change their revenue models and the transition could prove to be a short term disaster for profits and stock prices. In the long run, an Enterprise App Store delivery model should generate more revenues with dramatically higher margins.

Nevertheless, Amazon and several of the other Cloud Service Providers (CSPs) are beginning to offer application catalogues that resemble the Apple and Android App Stores. And, there are rumors that several of the Auzre cloud platform providers are also developing the infrastructure and backoffice administration to support an Enterprise Class App Store in the Cloud.

Where it Runs
One of the major differences between downloading a single application to an iPhone and downloading an enterprise class application for use throughout an organization is where and how it runs. Obviously, the iPhone app runs on a single iPhone. However, the enterprise app will more than likely have to run in a virtual environment on a server and will have to provide access to multiple users. This is a much different configuration and will require a much more robust infrastructure.

Pricing
Another major difference is pricing. Many iPhone and Android apps are free and very few cost more than a few dollars. In addition, users can download them and pay for them, as an example, with the credit card they have on file with iTunes. Enterprise apps on the other hand may cost hundreds of thousands of dollars and won't be paid for via a credit card. Once again, the infrastructure and backoffice administrative systems to support this new model are much different.

Further, thanks to $.48 per hour per server pricing from CSPs like Amazon, use pricing is also another variable that enterprise App users will begin to demand. Instead of paying $250.000 per year for an SMB enterprise ERP system, users may want to pay $100 per hour per instance or per user for the time that they are actually using the App. And, once again, the infrastructure and backoffice administrative systems to support these requirements are much different than anything that has been done in the past.

The New Enterprise App Paradigm in the Cloud
The new Enterprise App paradigm in the cloud will enable enterprise users to access the cloud (where all of their data now resides) from any computing device (more likely a mobile devices as time marches on) and choose which Apps they want to use. The system (more than likely supported by a major CSP) will pull an instance of the requested App out of an App library, configure it to support the needs of the user and then charge the user's enterprise for the time that the App is actually used. This may sound crazy. But, this paradigm is not that far away. And, once one of the major CSPs begins to offer this as a first mover, the market will explode and the rest of the CSPs will have to follow or perish (i.e. how viable would a smart phone be that didn't enable you to download applicaions?).

Targets of Opportunity
The target markets for an Enterprise App Store are wide spread with both operational and financial benefits for both large and small enterprises. However, there are a few vertical application domains with applications that are not used on a daily basis that appear to pose great initial targets of opportunity. An example of this type of App would be within the eDiscovery market wtih Early Case Assessment (ECA) platforms. Enterprises that may be reluctant to spend $250,000 per year for a ECA tool under the current legacy distribution model where the amount of usage is highly variable, might be keen to enter into an agreement to have access to a virtual ECA solution with a pricing schedule that only charges them when they use the system. I am not sure that the legacy ECA tool vendors are going to be pleased with this new paradigm (See above). But, its the direction that the market is headed and therefore they had better start to make adjustments in their delivery models and also had better prepare their stockholders for the changes in the revenue stream.

SummaryIt only took comsumers a fews years to embrace the iPhone and Android App Store model and download almost 30 billion applications from the cloud. As I always say, the train has left the station on how users want their apps served up. So, now its just a matter of how long it takes the enterprise software vendors and the Cloud Service Providers to get their collective acts together and offer the same delivery paradigm for enterprise Apps.

eDiscovery and the Lawyer's Duty of Competence

2011-12-28T11:37:00.000-08:00

The level of eDiscovery knowledge and experience among attorneys is widely varied. Some understand the issues in-depth, others have a passing knowledge of the basics, and other do not have even a beginner’s comprehension of the issues. Those who fail to acquire a working understanding eDiscovery issues are doing a great disservice to their clients; they may even be committing malpractice.

I often preach that there were two obligations highlighted in the 2006 amendments to the Federal Rules of Civil Procedure. First, is the duty to disclose ESI when required. As is widely known, when litigation is reasonably foreseeable a party must prevent the destruction of all ESI that may be discoverable. When requested in discovery, this ESI must be disclosed. This a generally accepted principle. The second obligation, and in my view equally as important, is to obtain ESI in discovery from opposing parties and nonparties. Without a good understanding of eDiscovery issues, lawyers are not prepared to meet either of these obligations.

The need to have a thorough understanding of eDiscovery issues arises out of the attorney’s obligation to the client. Each lawyer owes a duty of competence to the client. The American Bar Association’s Model 1.1 of the Rule of Professional Conduct reads:

Rule 1.1 Competence
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation

Comment 6 to ABA Model Rule 1.1 states: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”

ESI has the potential to play a role in nearly every case and thus all lawyers must be competent in eDiscovery. Even the business lawyer who does not litigate cases must prepare his client for eDiscovery. Both in-house and outside counsel have been sanctioned for failure to preserve and disclose ESI. Each case must be evaluated to determine the extent of the role eDiscovery will play.

The abundance of ESI, from email to Facebook, copy machines to cell phones, is so overwhelming that it is very rare when a case does not require an understanding of eDiscovery issues. Some lawyers may believe that eDiscovery issues do not permeate their practice or the kinds of cases they handle. They may believe that eDiscovery only applies when large parties do battle and have the resources necessary to hire experts to do ESI searches and to pay teams of lawyers to pour over the results for large volumes of records that are generated by these searches. This is not true.

eDiscovery is important in almost every case. The divorce lawyer will want the email, Facebook, Twitter and other ESI of the soon-to-be ex-spouse. The bankruptcy lawyer representing creditors may want to search for evidence of other assets. A criminal defense attorney will want to look for impeachment evidence. The treasure trove of information contained in ESI needs to be considered by every litigator.

Some lawyers may avoid eDiscovery issues because they fear it cost-prohibitive for their clients. eDiscovery does not have to cost the clients hundreds of thousands of dollars. Depending on what is needed in the case, less costly options are available. After a thorough analysis of the case, the lawyer can provide options to the client depending upon what the client can afford. Ultimately, this the cost of eDiscovery is the client’s decision, but only the lawyer who is thoroughly versed in eDiscovery will be able to explain the options, the impact each option will have on the case, and how the costs compare with the likely benefits.

I urge lawyers to grow in their knowledge of eDiscovery issues, to become inquisitive as to how it can be integral in the cases they handle, and to use this knowledge to be zealous advocates for their clients. There are many organizations that can help walk attorneys through these issues, but regardless, it is each lawyer’s ethical obligation to competently represent her client.

Information Governance and eDiscovery Trends for 2012

2011-12-26T08:02:00.000-08:00

2011 has been a transitionary year for information governance and eDiscovery. Enterprises and governments worldwide have had to come to grips with the sudden acceleration of the use of social media, cloud computing, mobile devices and the resulting explosion in the volume of Electronically Stored Information (ESI).

Some are predicting the end of email in favor ot texting, Twitter and other social media electronic communications. There are over 100 million users on Twitter each day with 35% utilizing a mobile device. Facebook now has over 800 million users with 74% outside the United States and 350 million on mobile devices. There are also over 100 million LinkedIn users worldwide as business social media and the assocication collaboration and communications is now required as a fundamental marketing tool for any serious business player.  Click Here for a more detailed graphic overview of the the growth of social media from the Search Engine Journal.

In addition to social meida, the fundamental infrastructure matured in 2011 to support more serious cloud computing. Enterprises worldwide began to realize the dramatic cost benefits and potential business benefits of cloud computing. As a result they gave serious consideration to private cloud implementations and are becoming more comfortable with moving some ESI to public Cloud Service Providers (CSPs) such as Amazon and Rackspace. Microsoft launched Office360 to enable users to access the Microsoft Office Suite of products as Software-as-a-Service (SaaS) removing the expensive and time consuming software update dance that we all dread.  And, late in 2010, Apple released the iCloud platform for consumer cloud storage and set the stage for literally millions of iPhone, iTouch and Mac users to begin storing their pictures and other personal data in the cloud.

For anyone involved in the world of Information Technology (IT) whether as a user or a technologist, 2011 was definitely an exciting year. For those of us in the information governance and eDiscovery business, 2011 marked a turning point, both literally and conceptually, for the monitoring, indentification, collection, processing, review and production of electronic evidence.

Is it no longer just an interesting discussion at the local pub to talk about the eventuality of social media as a source of evidence. There were already close to 1,000 cases in 2011 where the judge issued a written opinion that mentioned social media. Likewise, information governance and eDiscovery in the cloud is longer just an interesting breakout session at tradehows to fill up your 'dance card". Harvesting ESI from the cloud for the purpose of eDiscovery was a real issue in 2011 and therefore anyone that is serious about eDiscovery from a process, legal and technology standpoint, had better start to pay attention.

Given all of this (and more that I have not even mentioned), 2012 is going to be a banner year for changes in information governance and eDiscovery. Following are my predictions:

Information Governance and eDiscovery Will Move to the Cloud
As more and more ESI moves to the cloud, the requirement to harvest this ESI "from the cloud" will also continue to grow. However, there will be a tremendous amount of confusion in regards to exactly what information governance and eDiscovery in the cloud means. Most, if not all, of the seroius technology vendors will announce that they are cloud ready or work in the cloud. However, in most cases, this will mean that they are using the same old legacy technology and harvesting data "from the cloud" and processing it the same old way they have been processing ESI and paper for years. Some of these vendors will have their own data centers and offer up information governance and eDiscovery as as Service.   However, this is nothing new. The real change that we will witness in 2012 will be virtual technology (not hardware based) that enables users to move information governance and eDiscovery solutions/platforms to the cloud ESI and collects it and processes it in the cloud where it resides. Physical location will no longer be an issue. Collection and moving massive amounts of data will no longer be an issue. The salability of hardward solutions will no longer be an issue. Staging information governance and eDiscovery respositories in third party service provider data centers will no longer be required.

Enterprises will be able to move virtual information governance and eDiscovery solutions around their networks and private clouds as required to collect and process ESI where it resides. Cloud Service Providers (CSPs) will provide information governance and eDiscovery solutions as part of their standard IaaS and PaaS technology stacks.   Early Case Assessment (ECA) is going to take on a whole new meaning. This approach is a major paradigm shift in the entire concept of how information governance and eDiscovery should work. 2012 is going to be an exciting year for information governance and eDiscovery in the cloud.

Semantic Search will Go Mainstream
The mystical world of semantic search and natural language processing technology will finally go mainstream in 2012. New Information governance and eDiscovery technology vendors will emerge that are utilizing this technology as the foundation of their offerings or have seamlessly integrated this technology into their platforms. Litigators will begin to understand the value of semantic search, courts will begin to accept the results and users will begin to demand its use. Before the end of 2012, the industry may even recognize the term "Lucene".

Predictive Coding will Go Mainstream
Just like the mystical world of semantic search and natural language processing technology, Predictive Coding will also go mainstream in 2012. New Information governance and eDiscovery technology vendors will emerge that have seamless integrated this technology into their platforms. Litigators will begin to understand the value of Predictive Coding, courts will begin to accept the results and users will begin to demand its use. Offshore coding will become less attractive as Predictive Coding will enable all but the very detailed review and tagging to be done automatically.

Informationn Governance and eDiscovery for Social Media Will be Required
Pushed by the ethical requirements for litigators to understand and utilize eDiscovery for social media and the practical requirements to ensure that all pertinent ESI is being collected and submitted, there will be a major move by the courts and litigators in 2012 to ensure that social media evidence is being collected and submitted with an appropriate chain of custody and with access to metadata to ensure the validity of the evidence. And, as a results, legacy ECA vendors will social media file types to their bag of tricks and numerous new Discovery tools for social media will be released in 2012.

End-to-End Information Governance and eDiscovery Solutions
As Early Case Assessemnt (ECA) vendors expand their product lines "right" into document review and case management and as document review platform expand their product lines "left" into ECA, the market is going to have a choice of more end-to-end information governance and eDiscovery solutions. In addition, we will see the integration of data mapping, legal hold, semantic search, predictive coding, project management, workflow management and case management into these end-to-end solutions.

Litigator Will Become More Technology Savy
Out of both practical necessity and statute ordered requirements, litigators will become more technology savvy in 2012. The days of the hands-off, don't bother me with the technical details for eDiscovery litigator are quickly coming to a close.

Information Governance and eDiscovery Pricing will Drop
The move to the cloud along with easily scalable virtual solutions offered up as Software-as-a-Service (SaaS) will enable a dramatic price decrease for information governance and eDiscovery in 2012.

eDiscovery will become a subset of Information Governance
As I have predicted in previous years, as eDiscovery moves to the enterprise, eDiscovery will become a subset of Information Governance in 2012.

In conclusion, 2012 is going to be a very exciting year in information governance and eDiscovery. Enjoy the rest of 2011 and strap yourself in for a wild ride in 2012.

Navigating eDiscovery in the Cloud Shouldn't Be That Difficult

2011-11-29T13:03:00.001-08:00

In a follow up to my Blog post titled, "eDiscovery in the Cloud: The Sky Is Not Falling", this Blog post is dedicated to the premise that successfully navigating eDiscovery in the cloud is not as complicated as many are indicating it should be or as complicated as many are making it.

Successfully navigating the brave new world of eDiscovery in the cloud is really just a matter of education and a willingness to move beyond the status quo. There is no doubt that if you don't pay attention, you and your team will perish on the rocks. However, don't pass on taking the eDiscovery in the cloud journey because it is too dangerous or give up before you at least make an attempt to learn how to save your ship.

First of all, in case anyone missed the memo, the cloud train has left the station. As an example, independent research firm Forrester Research predicted in a research report published earlier this year titled, “Sizing the Cloud” that the global cloud computing market would reach $241 billion in 2020 compared to $40.7 in 2010. So, more than likely, whether you want your data in the cloud or not, it is moving quicker than you think. And, as an end-user, unless you have some kind of cloud storage phobia, it really shouldn't matter that much. The real debate doesn't start until you couch the question(s) about cloud computing in terms of what happens when your have to perform the delicate and often times messy operation of eDiscovery in the cloud. If you are a glutton for punishment and like to dwell on all of the negative things that could possible happen in the life then I encourage you to read "The Promise of the Cloud Meets the Obligations of E-Discovery", published on the Law.com website on October 12, 2011 by Brendan M. Schulman and Samantha V. Ettari. This article does a great job of indicating that the sky is falling and that we are all doomed. However, as I indicated in the my response to this piece, "cloud computing has already made it and most of us are just fine, eDiscovery in the cloud and all!!" But, the devil is always in the details and therefore what does this mean in practical terms?

Further, please note that if you are currently doing a bad job of eDiscovery in general, you had better read the Schulman and Ettari article as the sky is going to fall if you attempt to perform eDiscovery in the cloud under your current practices. Once you have completed reading that article and if you still want a road map for successful implementation of eDiscovery in the cloud, come back and finish reading this blog post.

What is eDiscovery in the Cloud?To properly perform eDiscovery in the cloud, you first have to understand what it is and, probably more importantly, what it is not. The current crop of litigation technology vendors have done a great job of confusing the market in regards to eDiscovery in the cloud. However, I believe that over the next 12-18 months, the market will become much more educated and some amount of consensus will begin to form regarding a more realistic and concise definition of eDiscovery in the cloud.

eDiscovery in the cloud is NOT uploading all of your potentially responsive ESI to a litigation service provider's data center and then accessing that ESI via the Internet to perform searches and document review. That may be Early Case Assessment (ECA) or document review delivered under a Software-as-a-Service (SaaS) model. But, it is not eDiscovery in the cloud.

Likewise, eDiscovery in the cloud is NOT manually collecting big chunks (that's a technical term) of potentially responsive ESI from your cloud provider and the performing eDiscovery with that ESI the same way you process ESI from your corporate network or from unconnected desktops and laptops (BTW - I am in the process of investigating the nightmare of collecting ESI from your cloud provider and plan to author a Blog post of my findings before the end of the year. So, if anyone has any input, send it to me and I will consider including it in my post).

eDiscovery in the cloud ultimately means having a virtual eDiscovery process that actually runs in the cloud right alongside of your cloud storage and allows you to perform, Early Case Assessment (ECA) including First Pass Review, possibly preservation and legal hold management, definitely forensically sound collection and the generation of an industry standard load file and/or full on document review and production. In addition, eDiscovery in the cloud also means that you can operate these processes remotely through an Internet based user interface and don't have to have operational bodies physically inside the cloud data center(s) to perform any of the normal magic that is currently required by many of the legacy hosted eDiscovery platforms.

Further, eDiscovery in the cloud should also include what I am going to call (for lack of a better term at this point) federated eDiscovery to enable an organization to "perform eDiscovery" on data no matter where it resides. Currently, users that are supported by competent IT organizations, don't have to worry about where ESI is physically located. Therefore, eDiscovery professionals shouldn't have to worry either. This would include ESI behind the corporate firewall, housed with different cloud service providers or housed with the same cloud service providers in different data centers potentially in different countries (don't get me started on the debate regarding the legal issues with moving ESI in and out of countries as that is the topic of a future Blog post). Please note that I am not oblivious to the challenges of moving large amounts of data around. However, we all might be surprised to learn that class 5 rapids have been successfully navigated in other industries.

Is this Definition Realistic
This definition of eDiscovery in the cloud may sound like something that only Scotty, the engineer from the Star Trek Enterprise, could cobble together with technology from the next century and a good amount of duct tape. However, the technology exists today and is ready to be utilized with little or no duct tape required. Therefore, the only real speed bumps on this journey will be convincing the cloud service providers to install the appropriate eDiscovery technology as a standard part of their technology stack, enlisting a new generation of eDiscovery consultants to support the development of best practices for eDiscovery in the cloud and finally to show the market that eDiscovery is no longer a reason to NOT move your data to cloud. I realize that these are not insignificant roadblocks. However, providing eDiscovery as a standard part of it's technology stack is a homerun for cloud service providers and the associated services represents a blue water/green field market opportunity for eDiscovery consultants and possibly service provides. Therefore, resistance should be minimal and buy-in should be quick.

What's Next?
In the coming weeks I will be releasing my initial list of eDiscovery technology vendors that can support my vision of eDiscovery in the cloud along with an initial overview of the best practices. If anyone has any input that you believe should be included in these upcoming Blog posts, send them to me and I will consider including them.

In the mean time, if you are concerned with moving your data to the cloud and are hesitant because you are concerned about eDiscovery or if you are currently faced with the daunting task of extracting your ESI from a cloud service provider, contact me as I can help you successfully navigate your way through this paradigm shift.

eDiscovery in the Cloud: The Sky is Not Falling

2011-11-16T07:07:00.001-08:00

It appears that Chicken Little is alive and well when it comes to moving your data to the cloud. In an article titled, "The Promise of the Cloud Meets the Obligations of E-Discovery", published on the Law.com website on October 12, 2011, authors Brendan M. Schulman and Samantha V. Ettari state that, "cloud computing also poses a serious threat to an organization's ability to prepare for and respond to document preservation and discovery obligations, and erodes protections against discovery of the data by government authorities and third parties."

Putting this into perspective, ancient scholars thought that the world was flat and some even thought that Columbus would fall off the edge. Many adults during the 1960's believed that Rock and Roll music would destroy Western culture and there are still some that believe that the world is going to end in 2012.

Closer to home with Chicken Little arguments that we have heard regarding advances in Information Technology (IT), some thought that putting computers (PCs) in the hands of common people was a crazy idea, decentralizing IT with departmental client/server computing would be the end of the corporation as we know it and all of these mobile computing devices and associated social media communication options are destroying our ability to communicate in person.

And, even closer to home, it wasn't that many months ago that some litigators were contending that all of this eDiscovery technology was going to destroy the basic fabric of the legal process.

Obviously none of this is true and likewise there is very little real danger in moving your data to the cloud. So, let's examine Ms. Schulman's and Ms. Ettari's concerns in more detail.

First of all, they do admit that, "The cloud computing revolution sweeping through corporate IT departments does, indeed, promise substantial cost savings and organizational efficiencies." But then the go on to state that placing data in the cloud will compromise the legal hold and associated collection process and can compromise rights to privacy. Let's examine these claims in more detail:

The Legal Hold Process
Many corporations are already dropping the ball on fulfilling their legal hold obligations. They don't really know where their data it located, don't have well defined data retention policies in place and as a result treat most legal requests for data as a very costly and highly inefficient one-off fire drill that in most cases doesn't meet even the minimum legal requirements. I contend that consolidating data in the cloud will at least ensure that most of the data is in one place and will enable a much more effective data retention and associated legal hold process.

eDiscovery Collections in the Cloud
As with legal hold, many corporations are already dropping the ball on fulfilling their legal obligations in regards to collecting ESI in a forensically sound manner. Therefore, as with legal hold, consolidating ESI under a common CSP and utilizing state-of-the-art Early Case Assessment (ECA) technology that has been designed to run in the cloud (its a very short list but it does exist), should and will make eDiscovery collection in the cloud much more efficient and cost effective. Please note that I am not oblivious to the fact that tyring to perform ECA with no technology or with the wrong technology and in partnership with some CSPs can in fact be difficult. However, there is technology and best practices available today and the CSPs that embrace eDiscovery as a standard component of their technology (yes technology) stack will in fact find it (eDiscovery in the cloud) to be a "key competitive advantage" that will accelerate the move to the cloud.

Rights to Privacy
With the accelerating proliferation of ESI, mobile computing devices and associated mobile communications, privacy and rights to privacy has become a difficult issue to get our collective arms around. In regards to corporate data or law firm data, I am going to contend that they already have multiple holes in their security dikes and that for all practical purposes the security that we all knew in the era of the bricks and mortar corporation with paper is long gone. Further, with the proliferation of email, texting, blogging and now social media such as Facebook, Twitter and LinkedIn, the core concepts of rights to privacy need to be adjusted. And, as with legal hold and collections, moving your data to the cloud is not going to make rights to privacy issues any worse as this data is already in the cloud.

Summary
I appreciate the concerns of these authors. However, these concerns do in fact rise to the level of Chicken Little. As I have said many time in the past 24 months, "the cloud train has left the station." And therefore, to shout that riders had better not get on or that if they do get on they had better hang on to their hand bags because some dark stranger is going to grab it. Or to say that there is a dark cloud on the horizon that is going to swallow all of your crazy cloud people is not much different than the people that said Columbus would never return. Columbus made it and so will cloud computing. It fact, cloud computing has already made it and most of us are just fine, eDiscovery in the cloud and all!!

The full text of the article by Brendan M. Schulman and Samantha V. Ettari is as follows:

Cloud computing" refers to the revolution sweeping through corporate information technology departments of using remote computing providers connected via the Internet, rather than internal servers and network drives, to store and access a corporation's electronically stored information. The cost savings and efficiency gains offered by cloud computing make it an irresistible lure to companies looking for cheap data storage and technical support.

However, cloud computing also poses a serious threat to an organization's ability to prepare for and respond to document preservation and discovery obligations, and erodes protections against discovery of the data by government authorities and third parties. When the negotiation of a terms-of-service agreement with a cloud service provider takes place without the input of legal departments or outside counsel who are familiar with these issues, corporations and their counsel lose a valuable opportunity to include favorable provisions that could help mitigate substantial e-discovery risks and costs in the future.

UNDENIABLE BENEFITS

Recently, President Barack Obama's former chief information officer, Vivek Kundra, published an op-ed piece in The New York Times describing the administration's "Cloud First" policy, an initiative to cut 50 percent or more of the $80 billion federal information technology budget simply by moving government agency data to the cloud.[FOOTNOTE 1]

The Times piece implored American corporations to avoid "wasteful spending" inherent in current IT infrastructure and concludes that "those that embrace the cloud will be rewarded with substantial savings and 21st century jobs."

The cloud computing revolution sweeping through corporate IT departments does, indeed, promise substantial cost savings and organizational efficiencies. A large part of that efficiency is attributable to the dynamic scalability of cloud-based systems. For decades, whenever a company purchased an enterprise-level computer system, such as an e-mail server, it purchased excess capacity in anticipation of its future needs, and employed a full support staff to implement and maintain it. Cloud services eliminate these and other inefficiencies by pooling the vast centralized storage and computing capacity made available by a CSP, allocating storage space and computing resources to the customers who need them, when they need them. Customers pay only for their use of actual computing services in time units or storage space, allowing them to eliminate IT positions. For small companies, some CSPs provide the added benefit of 24-hour technical support and may afford greater data security as well as backup redundancy and faster crash recovery.

However, aspects of cloud computing that may not be immediately obvious threaten to make compliance with various e-discovery obligations more difficult and more expensive, in some cases potentially negating some of the long-term promised benefits of moving to the cloud.

A MORE COMPLICATED PROCESS

Placing corporate ESI into the cloud can complicate efforts to institute a litigation hold upon the reasonable anticipation of litigation. Generally, the preservation obligation requires that reasonable efforts be made to preserve "all sources of potentially relevant information."[FOOTNOTE 2]

Data in the cloud is by its nature fluid, accessed by the client from various remote locations and often shuffled around by the CSP. The practice of circulating a litigation hold notice to a list of custodians may be less reliable if the relevant data is on a shared cloud service and can be altered or deleted by persons who are not included in the notice.

Alternative methods of preservation, such as the making of a "forensic image," may be rendered infeasible because the relevant data exists in fragments across various locations around the world. It also may be difficult to locate a CSP representative who will assist counsel in understanding the cloud system and implementing the necessary preservation steps. Additionally, cloud providers that contractually cap a customer's storage limit or that delete data after a certain time period could unintentionally cause spoliation of evidence. For these reasons, it is prudent for companies to negotiate a terms-of-service agreement that requires automatic deletion routines to be suspended when necessary, and that sets out a litigation hold protocol, or to find a CSP who offers these options.

A move to the cloud also impacts the ability of the corporation to respond in a timely manner to initial disclosures and document requests. No longer can the general counsel call the company's IT director and ensure an appropriate response to an urgent litigation need. Instead, the CSP might be expected to respond in accordance with the terms-of-service agreement, which may fail to address litigation response at all. Thus a party's ability to respond to document requests within the timeframe provided in the applicable rules, or as ordered by a court, may be jeopardized by the selection of a CSP who is leanly staffed. Care should be taken in selecting a suitable CSP, and a prudently negotiated services agreement would include specific provisions for response time to litigation-related requests.

Court rules increasingly anticipate that counsel will quickly learn the facts concerning a client's data system. For example, the August 2010 amendments to New York Uniform Rules 202.12(b) and (g) require that:

counsel for all parties who appear at the preliminary conference must be sufficiently versed in matters relating to their clients' technological systems to discuss competently all issues relating to electronic discovery; counsel may bring a client representative or outside expert to assist in such e-discovery discussions.

When a client's ESI is in the cloud, it is difficult to imagine effective compliance with this rule in the absence of cooperation from the CSP.

The cloud also may impact a party's ability to efficiently prepare documents for review and production. Fed. R. Civ. P. 34 provides that, as to electronically stored information, "[a] party must produce documents as they are kept in the usual course of business or must label them to correspond to the categories in the [document] request."[FOOTNOTE 3]

The most common form of electronic production tends to involve TIFF images of each document with a corresponding "load file" containing metadata. Under certain circumstances, courts have required parties to produce files in "native" format.[FOOTNOTE 4]

A mature industry now exists to provide for collection, processing, review, and production of ESI in this manner. However, cloud computing raises the prospect that satisfaction of discovery obligations will be more difficult and expensive if a company's ESI is stored in a special proprietary format devised by individual CSPs.

The content of ESI available to be produced may also be unexpectedly affected by cloud systems. It is generally accepted that ESI should be produced together with at least some of its metadata when requested,[FOOTNOTE 5] such as information about the file name, custodian, the source path, the date and time the document was last modified.[FOOTNOTE 6]

Each of these metadata fields, and perhaps others, is at risk of being altered by cloud systems that constantly move data to the most efficient storage location, use automated file naming conventions, and store files without reference to custodian. These technical complexities may remain unclear until the time that data is actually collected. Therefore, counsel who engages in a Fed. R. Civ. P. 26(f) meet-and-confer and agrees to produce "standard" types of metadata or native files may be in for a surprise when she learns that the metadata does not exist or that there is no readily accessible "native" file. Moreover, the metadata located in a cloud-based version of a document may be unreliable.

INCREASED RISKS

Government and third-party access. Cloud computing raises concerns with respect to government agencies and third parties seeking to obtain customer data content. The Stored Communication Act, enacted in 1986, provides an extensive and complex set of Fourth Amendment-like privacy protections for electronic communications and stored data in the possession of third-party service providers.[FOOTNOTE 7]

Under the act, for example, the contents of unopened electronic mail present on a public electronic communications service that is 180 days old or less may only be obtained by authorities using a search warrant.[FOOTNOTE 8]

However, when that same data is stored with a CSP (who does not send and receive the e-mails but only stores them), the service provider may be deemed to be a "remote computing service" under the Stored Communication Act and the stored data may be obtained through a court order upon a showing of "reasonable grounds" to believe the data is "relevant and material to an ongoing criminal investigation" -- a far lower standard.[FOOTNOTE 9]

Moreover, notification that a subpoena was received can be delayed for 90 days upon written certification of a supervisory official that notification would jeopardize a pending investigation.[FOOTNOTE 10]

Thus, a cloud customer may not find out that its data has been collected by investigating authorities until months after the fact.

Cloud computing also provides an additional way for civil litigants to potentially gain another avenue of access to electronic documents. Courts have held that the Stored Communication Act prohibits an electronic communications service or remote computing service from producing documents in response to a Rule 45 subpoena in the absence of the consent of the data's owner.[FOOTNOTE 11]

However, some courts have ordered parties to provide that consent, thereby resulting in production of the documents by the CSP rather than the party litigant.[FOOTNOTE 12]

Additionally, it is conceivable that a court might construe broad language in a terms-of-service agreement or lax controls over a CSP's access to customer data as indicative of prior consent to production pursuant to a subpoena. For these reasons, it is a best practice, where possible, to negotiate into the terms-of-service a provision requiring that the CSP provide notice to the customer upon receipt of a civil subpoena, and express language indicating that no ESI may be produced to a civil party without the customer first having had an opportunity to be heard.

Losing access. Access to data when CSPs become insolvent may well become one of the most vexing issues for companies who have moved to the cloud. For preservation and discovery purposes, documents are generally considered to be within the possession, custody, or control of a party if it has the "legal right" or "practical ability" to obtain the ESI.[FOOTNOTE 13] If a company's CSP shuts down, it could be argued that there is no longer such an ability, although a court may view the terms-of-service agreement as providing the customer with a "legal right" to the ESI.

Alternatively, Fed. R. Civ. P. 26(b)(2)(B) might be invoked to argue that the data is no longer "reasonably accessible," although that rule is typically concerned with "undue cost or burden." It is conceivable that a party may become caught between a court order in a far-off jurisdiction compelling production, and a bankruptcy proceeding that prohibits the debtor from committing resources to a customer's response. Even if a cloud customer caught in this situation is afforded relief from certain discovery obligations, there is always the risk that documents that are helpful to the company's case will remain inaccessible, posing a threat to the substantive outcome of the case. A terms-of-service agreement that specifically contemplates this scenario could be of assistance in asking a Bankruptcy Court to require cooperation, although the outcome is likely to turn on the practical ability of the debtor to undertake the effort. These risks may be mitigated, in part, by implementing an appropriate backup regime allowing ESI to remain accessible by the company.

CSPs, in an effort to find the cheapest locations to house their massive data centers, are likely to store customer data in foreign jurisdictions with low labor, energy, and real estate costs. Foreign data privacy laws may therefore apply and make it more costly to review and produce the data, or expose the company to the risk of violating a foreign statute. For example, the French blocking statute provides for criminal penalties when discovery is conducted within France.[FOOTNOTE 14]

Yet courts in the United States have generally ordered discovery to proceed notwithstanding a conflict with overseas privacy laws,[FOOTNOTE 15] and have even imposed sanctions upon parties who have invoked foreign privacy laws as grounds for resisting discovery.[FOOTNOTE 16]

In some cases, a customer may be able to negotiate the geographical limitations of where its data will be stored in the cloud, or at least require notice before data is moved to another jurisdiction.

CAUTION FOR LAW FIRMS

Law firms considering moving their data to the cloud should keep in mind ethical rules concerning the exercise of reasonable care to protect client confidences.[FOOTNOTE 17] The New York State Bar Association concluded in 2008 that a lawyer may use an e-mail service that scans e-mail to generate computer advertising, but:

would reach the opposite conclusion if the e-mails were reviewed by human beings or if the service provider reserved the right to disclose the e-mails or the substance of the communications to third parties without the sender's permission.[FOOTNOTE 18]

Caution is therefore warranted when cloud service agreements appear to provide outsiders with broad access to law firm data.

THE STORM AHEAD

Judges who are prominent in the e-discovery field, including U.S. District Judge Shira A. Scheindlin of the Southern District of New York, have informally expressed concern about the unforeseen discovery consequences of corporate ESI moving to the cloud.[FOOTNOTE 19]

Many companies appear to be focused on the cost-saving aspects with little regard for the many discovery ramifications and without consulting counsel proficient in e-discovery issues. The full impact of cloud computing on the discovery process remains to be seen, but in the interim it is prudent to exercise caution when deciding to move enterprise data to the cloud, to evaluate each CSP candidate in light of future litigation needs, and to negotiate favorable discovery-related terms of service whenever possible.

::::FOOTNOTES::::

FN1 Vivek Kundra, "Tight Budget? Look to the 'Cloud,'" The New York Times, Aug. 31, 2011, at A27.

FN2 Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004).

FN3 Fed. R. Civ. P. 34(b)(2)(E)(i).

FN4 See, e.g., In re NYSE Specialists Sec. Litig., 2006 WL 1704447 at *1 (S.D.N.Y. June 14, 2006).

FN5 See Aguilar v. Immigration & Customs Enforcement Division, 255 F.R.D. 350, 357 (S.D.N.Y. 2008).

FN6 Before it was withdrawn, U.S. District Judge Shira A. Scheindlin's decision in National Day Laborer Organizing Network v. United States Immigration and Customs Enforcement Agency, 2011 WL 381625 (S.D.N.Y. Feb. 7, 2011), listed these among nine specific metadata fields that should accompany production of all forms of ESI.

FN7 18 U.S.C. §§2701-2712.

FN8 Id. at §2703(a).

FN9 Id. at §2703(d).

FN10 Id. at §2705(a)(1)(B).

FN11 See Viacom v. Youtube Inc., 253 F.R.D. 256, 264 (S.D.N.Y. 2008).

FN12 See, e.g., Thayer v. Chiczewski, 2009 WL 2957317 (N.D. Ill. Sept. 11, 2009).

FN13 NTL Inc. Securities Litigation v. Blumenthal, 244 F.R.D. 179, 195 (S.D.N.Y. 2007).

FN14 Law No. 80-538 of July 16, 1980, Journal Officiel de la Republique Francaise, July 17, 1980.

FN15 See, e.g., Strauss v. Credit Lyonnais, 249 F.R.D. 429, 456 (E.D.N.Y. 2008).

FN16 Lyondell-Citgo Refining, LP v. Petroleos de Venezuela, S.A, 2005 WL 1026461 at *4 (S.D.N.Y. May 2, 2005).

FN17 See New York Rule of Professional Responsibility 1.6(c).

FN18 N.Y. State Bar Ass'n Op. 820, at 2.

FN19 "Status of E-Discovery Law: A Judicial Perspective On The Current State of E-Discovery," The Metropolitan Corporate Counsel, April 2010, at 6.

Electronically Stored Social Information (ESSI) and eDiscovery

2011-11-08T16:34:00.000-08:00

Anyone with a PC or mobile device and an Internet connection realizes that the use of social media such as Facebook, Twitter, LinkedIn, MySpace and even YouTube is increasing at an accellerating rate.

However, it is sometimes hard to truly understand how quickly the amount of data that is invovled in social media is actually growing.

Banking2020.com updated its social media statistics in an article posted on October 19, 2011, titled, "Social Media Statistics: By-the-Numbers, October 2011".

According to the article:

$400,000,000 in ad revenue is projected for Twitter by 2013, up from $139.5 million in 2011 (Source: eMarketer)
7,432,307 job changes have been tracked by LinkedIn since 2009 (Source: LinkedIn)
68% of social media users go to social networking sites to read product reviews (Source: Nielsen)
59% of B2B purchase decision makers use a smartphone to research potential purchases (Source: eMarketer)
58% of social media users go to social networking sites to learn about or research products (Source: Nielsen)
1,600 advertisers are now using the Twitter platform for advertising (Source: Twitter)
53% of active adult social networkers follow a brand, while 32% follow a celebrity (Source: Nielsen)
40% of social media users access social media content from their mobile phones (Source: Nielsen)
$1.23 billion will be spent by US advertisers on mobile advertising this year, up from $743 million in 2010

Without stating the obvious, I would image that with all of this Electronically Stored Social Information (ESSI), it just a matter of time before everyone involved in litigation is going to have to be able to get forensically sound access to this evidence. And, they are going to have to have a more sophisticated methodology and associated technology than screen scraping and Excel spreadsheets.

Over the next few weeks, I will be invetigating the tools that are available to collect and process social media evidence and will be publishing my findings.

Interesting Poll Results for eDiscovery Market

2011-10-24T08:14:00.000-07:00

Over the past four (4) months, eDSG has been running weekly polls on the state of the information governance and eDiscovery in the cloud markets. Participation ranges from several hundred to several thousand voters in any given week and therefore the results are not scientific nor statistically controlled. However, I believe that the results do in fact paint a very interesting picture of the current state of the information governance and eDiscovery in the cloud market and therefore I have chosen to summarize and share those results with the readers of this Blog.

A summary of the Poll Results are as follows:

What are your plans to move all or part of your eDiscovery platform to the cloud?

9% - Outsource all eDiscovery to a Service Provider
9% - Plan to move eDiscovery to the cloud in 2012
36% - Plan to move some eDiscovery to the cloud in 2011
45% - Plan to move all eDiscovery to the cloud in 2011

Where should eDiscovery be located in a Global 2000 organization?

8% - eDiscovery should be outsourced to outside counsel
17% - eDiscovery should be outsourced to a litigation service provider
33% - eDiscovery should be part of IT under information governance
42% - eDiscovery shoulbe be in the legal department

What are your enterprise plans for documente retentionn policy?

9% - We are planning to develop a policy in 2012
27% - We are planning to develop a poligyt in 2011
27% - We have begun to develop a policy
36% - We have a working policy in place

How would you rather pay for eDiscovery?

7% - Outsourced to a ligitation service provider and paid for on a per GB price
13% - Processed in-house with purchased software
20% - Outsourced to outside counsel and paid for as part of our normal legal bills
60% - Processed by a SaaS provider and paid for on a monthly basis

Why is your organization moving information governance and eDiscovery to the cloud?

17% - Increased productivity
33% - Increase the strategic value of IT
50% - Reduce costs

What are the major benefits to moving information governance and eDiscovery to the cloud?
(Allowed Multiple Selections)

25% - Outsourced service provider solutions don't work
25% - In-house solutions don't work
25% - Increased productivity
25% - More Flexibility
25% - The majority of our ESI is in the cloud
50% - Reduce costs

What is the value of pro-active eDiscovery?
(Allowed Multiple Selections)

100% - Access to realtime information
100% - Reduce costs

What is the major roadblock to moving information governance and eDiscovery to the cloud?

11% - There are no roadblocks
11% - Maturity of SaaS applications
33% - Secutiry
44% - Not enough bandwidth to move data around

Was the acquisition ot Autonomy good or bad for HP?

10% - It was a great strategic move for HP
30% - It was a terrible move for HP
60% - Only time will tell

Are you planning to implement some form of predictive coding for eDiscovery?

20% - What is predictive coding?
20% - No plans
20% - In 2011
40% - In 2012

Is it time to update the FRCP again?

12% - What are the FRCP?
25% - No
62% - Yes

Do CEO's understand the strategic importance of eDiscovery in the cloud?

11% - Yes
33% - No
56% - Not in depth

Which eDiscovery tool are you planning to use in the next 12 months?

25% - ClearWell
21% - AccessData
19% - Other
15% - Nuix
6% - kCura

Are you planning to move eDiscovery to the cloud in the next 12 months?

20% - No opinion
20% - No
60% - Yes

Is technology ruinng the fine art of litigation?

14% - Somewhat
29% - Yes
57% - No

For complete results please go to the eDSG website at: http://www.ediscoverysolutionsgroup.com/index-8.html

Are Large IT Providers Dropping the Ball on eDiscovery in the Cloud?

2011-10-10T14:25:00.000-07:00

Are the big Information Technology (IT) providers dropping the ball or are they just ignorant of the strategic and financial significance of providing eDiscovery as part of their overall cloud offerings?

It wasn't that many years ago that litigation technology was a niche market relegated to a very small group of vendors that provided very unique technology to perform very specific document identification, collection, processing and management to the litigation service providers and law firms. And, as a general rule, these vendors very seldom set foot within the walls of the General Counsel's (GC's) office of the Global 2000 and never set foot within the walls of the Chief Information Officer (CIO) of the Global 2000.

Likewise, up until this day, the big IT providers have all but ignored the litigation technology market and have never felt the need to set foot within the walls of the General Counsel's (GC's) office of the Global 2000.

However, with the convergence of information governance and eDiscovery along with the rapid advance of cloud computing, a multi-billion dollar market has emerged that can no longer be ignored. Information Governance and eDiscovery in the cloud should either be a standard component or an easy upgrade available from any serious Infrastructure-as-a-Service (IaaS) and/or Platform-as-a-Service (PaaS) provider.

Over the past eighteen (18) months I have spent a great deal of time and resources discussing this opportunity with most of the major IT vendors. And, to my amazement, information governance in the cloud is barely on their radar(s) and most of them haven't even thought about eDiscovery in the cloud.

The concept of eDiscovery in the cloud is not overly complex. As more and more Electronically Stored Information (ESI) is stored in the cloud, the percentage of ESI that may be pertinent to a law suite and therefore subject to collection, processing and review by computer forensic experts and lawyers, is also increasing. Therefore, without eDiscovery actually residing in the cloud with the pertinent ESI, the process of collection is going to be manual (i.e. a technician entering the data center and retrieving data) with processing and document review completed at another location independent of the pertinent ESI.

It only makes sense that information governance and eDiscovery solutions reside in the cloud with the pertinent data so that collections, processing and document review don't require ESI to be moved. I predict that the first IT provider that gets this approach is going to have a key competitive advantage over those that do not "get it".

As a followup to the Blog post, I will be reviewing several information governance and eDiscovery platforms that have the capability to support this approach. Let me know if you would like to be included.

Navigating into the New World of Information Governance

2011-09-22T08:45:00.000-07:00

Over the past six (6) months I have spend many hours talking to CEOs, the General Counsel and CIOs of some the largest companies in the world about information governance and eDiscovery. And, the common theme has been that there is a tremendous amount of confusion in regards to where the market is headed and which technologies and outside consulting services they should be using. And, probably the most urgent question is how much is all of this going to cost and what will the impact be on my business and career.

The volume of Electronically Stored Information (ESI) is increasing at an accelerating rate, the migration to the cloud is a fait accompli, electronic communication platforms (i.e. social media) are mutating quicker than most of us can keep up and now email is no longer the number one target for eDiscovery searches (Source: Email slips as ediscovery target says Symantec).   There is no doubt that the IT world and therefore the information governance and eDiscovery world are in the middle of a paradigm shift. As such, the Global 2000 need to quickly figure out how to survive in this new world or parish.

As Geoffrey Moore states in Escape Velocity: Free Your Company's Future from the Pull of the Past, "enterprises.. need to overcome the pull of the past and reorient their organizations to meet a new era of competition." In other words and in the context of information governance and eDiscovery, litigation and compliance aren't about copying, scanning and reviewing paper documents anymore and its time for BIG changes.

This Blog post is the first in a series of Blog posts that I am working on to provide some insight and guidance to the Global 2000 and by association to the vendors that serve the Global 2000 in regards to how to succeed through this paradigm shift.

eDiscovery is a Subset of Information Governance
The processes, procedures and technologies that are required to support eDiscovery are the same basic set of "tools" that are required to support the much larger and broader demands of information governance. Therefore, I contend that the Global 2000 should consider designing, implementing and maintaining a single comprehensive information discovery platform that supports both information governance and eDiscovery. After all, its really all about federated data / big data consolidation, search and analytics. Please note that I plan to dedicate an entire Blog Post to this topic later this year.

It's Strategic
Global 2000 stakeholders can no longer afford to view information governance and eDiscovery from a tactical standpoint and only prioritize it when there is a pending law suite or compliance issue. Information Governance and eDiscovery need to be considered strategic business imperatives within the boardrooms of the Global 2000.

Its in the Cloud
If the board of directors and senior management from any Global 2000 organization don't know about the cloud or think that cloud is just some passing fade, they need to replaced or retire.  Cloud computing and all of its associated technologies and capabilities (i.e. mobile computing and social media) are the most significant changes in IT that has happened since the introduction of the PC. And, to drive the point home even further, according to Forrester Research, the global cloud market is set to explode in the next 10 years, growing from $40.7bn in 2011 to more than $241bn in 2020. Further, the resulting impact on the way that we now MUST and can conduct business is enormous. Please note that I plan to dedicate an entire Blog Post to this topic later this year.

Information Governance and eDiscovery in the Cloud
As a logical extension of the fact that IT has moved to the cloud, the board of directors and senior management from Global 2000 organizations need to also realize that information governance and eDiscovery also need to move to the cloud. The same basic processes and technologies that are required to support eDiscovery fulfill the basic requirements of information governance. Its really all about consolidating ESI/ federated data/big data, search and analytics anyway. Whether its for information governance or eDiscovery shouldn't matter at the core. Please note that I plan to dedicate an entire Blog Post to this topic later this year.

Who to Trust
As indicated int he opening paragraph of this Blog post, these dramatic changes have a tremendous amount of confusion among Global 2000 stakeholders in regards to where the market is headed and which technologies and outside consulting services they should be using.   This is always a BIG question during a paradigm shift. And, it is even a bigger question during this paradigm shift because the stakes are so high.

However, the answer is complicated. First of all, it is highly likely that only a small percentage of your stable of legacy trusted advisors will be of any use in this new paradigm. When markets change, there is a natural turnover of experts and consultants. And, it is even more likely that an even smaller percentage of your current technology providers will have solutions that work in this new paradigm. As is the case with the natural turnover with consultants, BIG changes in markets also cause big changes in the fabric of the technology vendor communities that service those markets. As an example, we have already seen Symantec acquire ClearWell (http://www.reuters.com/article/2011/05/19/us-symantec-idUSTRE74I7D020110519) and HP acquire Autonomy (http://in.reuters.com/article/2011/08/18/hp-autonomy-idINN1E77H1QO20110818). And, believe me, this is just the beginning of the consolidation and restructuring of the players that service this market.

So, my advice is to move slowly, listen, read, investigate and don't be afraid to make a change. After all, the future success of your business and your career may depend upon the decisions that you make over the next 6-12 months regarding who you partner with to navigate through this brave new world.

Evolving from eDiscovery to Information Governance

2011-09-15T08:28:00.000-07:00

Gartner announced their inaugural “magic quadrant” for the E-Discovery (eDiscovery) software market on May 13, 2011 and predicted that this market would reach $1.5 Billion in revenue by 2013.    However, as anyone that reads my blog posts on a regular basis knows, I believe that eDiscovery is actually part of a larger market called information governance (IG). And, as Sunil Soares, the Director of Information Governance within the IBM Software Group indicated in a blog post on April 11, 2011 titled, Why Information Governance is a Market, Not Just a Process, “information governance is like the blind man and the elephant. Depending on which part of the elephant you touch, people define information governance to include master data management, data stewardship, data quality management, metadata management, business glossaries, information lifecycle management and security and privacy.”

I would actually include several other components as integral parts of IG in pursuit of my premise that if Gartner predicts that the eDiscovery market is going to reach $1.5 Billion by 2013, the information governance market is going to be many times this size. Or, in other words, more than likely the largest software and services market on the planet in the next five (5) years (Note that HP paid $11 Billion for Autonomy to play in the IG Market).

As such, if IG is going to be such a large market, and if (as I contend) many eDiscovery platforms already possess some of the capabilities to support the much larger IG requirements, it stands to reason that many of the current eDiscovery platform vendors are going to make an attempt to evolve into IG vendors. As such, the topic of my blog today is an overview of that potential evolution.

There are several challenges that face the current set of eDiscovery platform vendors in their quest to become bona fide members of the IG vendor community, including; (1) technology, (2) sales capabilities; (3) marketing; and, (4) partnerships and the channel. My opinion on each of these challenges is as follows:

THE TECHNOLOGY CHALLENGE

The natural evolution of any market will present different technology challenges at different stages in that lifecycle.   And, it is also not unusual as technology vendors enhance and/or upgrade their platforms to meet these evolving challenges that they find that they have inadvertently developed the capability to potentially meet the challenges in additional markets.   Such is the case with the eDiscovery market as it evolves to the point where it’s requirements are fundamentally very similar to the requirements of IG. And, therefore, as would be natural, there are several eDiscovery platform vendors that have developed technology that would be able to support some of the fundemental requirements of IG.

The fundamental requirements of eDiscovery: The fundamental requirements for an eDiscovery platform are to: (1) collect data, (2) process/normalize data, (3) index data, (4) analytics and reporting, (5) search and associated tagging, (6) first pass review, (7) support for standard export formats, (8) comprehensive document review; and, (9) production. Additional potential requirements include; (1) data mapping; (2) integrated legal hold, (3) data retention policy management, (4) workflow management , (5) Advanced analytics such as predictive coding and related machine driven intelligence, (6) collaboration, (7) federated data stores; and, (8) big data.

In my opinion, there are currently no eDiscovery platforms on the market that fulfill all of these requirements in a comprehensive and commercially viable way.   Therefore, users currently utilize a best-in-class approach to cover the entire lifecycle. However, that being said, there are several eDiscovery platform vendors that have made great strides towards fulfilling the requirements of the entire lifecycle and should be able to do so within the next few releases (i.e. 6-12 months).   The question for this blogger, which of these eDiscovery requirements and by extension, which eDiscovery platform vendors, will be able to cross over to support IG.

The fundamental requirements of information governance: as Sunil Soares, the Director of Information Governance within the IBM Software Group indicated, “information governance is like the blind man and the elephant. Depending on which part of the elephant you touch, people define information governance… differently.” As such, depending upon which “blind man” you talk to, information governance can be many different things.

As a place to start, Debra Logan of Gartner fame defined IG in a blog posting on January 11, 2010, titled, “What is Information Governance? And Why is it So Hard?, as “the specification of decision rights and an accountability framework to encourage desirable behavior in the valuation, creation, storage, use, archival and deletion of information. It includes the processes, roles, standards and metrics that ensure the effective and efficient use of information in enabling an organization to achieve its goals. It is derived from our definition of IT governance which ‘may be defined as the processes that ensure effective and efficient use of IT in enabling an organization to achieve its goals.”

Debra’s definition is definitely a mouth full. However, it is actually a very good definition from a conceptual standpoint. What it doesn’t do is explain the fundamental and specific requirements of an IG platform. So, in pursuit of attempting to investigate whether or not an eDiscovery platform could be used to support information governance, my list of fundamental requirements for an information governance platform are: (1) data mapping, (2) data usage policy management, (3) data retention policy management, (3) storage management, (4) collection, (5) indexing, (6) analytics and reporting, (7) information security and risk management, (8) compliance management, (9) fraud management, (10), data federation, (11) workflow, (12) advanced analytics such as machine driven search and analysis, (12) document review, (13) collaboration, (14) big data; and, (15) production.
So, with the exception of data usage policy, storage management and security and fraud management, there is not really much of a difference between the fundamental requirements of IG and eDiscovery.    And, at some level, it would be appropriate to conclude that eDiscovery requirements are actually a subset of the requirements of IG.

Conclusion on technology: Therefore, without getting into a long and drawn out discussion about focus, release creep, support and other application development and support issues, I am going to conclude that there are in fact some eDiscovery platform vendors that have platforms or are close to having platforms that could provide support for at least part of the IG lifecycle.

THE SALES CHALLENGE

It is a natural evolution of any market lifecycle to have different sales requirements at different stages in that lifecycle. And, the litigation technology and services market is no exception. What started out as a market requiring vendors to sell copying, scanning and coding to law firms has quickly evolved into a market requiring a comprehensive eDiscovery platform for global 2000 legal department and possibly even the IT department.

This dramatic change is evident in the eDiscovery offerings moving from services to a combination of services technology, in the type and length of the sale cycle, in pricing and in the buyer. As a result, this paradigm shift has has a dramatic affect on the type of sales professional that can be successful with these market dynamics.

The litigation Services Sales Executive: Most of the current eDiscovery tool vendors have sales organizations stocked with sales personnel that “cut their sales teeth” in the litigation services industry.   This sales executives understand how to process and code paper documents, and extract Electronically Stored Information (ESI) from tape. They know the dynamics of copying, scanning, coding, document review and even online document review and associated storage and can quote the economics in their sleep.   Swimming in what quickly became a commodity based market, these sales executives established relationships within the lower levels of the litigation services groups of law firms years ago and have made a living from leveraging these relationships.

However, as the litigation technology market evolved from scanning to online document review to Early Case Assessment (ECA), the stakeholders within the law firms began to change and as a result these early litigation services sales executives had to “move up the buyer food chain” and establish relationships with new and more sophisticated buyer sand learn to work through a more complex and technically centric sales cycle. They were still selling to the law firms, but they were now having to explain technology stacks, support for data types and databases and connectivity options (i.e. LAN, WAN or the Internet).   Selling also began to move from a relationship based model to more of a customer centric and/or solution selling model based on a combination of technology, services and support.

The Computer Forensic Tools Salesman: Another group of sales executives grew up in the computer forensics and data collection industry selling technology and the associated services to extract Electronically Stored Information (ESI) from computers and “downstream it” to the service providers and/or law firms to integrate into a larger dataset of scanned data.    This group of sales executives are actually fairly technical as they understand the details of where and how ESI is stored and the complexities of extracting it in what has become to be known as a “forensically sound manner”.   They also understand the concepts of metadata and probably understand the technology (as opposed to just the concepts) of de-duping, de-nisting and flattening out and unpacking ESI. Swimming in the strange waters of computer forensics, these sales executives learned to sell to the very niche market of law enforcement, private investigators and the really technical nerds sitting in the basements of law firms and corporate legal and/or IT departments (for those of you who watch the TV series Bones, the FBI refers to this group of practitioners as squints).

Over time and with the consolidation of technology vendors, many of the independent technologies that were were initially sold as computer forensic tools have now been integrated into larger Early Case Assessment (ECA) or entire eDiscovery lifecycle tools. And, this consolidation will accelerate as the eDiscovery market moves to the cloud.

The new sales cycle: Historically, the litigation tools and service sales cycle was reactive and project based and therefore had short sales cycles with a buyer that a had a very easy to identify pain (e.g. he/she had a bunch of paper that needed to be processed).   Even as eDiscovery technology became a more significant part of the sale (e.g. online document review and ECA platforms), because many of the eDiscovery platform vendors were providing a package of technology and services, the sales cycle was still primarily reactive and project based. And, although selling into the litigation service provider channel did have more of a standard technology sales cycle, most of the eDiscovery platform vendors still wanted in on the project revenue and therefore priced their offering with an annual license fee plus a per gigabyte processing fee component that put their sales teams back in the project hunt. I guess that it is hard for a zebra to change its strips?

However, as the eDiscovery platform vendors began to target the eDiscovery buyers within the global 2000 legal departments, the sales cycle has changed to more of a standard technology sales cycle. And, as these same eDiscovery platform vendors and their sales organizations attempt to sell information governance to the business and IT stakeholders within the global 2000, they are going to find themselves right in the middle of a standard technology sales cycle very similar to the sales cycle for selling ERP or other multi-million dollar software and services.

Conclusion on sales challenges: I am going to conclude that the eDiscovery platform vendors are going to have to retool their sales and channel organizations to effectively sell IG into the global 2000.

POSITIONING AND MARKETING CHALLENGE

Positioning, messaging, marketing and the resulting “perception” in the market, in most cases, is more important to the success of a technology offering than the actual technology itself.   The technology “junk yard” is littered with leading edge technologies that failed because they did not create an adequate perception in the market. And, on the flip side of this argument, there have been many very successful technology companies that have has spectacular marketing and less than spectacular technology.   In fact there are actually a couple of these success stories that have occurred in the the eDiscovery market.

The current state of marketing within the eDiscovery platform vendors: That being said, many of the current eDiscovery platform vendors have revenues less than $25M per year and therefore have realistic economic limitation on what they can spend on positioning and marketing their products.   Further, I am going to contend that, given the rapid changes in the litigation technology market, that the eDiscovery platform vendors are already challenged with developing and delivering a focused message that makes sense to law firms, service providers, consulting groups and the legal departments within corporations. In most cases, what the market sees from the eDiscovery platform vendors is a combination of independent positioning and market for each market with little or nor coordination and integration across the disparate markets segments.

The positioning and marketing requirements of IG: Although the technologies between eDiscovery and IG are similar, the IG market is completely different from the eDiscovery market. The corporate buyer is a much different animal than the eDiscovery vendor marketing teams have ever seen. The value propositions and Total Cost of Ownership (TOC) arguments are much more business oriented. There are probably multiple stakeholders within different groups or divisions with different agendas. There are corporate gatekeepers. The sales cycles will be long and complicated and require patience and big IT sales expertise.   Given all of this, positioning and marketing are going to be paramount for the eDiscovery platform vendors to even get invited to the IG party.

Further, as with any new market, the IG market “waters are fairly bloody” as the vendors and buyers try to figure out what they are doing. Finally, there are some very large sharks with really big marketing budgets like HP, IBM and Oracle that play in these waters. All told, it is definitely not a place for the inexperienced, uninformed, confused or unaware to be swimming.

Conclusion on positioning and marketing challenges: I am going to conclude that the eDiscovery platform vendors will face a major challenge to develop and deliver a coherent and effect IG marketing message to the global 2000.

PARTNERSHIPS AND THE CHANNEL

Partnerships and channels have become one of the major distribution and support vehicles for many of the big IT providers throughout the world. Direct sales organizations are expensive and it is very difficult to develop and maintain expertise in every one of the vertical markets that and IT provider may want to play.    As an example, Cisco just announced that, “it will put its money where its mouth is and invest $75 million in new resources for the channel during its fiscal 2012.”

Partnerships and the channel in the eDiscovery market: The eDiscovery market has been no exception when it comes to partnership and channels. Most of the eDiscovery platform vendors have developed partnerships and associated channels of distribution with the litigation service providers and consulting organizations.

In addition, most of the eDiscovery platform vendors have established OEM type partnerships with each other, filling in technology short comings in their product lines and in pursuit of developing comprehensive support for the entire eDiscovery lifecycle.

Partnership and channel requirements in the IG market:   As indicated throughout this blog post, the IG market is big and is already occupied by some of the largest IT players in the world. As such, major partnerships and channels of distribution have already been established among some of the bigger players.   The big storage vendors are aligning with the big IT players and the big consulting players are aligning with the big IG providers.

Conclusion on partnership and channel challenges: I am going to conclude that many of the current partnerships and channels of distribution that the eDiscovery platform vendors have developed are not going to be of much use in the IG market as these partners do not have relationships with the IG buyers and are not even currently selling into the global 2000 IG market.

SUMMARY

I believe that there are currently several eDiscovery platform vendors that have platforms or are close to having platforms that could provide support for at least part of the IG lifecycle. However, I have concluded that these eDiscovery platform vendors are going to have to retool their sales and channel organizations to effectively sell IG into the global 2000. Further, I have concluded that these eDiscovery platform vendors will face a major challenge to develop and deliver a coherent and effect IG marketing message to the global 2000 and many of the current partnerships and channels of distribution that the eDiscovery platform vendors have developed are not going to be of much use in the IG market as these partners do not have relationships with the IG buyers and are not even currently selling into the global 2000 IG market.

In conclusion, having said all of that, I firmly predict that several of the current eDiscovery platform vendors will rise up to meet these challenges and become major players in the IG market within the next five (5) years. As a result, some of them will be acquired along the way and other will remain independent. The rest of the eDiscovery platform vendors will continue to successfully ride the wave of project based eDiscovery and associated services for many years to come. After all, not every organization in the world is going to jump on the IG bandwagon.

eDiscovery and Big Data Analytics

2011-09-06T12:46:00.000-07:00

If cloud computing in general is the next challenge facing information governance and eDiscovery. Then, Big Data Analytics is one of the specific issues that information governance and eDiscovery technologist are going to have to conquer.

Cloud computing is an IT infrastructure choice, storage architecture and application delivery mechanism. And, combined with mobile computing, a choice that will results in more Electronically Stored Information (ESI) or Electronically Stored Evidence (ESE), if you are a lawyer, than the total information from all previous generations.

And, whereas the eDiscovery industry has been struggling to collect, process and analyze terabytes of data in a reasonable amount of time for a reasonable cost, this new paradigm of cloud computing and its associated federated data stores is already producing peta and exabytes of data. Hence, the term Big Data (its actually all a matter of perspective). Of even more concern is the fact that as the eDiscovery market has been struggling to appropriately and accurately analyze structured data, the new paradigm of Big Data in the cloud is largely unstructured data and therefore largely left out of the eDiscovery equation.

Today, whether right or wrong and due largely to a lack of understanding and associated technological and financial restraints, very little unstructured data is even considered during 26(f) strategies and is therefore left out of most litigation. From an eDiscovery standpoint, there is no doubt that there are "smoking guns" hiding in some Big Data store as unstructured data and as such brings a whole new meaning to the phrase of "looking for a needle in a haystack".

However, I believe that there is hope as Big Data analytics do in fact exist and the technology is evolving. As Srinivasan Sundara Rajan from HP points out in September 6, 2011 article on SOA World Magazine Site titled, "Traditional vs Big Data Analytics," "Big data analytics provide new ways for businesses and government to analyze unstructured data which so far have been rejected by the data cleansing routines in a typical enterprise data warehouse scenario." This same technology will be useful for information governance and eDiscovery. And, from a requirements standpoint, may prove to be a very interesting and financially rewarding vertical for the technologists to address.

The full text of the Srinivasan Sundara Rajan's article is as follows:

Big Data Analytics Convergence Among the Major IT Companies
Major IT companies acquiring analytics software and application providers has been the order of the day. We have seen the words ‘Big Data Analytics' being used in many solutions for the enterprise.
‘Big Data' is the general term used to represent massive amounts of unstructured data that are not traditionally stored in a Relational form in enterprise databases. The following are the general characteristics of Big Data.

Data storage defined in order of PETA BYTES, EXA BYTES and much higher in volume to the current storage limits in enterprises which TERA BYTES.
Generally it is considered as Unstructured data and not really falling the under the relational database design which the enterprises have been used to
Data Generated using unconventional methods outside of data entry like, RFID, Sensor networks etc...
Data is time sensitive and consists of data collected with relevance to the time zones

In the past, the term ‘Analytics' has been used in the business intelligence world to provide tools and intelligence to gain insight into the data through fast, consistent, interactive access to a wide variety of possible views of information.

Very close to the concept of analytics, data mining has been used in enterprises to keep pace with the critical monitoring and analysis of mountains of data. The biggest challenge is how to unearth all the hidden information through the vast amount of data.

Traditional DW Analytics vs Big Data Analytics
The analytics of enterprise data toward meaningful insights into the information that exists over a period of
time in that context is why Big Data Analytics makes it different from traditional data warehouse analytics.

Traditional Data warehouse Analytics	Big Data Analytics
Traditional Analytics analyzes on the known data terrain that too the data that is well understood. Most of the data warehouses have a elaborate ETL processes and database constraints, which means the data that is loaded inside a data warehouse is well under stood, cleansed and in line with the business metadata.	The biggest advantages of the Big Data is it is targeted at unstructured data outside of traditional means of capturing the data. Which means there is no guarantee that the incoming data is well formed and clean and devoid of any errors. This makes it more challenging but at the same time it gives a scope for much more insight into the data.
Traditional Analytics is built on top of the relational data model, relationships between the subjects of interests have been created inside the system and the analysis is done based on them.	In typical world, it is very difficult to establish relationship between all the information in a formal way, and hence unstructured data in the form images, videos, Mobile generated information, RFID etc... have to be considered in big data analytics. Most of the big data analytics database are based out Columnar databases.
Traditional analytics is batch oriented and we need to wait for nightly ETL and transformation jobs to complete before the required insight is obtained.	Big Data Analytics is aimed at near real time analysis of the data using the support of the software meant for it
Parallelism in a traditional analytics system is achieved through costly hardware like MPP (Massively Parallel Processing) systems and / or SMP systems.	While there are appliances in the market for the Big Data Analytics, this can also be achieved through commodity hardware and new generation of analytical software like Hadoop or other Analytical databases.

Traditional Data warehouse Analytics	Big Data Analytics
Traditional Analytics analyzes on the known data terrain that too the data that is well understood. Most of the data warehouses have a elaborate ETL processes and database constraints, which means the data that is loaded inside a data warehouse is well under stood, cleansed and in line with the business metadata.	The biggest advantages of the Big Data is it is targeted at unstructured data outside of traditional means of capturing the data. Which means there is no guarantee that the incoming data is well formed and clean and devoid of any errors. This makes it more challenging but at the same time it gives a scope for much more insight into the data.
Traditional Analytics is built on top of the relational data model, relationships between the subjects of interests have been created inside the system and the analysis is done based on them.	In typical world, it is very difficult to establish relationship between all the information in a formal way, and hence unstructured data in the form images, videos, Mobile generated information, RFID etc... have to be considered in big data analytics. Most of the big data analytics database are based out Columnar databases.
Traditional analytics is batch oriented and we need to wait for nightly ETL and transformation jobs to complete before the required insight is obtained.	Big Data Analytics is aimed at near real time analysis of the data using the support of the software meant for it
Parallelism in a traditional analytics system is achieved through costly hardware like MPP (Massively Parallel Processing) systems and / or SMP systems.	While there are appliances in the market for the Big Data Analytics, this can also be achieved through commodity hardware and new generation of analytical software like Hadoop or other Analytical databases.

Use Cases for Big Data Analytics
Enterprises can understand the value of Big Data Analytics based on the use cases and how the traditional problems can be solved with the help of Big Data Analytics. The following are some of the usages.

Customer Satisfaction and Warranty Analysis: Probably this is the one big area that most product-based enterprises are worried about. As of today, there is not a clear way of gauging the issues with the products and the associated customer satisfaction, unless they come in a formal way in an electronic form.

Information regarding quality is collected through various external channels and most of the times the data is not clean
As the data is unstructured there is no way to relate the associated issues, so that the long-term fix can be given to customer.
Classification and grouping of problem statements are missing , resulting enterprises not able to group the issues

From the above discussion, utilizing the Big Data Analytics for customer satisfaction and Warranty analysis will help enterprises gain insight into the much-needed customer mind set and solve their problems effectively and to avoid them in their new product lines.

Competitor Market Penetration Analysis: In today's economy where the competition is high, we need to gauge the areas where the competitors are strong and their pain points through an analysis within the legal means. This information is available in a variety of web sites, social media sites and other public domains. Big data analytics on this data can provide an organization with much needed information about Strength, Weakness, Opportunities and Threats for their product lines.

Healthcare / Epidemic Research & Control: Epidemics and seasonal diseases like influenza start with certain patterns among the people and they spread to a larger section if they are not detected early and controlled. This is one of the biggest challenges for growing as well as developed nations. The current issue most of the times the symptoms vary between the people and various health care providers treat them differently. There is also not a common classification of symptoms across people. Adopting Big Data Analytics on this typically unstructured data will help the local governments to effectively tackle the outbreak situations.

Product Feature and Usage Analysis: Most product companies, especially consumer products, keep adding lot of features to their product line, however it may happen that some of the features are not really used by the consumers and some are used more and effective analysis of this data captured by various mobile devices and other RFID based inputs can provide valuable insights to the product companies.

Future Direction Analysis: The trends in each business are analyzed by research groups and this information is available through industry specific portals or even common web blogs. Constant analysis of this futuristic data will help enterprises to look forward to future and bring them to their product lines.

Summary
Big data analytics provide new ways for businesses and government to analyze unstructured data which so far have been rejected by the data cleansing routines in a typical enterprise data warehouse scenario. However as evident from the use cases above, these analyses will go a long way in improving the operations of the organizations. We will see more convergence of the products and appliances in this space in the coming days.

eDiscovery from Magic to Mainstream Technology

2011-08-30T11:18:00.000-07:00

Is the current state of eDiscovery sufficiently advanced from a technology standpoint that it is indishtinguishable from magic? Probably, but that isn't necessarily a bad thing.

It wasn't that many years ago that only a hand full of ligitation technology "geeks" knew what eDiscovery (Electronic Discovery or E-Discovery) even meant. In fact, it really wasn't that many years ago that Information Technology (IT) had little or nothing to do with supporting the fine art of litigation. Don't get me wrong, there were plenty of disagreements about the ownership and use of intellectual property and associated technology that were adjudicated in a court of law long before anyone had ever heard of eDiscovery. There just wasn't much technology, if any, used to support the litigation process.

Litigation has historically been the dominion of lawyers with visions of men in white wigs and "Sherlock Holmes type" investigators gathering and presenting evidence under a set of rules that were completely foreign to all those except members of a club called the bar. Perrry Mason dragged litigation and the "experience within the courtroom" into the post World War II era and made it a bit more glamerous and attractive. But, there still wasn't much technology involved in the litigation process.

Typewriters and the Gold Era of Litigation
The introduction of the IBM Selectric typewriter in the 1960's revolutionized business around the world. And, in conjunction with the first commercially feasible copy technology in the 1960's, thanks to Xerox, the volume of paper expanded exponentially (Please note that I am not sure that anyone except a few math geeks used the word exponential at that time). I think that the rule of thumb for most enterprises at this time was that if 1 copy was good, 20 copies was great! So, with the proliferation of paper copies of everything, litigation had to accommodate this new paradigm of massive volumes of paper evidence. And, hence the introduction of the cardboard legal box and what we all now fondly refer to as "document review". Since most evidence was now on a piece of paper somewhere, every document had to be copied multiple times so that teams of lawyers (on both sides of the case) could review every single document (usually multiple times) and copies of all of this paper also had to sent to the courts. Some in the copy and document review business probably call this the "golden era of litigation" as there was millions of dollars spent on just copying and reviewing documents before the lawyers could even begin to get ready for trial. Under any circumstances, the amount of potential evidence exploded and therefore litigation became very expensive during this time.

Scanning and Optical Character Recognition (OCR)Sad for many but true, the paper only era was actually short lived in the overall timeline of present day litigation practices. By the 1980's, the Professional Computer (PC) with word processing was replacing the typewriter and a new paradigm shift was underway with the advent of Electronically Stored Information (ESI). However, there was still lots of paper left over from the previous "owners" and still a fair of amount of paper being printed (and not stored) in the present paradigm. So, beginnig in the 1980's and becomming prevalent in the 1990's commercially feasible scanning technology along with Optical Character Recognition (OCR) software hit the litigation technololgy market and now paper could be scanned and converted into searchable ESI. The litigation service provider market emerged almost over night turning many with little more than a scanner in a warehouse into multi-million a year businesses. With the advent of the scanner and OCR, the litigation cost per page went down. But, with the accellerating volume of ESI, the overall cost of litigation continued to go up. Unfortunately, the amout of information and the costs were about to go up even more.

eMail and the Internet
Even though PC's were prevelant throughout the enterprise in the 1980's, it was until the late 1980's and early 1990's with the advent of the commercial World Wide Web (Internet) and the subsquent explosion of email, that ESI really began to become the driver of the next big paradigm shift in eDiscovery.

Litigation Software and MagicWith the explosion of ESI in the 1990's, the technologists began to realize that there was a very lucerative and, in many cases, captive audiance (i.e. you can't hide from litigation) that needed software to drive ESI through the litigation process, find the specific data required, increase productivity and reduce costs (please note that I am not convined that the cost reduction criteria was real high on the list of benefits of the early litigation software vendors). And therefore, almost overnight, a whole new industry was born and what I am referring to as the "magic" began.

In an industry that just 40 years earlier was barely dealing with paper, the introduction of ESI and the need collect, processing, find/search and review data was probably not that much different to many litigators than fire was to the early cavemen (no offense meant to cavemen). The legal process (i.e. the courtroom and associated rules) had not changed. However, the entire playing field of where most evidence came from and how it had to be handled and how it had to be presented was totally diferent. For all practical purposed, it was magic to most in the legal industry. Remember that sufficiently advanced technology is indishtinguishable from magic!

Social Networking and Mobile Devices
Today, with the dawn of cloud computing, the era of email comming to an end and the exponential explosion of social networking platforms such as facebook, Twitter and LinkedIn (just to name a few of the big players) on mobile devices, the true era of ESI and the subsequent birth of true eDiscovery has really just begun.

To put this into perspective, there 30 billion pieces of content (e.g., links, photos, notes) shared on Facebook each month and there were 25 billion tweets sent on Twitter in 2010. I could go on and on with the staggering statistics. However, I think that we all get the point. Social media has changed the world and as a result, the practice of eDiscovery will never be the same.

All of this being said, we are making tremendous progress moving from magic to mainstream technology.

Changes to the FRCP

On December 1, 2006, the way that litigants in federal civil lawsuits conduct discovery changed to reflect the increasing prevalence and relevance of ESI in legal proceedings. Prior to this change, many courts had been grappling with issues surrounding the treatment of electronic records discovery. The new amendments to the Federal Rules of Civil Procedure (FRCP) in essence made it more difficult to use the fact that information is held in electronic form as a defense to fulfilling discovery requests. The requirement that is implicit within the new eDiscovery amendments is that litigators must now plan ahead of time to better organize and manage their vast stores of information.

Pertinent Case Law

Zubulake v. UBS Warburg is a case heard between 2003 and 2005 in the United States District Court for the Southern District of New York. Judge Shira Scheindlin, presiding over the case, issued a series of groundbreaking opinions in the field of electronic discovery. Plaintiff Laura Zubulake filed suit against her former employer UBS, alleging gender discrimination, failure to promote, and retaliation. Judge Shira Sheindlin's rulings comprise some of the most often cited in the area of electronic discovery, and were made prior to the 2006 amendments to the Federal Rules of Civil Procedure. The relevant opinions in the field are known as Zubulake I... and Judge Shiendlin is now touring the country/world speaking on the merits of this case and how it has changed eDiscovery.

And, as time goes on, there are more and more cases everyday defining this new thing that we call eDiscovery and the associated technology.

Mainstream TechnologyWith the advent of "big data analytics", "cloud computing, "fatter/faster Internet pipes" and Software-as-a-Service (SaaS), the magic is wearing off and litigation and eDiscovery technology are headed towards becoming mainstream. Workflow models and associated methodologies such as the Electronic Data Reference Model (EDRM) along with standard data exchange formats and standard federated datastore formats, are all moving the industry to a point where it will normalize, become somewhat commoditized and costs will continue to come down. However, that doesn't mean the industry will not progress with the magic comming back.

As an example, the industry is in the middle of trying to figure out how to deal with all of the ESI in the cloud and at the same time wanting to move its tools and platforms to the cloud. So, some are scared with with the concept of multi-tennant applications and whether or not they should go with private, public or some hybrid cloud infrastructure. Others just think that this cloud thing will pass like some bad storm.

And, of evern more interest from a pure progressive software standpint, the current discussion/debate about "magic" in the industry is in regards to "predictive coding". With vendor wars over patents and approaches and courtroom discussions/hearing about methodologies, algorithms and statistical significance, it is really heating up and providing some real entertainment for the peanut gallery.

As a litigator, you are probably in the wrong business if you don't love the continual progression of magic and the evolution to mainstream technology. As a technologist interested in progressing information governance as whole, it doesn't get much better than the rapid succession of paradigm shifts that have occurred in eDiscvoery in our life times. I love it!!

And, in the end, the real winners will be the legal system and those of us who have to deal with it. As a result of all of this magic, litigation will be faster, more accurate and cost less (At least theoretically).

Updates and Comments from ILTA 2011

2011-08-22T10:47:00.000-07:00

I am completing a consulting project report this week on information governance concpet search technnology in the cloud and therefore was not able to attend the International Legal Technology Association tradeshow in Nashville, Tennessee this week. Therefore, I am going to have to live vicariously through the blog postings and Tweets of others.

The firts report of note came out this morning in an article on the Law Technology News site from Evan Koblentz titled, "E-Discovery Leads Products Charge at ILTA Conference."

First of all, it is no surprise that there is a flurry of product announcements at the ILTA Conference/Tradeshow. It is obvoiusly a great place to announce new stuff. However, havning run several large scale enterprise class software development teams, it always amazes me how the development cycles magically cooincide with the major tradeshows. I guess that this observations fits into the category of sofware is done when management says that it is done?

Anyway, Evan based his product announcement list on the premise that these technology enhancements would reduce costs but then cited an article and comments by Katey Wood from industry analyst ESG that stated findings from an interview process of corporate lawyers indicated that, "Most corporate counsel, even among heavy litigants with large law firm bills, still don't track e-discovery expenses closely." Wood's findings are somewhat different to conversations that I have had with C level execs from the global 2000 regarding the cost of information governance and eDiscovery. Whereas the corporate lawyers didn't seem overly concerned about costs (i.e. not unusual for laywers in my experience), the C level execs (i.e. CIO, CEO and even GC's) were literally horrified by the billing practices of their outside counsel and the resulting high cost of eDiscovery. They all believe that they can bring eDiscovery in house and reduce costs and also beleive that the cloud is going to be a major factor in not only reducing costs but in also increasing productivity. I would suspect that this gap in interest in cost is a cultural issue that the entperise is already aware of and will address on a case by case basis (if you know what I mean!!).

Now, on to the list of vendors and their respective announcements. First of all, its a great time to be a technology vendor in information governance and eDiscovery. And, its an even greater time to be sitting on real cloud based technology (i.e. multi-tennant, etc.) and advanced next generation search. As such, I would suggest that users investigate each of these vendors and their announcements based on their ablity to be relevant in the new paradigm of information governance and eDiscovery in the cloud and provide support for truly next generation search. Given this criteria, some of these vendors will not make the cut.

Given all of this along with some other insight, my list of technology vendors to be watching over the remainder of 2011 and into 2012 would include (please note that some of these vendors are not on Evan's list because they are not making product announcement at ILTA 2011):

CaseCentral
Nuix (actually announced a new version last week)
DigitalReef
StoredIQ
Exterro
Orcatec (have integrated its components and completely redone its user interface)
Serviant (look for them to make some major noise in integrated predictive coding)
HP (the Autonomy acquisistion puts them on my list)
IBM (seem to be making some moves in pure eDiscovery)

In regards to the other issues that Evan covers in this article, I beleive that that ultimate winner in predictive coding (BTW - I really hate that term and would prefer to use machine learning), is going to be the vendor(s) that have a completely integrated solution through the entire lifecycle of either information governance or eDiscovery. Please note that the major benefit of having an integrated solution is that it can support an agile itterative process as opposed to a waterfall approach that requires data to be moved from tool to tool.

Finally, in regards to the "big data" and culling issue, ESI will continue to increase at an accellerating rate and therefore Early Case Assessment (ECA) and culling will continue to be even more important. And, directly to Wood's comment, I beleive that the enterprise and the CIO/CTO is going take the lead in regards to proactivly developing platforms that can provide the responsive information that is required for both information governance and eDiscovery. And as such, outside counsel is going be religated back to being a law firm instead of an IT provider.

The full text of Evan article is as follows:

Early case assessment (ECA), predictive coding, and search/data review applications will dominate the e-discovery product announcements at this week's International Legal Technology Association trade show in Nashville, Tenn.

That speaks loudly to lawyers' cost concerns, which is a trend that won't go away, observed Katey Wood, e-discovery analyst with Enterprise Strategy Group in New York.

Wood's team interviewed dozens of corporate lawyers about e-discovery trends. "As the data shows: Most corporate counsel, even among heavy litigants with large law firm bills, still don't track e-discovery expenses closely," she wrote in an e-mail to Law Technology News. "And when asked what measures they were asking of their law firms, they're more likely to request an alternate fee arrangement than to get into the particulars of technology approaches and results-oriented tracking of productivity and accuracy -- although increasingly they're doing that as well."

Wood added: "This puts the onus on the law firms to compete with each other on price. Even if they throw bodies at the problem with contract reviewers and [outsourcing], it's not possible for them to review all the data in some cases under court timeframes. Technology has to improve, and law firms have to evolve."
Software vendors recognize this trend. Following are major e-discovery product announcements expected this week.

• AccessData will launch a standalone early case assessment product available as software or on a turnkey Dell server, along with a native file viewer option. A quality-control module will follow in the first half of 2012.

• CaseCentral will show version 5 of its e-discovery system with concept-based custom menus, visual and grid views, a process analytics dashboard, and a new file system connector.

• Clearwell Systems is adding an import tool to bring in data from other review systems, support for unspecified increased system scalability, and a new e-discovery dashboard interface.

• CloudNine Discovery, until recently Trial Solutions, will divulge its OnDemand 10.5 review system. The new version allows for virtualized servers and file viewer synchronization.

• Daegis will announce version 7 of its hosted application. It now has a merged code base from Deagis' older DocHunter and Unify Central Archive applications, custodian-based archiving, more reporting options, a time estimator, and iterative search.

• Exterro will introduce Fusion LawFirm. It's meant to be simpler to deploy than previous versions of Fusion and works in on-premise or hosted configurations.

• Integreon will announce its Seek & Collect 2.0 appliance, delayed from the company's original July launch plan.

• IPro Tech will preview eCapture 6.0 and Allegro 3.0. The review and early case assessment programs, respectively, have been through a series of recent updates.

• Kcura is debuting two new products: Fact Manager, which is a matter management application, and Assisted Review, which performs predictive coding. The latter is noteworthy for its customization settings and the ability to run multiple projects in one workspace. It will get additional reporting tools in a future version.

• Lateral Data is unveiling connections between its Viewpoint software and popular end user applications. The new connectors work with Facebook, Google Gmail, Google Docs, Microsoft Exchange, Microsoft SharePoint, Twitter, and Yahoo Mail.

• LexisNexis will release an early case assessment program called Early Data Analyzer, available standalone or as a module for the Law PreDiscovery product. The company will also show its new Lexis for Microsoft Office integration.

• Orange Legal Technologies subsidiary PurpleBox system will announce an ECA appliance intended as a budget approach for enterprises.

• SFL Data will announce LitAudit readiness assessment, SmartSetup to prepare for e-discovery, RemoteCollect, for acquiring data, Defensible SelfCollect, used to train data custodians and IT staff, and Accelerated Review for document assessment.

• Wave Software will feature Trident Expert, a redesign of the original Trident. It has a unified dashboard, along with Exchange .OST support for analyzing large collections instead of individual mailboxes. Expert will get a programming interface this fall.

• ZyLAB is debuting the Data Sampler quality control software with a wizard process. Detailed logs of each sampling process are saved for comparison to past and future uses.

ESG's Wood commented individually on the ECA and review trends.

For ECA, "Clearwell's had no lack of competition, and now that they're squarely under Symantec and being integrated more into enterprise sales, their rivals are likely to go for broke in the indirect channel with service providers to gain traction there," Wood stated. "Companies like LexisNexis and IPro who've had great success in the legal sector already in indirect sales, and AccessData in forensics, want the large deal sizes of the enterprise, and now have their own ECA tools to court them (or partner service providers until the enterprise license sales come)."

On the review side, Wood wrote, "Competitors aren't backing down from the predictive coding challenge that Recommind introduced, because there's still great potential in the market. Whether you call it predictive coding or something else, review is going non-linear, search is getting more sophisticated, and the pricing pressure in the legal market is making law firms more receptive to new approaches that increase productivity."

In general, "There's still a question of where the puck is headed as far as the 'too much data' problem in this market," she added. And there are questions without clear answers, she noted. "Will enterprise customers keep getting their hands dirty with pre-culling before handing their data off to the law firm, or will law firms adopt faster methods of review for more sustainable pricing? Or both?"

Kcura CEO Andrew Sieja, asked about the same topic and recent industry consolidation, put it more succinctly: "This is going to be a journey, man. we're just getting going."

The Post Autonomy World

2011-08-19T10:17:00.000-07:00

I was minding my own business yesterday when the rumors started to hit the wires that HP CEO Leo Apotheker was going to flush his mobile business, spin off or sell the PC business and bet the HP farm on information management by acquiring Autonomy. Since the Palm acquisition has been a flop and only 4 or 5 people have purchased the new HP tablet, it was no shock that Leo was announcing that he was getting out of a business that was basically already dead (please note that there is probably some value in the mobile IP but almost no value in the business). And, with dwindling margins in the PC business in the post PC era, it was also no shock that Leo decided to follow IBM and flush Compaq. However, I had to do a double take on his announcement that he was going to acquire Autonomy. My first thought was that this was a brilliant move.

Anyone that reads this blog and follows my Twitter account (eDiscoveryGroup) knows that I have been very vocal that the new IT paradigm is information management/governance and eDiscovery in the cloud. And, that the big IT providers that positioned themselves to quickly take advantage of this paradigm shift were going to be the big winners.   IBM has already made a move in this direction. And, it was really interesting and made absolute sense to see that Leo was now going to follow. But then, the name Autonomy jumped right off the screen! Wow, why Autonomy?

For those of us that have been in the information governance and eDiscovery market for any amount of time knows that Autonomy is the big gorilla on the block and that all of the rest of the vendors are second tier and lower. They (Autonomy) have been building up their war chest of technology and clients for years and therefore tout the most terabytes of data stored, the largest client base, the most revenue and the list of most and biggest just goes on.

However, they also have what some would refer to as a  boat anchor called the Intelligent Data Operating Layer (IDOL) which has created one of the most interesting love hate relationships in the IT industry. It has historically been a leading edge solution, seems to work really well within the enterprise and therefore is one of the only options available for many within the global 1000 for massive information management. However, most clients will tell you that its too expensive, cumbersome, hard to maintain and eats up resources. Kinda reminds us all of Oracle!!

Autonomy has also not done a very good job of integrating all of the technologies that have purchased over the years and I am sure that it has made for some interesting discussions with clients in regards to how to migrate data back and forth between these technology platforms. Probably made for some really good service and consulting contracts.

Next, although Autonomy has some interesting cloud based offerings and does in fact have lots of data being hosted and processed in the cloud, it is a bit of stretch to say that they are a leading edge cloud technology vendor. And, although they also have some interesting search technology. It is by no means leading edge.

Further, Autonomy has gained a reputation of over selling and committing and under delivering. This has all added up to a very frustrated client base and a very wary list of prospects. As a result, smaller vendors with less expensive and technically agile and focused solutions such as Nuix out of Australia have been able to eat away at Autonomy's market share (Huron Replaces Autonomy with Nuix). And, there are several other players in the information governance and eDiscovery market that also have much better and more focused and agile platforms than Autonomy, including, CaseCentral, DigitalReef and StoredIQ (please note that I realize that I have not listed every single vendor that can successfully compete with Autonomy). So, even with the HP acquisition, I would suspect that the trend of Autonomy losing installed base will continue.

As such, even though Leo in on the right track, he is going to have his hands full with the baggage that Autonomy brings with them.

However, all of this being said, I am not sure which technology provider that HP could have purchased, instead of Autonomy, that would have the "juice" to have an immediate and potentially long term impact on the success or failure of Leo, his strategy and ultimately HP.    And, it is very rewarding for all of us in the information governance and eDiscovery markets to have a respected CEO like Leo and a company like HP basically validate your market.

And, I have faith the Leo and his team is going to be able to eventually figure out what they have purchased, leverage the good stuff and flush the bad. For the sake of the stockholder's and to a certain degree for the health of the IT industry in general, let's hope that he is successful.

Global 2000 Poll Results on Information Governance and eDiscovery in the Cloud

2011-08-15T10:04:00.000-07:00

Beginning in June 2011, eDiscovery Solutions Group (http://www.ediscoverysolutionsgroup.com/), starting running weekly polls asking global 2000 stakeholders about topics relating to moving information governance and eDiscovery to the cloud. With average weekly participating of over 1,500 voters, the results, although not scientific, have been very interesting.

As such, I thought that I would share them with you.

June 26, 2011

45% of the respondents plan to move all eDiscovery to the cloud in 2011.

July 5, 2011

42% of the respondents believe that eDiscovery should be located in the legal department.

July 12, 2011

38% of the respondents indicated that they have a working document retention policy in place.

July 18, 2011

60% of the respondents indicated that they would prefer to pay for eDiscovery under a multi-year monthly payment agreement (i.e. SaaS based pricing)

July 25, 2011

50% of the respondents indicated that they are moving information governance and eDiscovery to the cloud to reduce costs.

August 1, 2011

50% of the respondents indicated that they major benefit of moving information governance and eDiscovery to the cloud was the reduction in costs.

August 8, 2011

100% of the respondents indicated that the value of proactive information governance was to be able to access real time information and to reduce costs (please note that this was a multi-selection poll).

To view the poll results on the eDiscovery Solutions Group Website, please go to: http://www.ediscoverysolutionsgroup.com/index-8.html

Predictive Coding Drama is Good for eDiscovery Market

2011-08-01T15:49:00.000-07:00

In a Law.com blog post by Evan Koblentz on August 1, 2011 titled, "Bragging Rights or Blowing Smoke?", Mr. Koblentz indicates that Recommind's CEO Bob Tennant pointed out that, "If nothing else, the ruckus acknowledged the importance of automation to the future of legal discovery, and the significance of our intellectual property, including the announced patent, to the e-discovery industry." I am not sure about the significance of Recomminds intellectual property and its announced patent. But, Bob is spot on about the fact that the rukus over who owns what predictive coding IP is absolutely outstanding to the future of eDiscovery. litigators, judges, general counsel, IT directors, litigation service providers and even some litigation technology vendors need to realize that mature and tested technology already exists to completely change the game and change the paradigm in which we currently view how technology is utilized and how it affects litigation.

As a result, it won't be long before risky off-shore coding and document review and expensive on-shore coding and document review will be practices that we read about in the history books and wonder why.

Finally, I couldn't let another blog posting on predictive coding go by without mentioning, as may others have, that there are lots of other predictive coding vendors with exceptional predictive coding technology that need to be acknowledged, including Orcatec, Equivio, Capital Legal Solutions, Catalyst, FTI Technology, InterLegais, Kroll Ontrack, Valora and Xerox.

eDiscovery Decisions in 2011 Increase at Accelerating Rate

2011-07-26T10:53:00.001-07:00

The coveted Gibson Dunn 2011 mid-year analysis on eDiscovery cases is out and it is not surprising that the number and sophistication of eDiscovery cases continued to grow at an accelerating rate.

Highlights from the Gibson Dunn analysis of pertinent decisions include:

The number of eDiscovery decisions continues to increase at a blistering pace. The 187 decisions we identified in the first half of 2011 represents an 82% increase over the 103 decisions we identified at mid-year 2010.
The number of instances in which litigants sought sanctions in the first half of 2011 was more than double the number in the same period last year (68 at mid-year 2011 versus 31 at mid-year 2010), and sanctions awards have nearly doubled in absolute terms (38 at mid-year 2011 versus 21 at mid-year 2010).
Notwithstanding this increase, courts awarded sanctions at essentially the same rate as in 2010 (56% of the instances in which a party sought sanctions in the first half of 2011, versus 55% for the full year in 2010).
Determining when litigation is "reasonably foreseeable" for purposes of triggering the duty to preserve continued to be a fact-specific analysis.
Courts continued to emphasize that counsel's responsibility to ensure preservation does not end with timely distribution of a legal hold notice.
Courts continued to demand cooperation and remained keenly aware of counsel's efforts--or lack thereof--to resolve eDiscovery disputes before seeking judicial involvement.
It turns out that there is such a thing as "discovery karma," at least in the 10^th Circuit, and "ankle-biting" an opponent for alleged discovery glitches may not be appreciated, especially when one's own house is not in order.
While no reported case addressed the use of predictive coding or other advanced search technologies, there is no doubt that these tools have been noticed, as The New York Times and Forbes focused on their potential impact in featured articles.
eDiscovery law continued to develop rapidly, and while some areas of law are coming into focus, other areas--including basic issues such as whether a litigation hold notice must be written--continue to be heavily debated.
Calls for reform of the Federal Rules of Civil Procedure continued, and the Civil Rules Advisory Committee is considering various

Unless you are stuck in some Star Trek time warp where Electronically Stored Information (ESI) and the associated eDiscovery is in some future and maybe even parallel universe, the Gibson Dunn report should come as no surprise. The amount of ESI is going to continue to grow at an accelerated rate for the foreseeable future. The cloud is going to accelerate the increase in the volume of ESI acceleration even faster. So, the fact that our judiciary is “dealing” with these facts is a good think. Let’s all hope that this continues to accelerate also.

Cloud Computing is Maturing

2011-07-12T14:50:00.001-07:00

With the dog days of summer 2011 upon us and the US debt ceiling negotiations in Washington DC seeming to be going nowhere, it is refreshing to be able to report that cloud computing is having a really great 2011 so far:

- The big IT providers are making progress building up their Infrastructure-as-a-Service (IaaS) offerings.

- Our favorite players such as Apple and Microsoft are beginning to make their moves with offerings such as iCloud and Azure.

- The whole concept of multi-tenancy and virtualization is beginning to become part of the mainstream discussion (i.e. 18 months ago only us techies even knew what those terms meant).

- Although there were some security bumps early this year with Amazon and Sony, the market seems to be getting comfortable with the notion of a public cloud.

- The Software-as-a-Service (SaaS) providers are beginning to close some big deals and therefore the previously radical idea of running a global 2000 enterprise in the cloud is no longer a “wild” idea.

- Global 2000 CFOs are ecstatic with the new economic realities of cloud computing.

- Global 2000 CEOs are beginning to understand the strategic business benefits of cloud computing.

- The idea of Information Governance and eDiscovery in the cloud is beginning to take shape as some of the big IT providers are realizing that these components need to be a standard part of any IaaS/PaaS offering.

- Consolidation is enabling the market to begin to cull itself down to a more manageable number of players with the financial legs to provide the stability that the market is demanding.

So, the cloud computing market is maturing pretty much on schedule. As such, the next five (5) years should be very exciting. And, as is the case with any new markets, there will be some big bumps along the way and maybe even some really unexpected turns. However, under any circumstances, it will be fun to be able participate and watch.

In a blog posting by James Staten on the Forrester website on July 12, 2011 titled, “The Cloud Computing Market Grows Up”, Mr. Staten does an excellent job listing the industry highlights and indicating that cloud computing is indeed growing up very nicely.

The full text of Mr. Staten’s Blog Posting is as follows:

Mark this date. While it isn't an anniversary of anything significant in the past, it is a day where our beloved cloud computing market showed significant signs of maturing. Major announcements by VMware, Citrix, and Microsoft all signaled significant progress in making cloud platforms (infrastructure-as-a-service [IaaS] and platform-as-a-service [PaaS]) more enterprise ready and consumable by I&O professionals.

* VMware updates its cloud stack. The server virtualization leader announced version 5 of its venerable hypervisor and version 1.5 of vCloud Director, its IaaS platform atop vSphere. Key enhancements to vCloud include more hardening of its security and resource allocation policy capabilities that address secure multitenancy concerns and elimination of the "noisy neighbor" problem, respectively. It also doubled the total capacity of VMs service providers can put in a single cloud to 20,000. VMware also resurrected a key feature from its now defunct Lab Manager — linked clones. This key capability for driving operational efficiency lets you deploy new VMs from the image library and the system will maintain the relationship between the golden image and the deployed VM. This does two things; it minimizes the storage footprint of the VM, much as similar technology does in virtual desktops, and second it uses the link to ensure clones maintain the patch level and integrity of the golden master. This alone is reason enough to consider vCloud Director.

To help both virtualization and cloud environments, VMware also made a significant change to its licensing model, moving away from CPU core entitlements (VMware will still count processor sockets, though) to pooled vRAM entitlements. This change ties licensing more to the use of the product and encourages greater VM consolidation as it counts VMs by size, rather than per physical server. This incents packing lots of VMs on a single system and even lets you share vRAM entitlements across physical systems to accommodate more seamless growth of your environment and management of the pool, a key operational change called out in our Virtualization Maturity Model. Basically, now you can entitle your virtual environment in total, based on its capacity, and fill it up as much as you want. This is much more consistent with their service provider pricing model; and if your goal is to build a private cloud, isn't that the point?

All in all, this shows that VMware gets it and is taking an active role in helping educate its customers that virtualization and cloud operations are two different things and making these distinctions clear is critical to their and your success. Well done, VMware.

* Citrix's acquisition of its OpenStack doppelganger, Cloud.com comes just months after Citrix announced its intention to commercialize an OpenStack solution for enterprises and service providers. Now they can stop that work. Cloud.com has successfully penetrated the service provider market with its OpenStack-based solution and racked up some solid wins in the enterprise to boot. This buy accelerates Citrix' IaaS efforts and gives solid financial backing to CloudStack. Sadly, though, it also reduces the number of commercial distributions of OpenStack by one.

Enterprise I&O pros should note that CloudStack is hypervisor agnostic, so this isn't a Xen-only play. And the synergies between CloudStack and the rest of its application and desktop virtualization portfolio aren't lost on the company or its service provider partners and prospects. Look to see more combined solutions that help you vend apps and desktops from a cloud in the future.

* Microsoft, here at its Worldwide Partner Conference in Los Angeles, stepped up its cloud game as well by showing the beta of System Center 2012, which adds a self-service portal for using Hyper-V as a private cloud platform and better orchestration for workload deployment. It also demonstrated new public cloud services from Boeing and General Mills plus a commissioned report by Forrester attesting to the differentiated economics of cloud platforms, something I talk about with CIOs in a report published this past spring.

For ISVs, Microsoft also announced commercial opportunities on Windows Azure for its massive software partner ecosystem. The Azure Marketplace can now vend commercial applications, meaning that any software application built for Windows (using the VMrole) or through Visual Studio (using the worker role) theoretically can be offered through Windows Azure as well.

Together, these announcements are strong milestones to the continuing progress and solid traction cloud platforms are having with the market. While the private cloud market is still very, very young, moves like these put it on more solid footing and should lead to expanded options for I&O professionals.

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Gartner Predicts eDiscovery Market at $1.5 Billion by 2013

2011-05-23T12:52:00.000-07:00

Gartner announced their inaugural “magic quadrant” for the E-Discovery (eDiscovery) software market on May 13, 2011 and predicted that this market would reach $1.5 Billion in revenue by 2013.

Having lobbied and pleaded my case with Gartner many times over the course of my career in enterprise software, I am very well aware of the politics and other factors that influence the final results of where a vendor ends up on the “magic quadrant”. And, I believe that Gartner does enable or enforces enough integrity into the process to render the results at least marginally interesting and a factor for enterprise buyers to consider. Having said this, I would have to admit that the inaugural '”magic quadrant” for E-Discovery Software paints a fairly accurate picture of the players in this space (with a few exceptions).

Gartner analysts John Bace and Debra Logan identify five leaders in eDiscovery including; (1) Autonomy; (2) Clearwell Systems; (3) FTI Technology; (4) Guidance Software; and, (5) kCura.

I would assume that Autonomy made the list because of its size of installed based, amount of data managed, revenues, etc. And, although it is not clear if Gartner was aware of the pending acquisition, Autonomy’s purchase of Iron Mountain does provide them with an even wider platform. However, if were a buyer in 2011, I would be cautious about Autonomy. They are very expensive, complex, proprietary, have a reputation for less than stellar service and I have never gotten great reviews from any of their clients. The relationship that they have with their client base reminds me a lot of Oracle from the 1990’s when clients would complain about how bad Oracle was as they were signing the purchase order to buy 50 more enterprise licenses. The point being, Autonomy (just like Oracle) has a corner on the enterprise market for clients that have lots of data and need a big legacy system to manage it all. The trade off is that it will not be leading edge or pretty. But, it will get the job done.

Clearwell is Clearwell and probably deserves to be somewhere in the mix just based on market share. They have undoubtedly done a great job literally creating the Early Case Assessment (ECA) market, the demand within the Early Case Assessment (ECA) market and then stepping up to fulfill that requirement. There are much better ECA tools on the market. But, as Clearwell and many other tools vendors have proven, you don’t have to have the best technology to capture a market. As I have indicated in past posts, Clearwell’s marketing success over the past 3 years will be studied at the Harvard School of Business. Let’s just hope that Symantec can add a little technology to mix and give their platform some legs to go along with their market share.

I don’t really have any comments on FTI Technology beyond the fact that they are a subsidiary of global consulting company with 3,400 employees and a large client base that is using FTI software because it is what the FTI consultants tell them to use. As such, FTI as a software player in its current state will linger within the industry for years to come as their client base struggles to defy the FTI consultants and move to a different more competitive platform. As a side note it has always been interesting to watch FTI balance the use of their internal technology with the wishes of their clients. If they hadn’t paid so much money for what the technology that they have, I would suspect that it would make much more business sense for them to go completely technology agnostic. But then the amortization on the investment that they have made would never get completed.

I also don’t really have any comments on Guidance as they will continue to own a decent share of the computer forensics and associated security software market and therefore will continue to be a member of the magic quadrant in someway shape of form. I will predict that the need for computer forensics software is changing and therefore there is an opportunity for some up and commers to steal market share from Guidance.

The last player on this list is kCura and I have to admit that I like Relativity and I am at least intrigued with their mini app store. However, I have found their channel plan to be highly draconian and their enterprise sales plan to be in conflict with their service provider channel. Further, I would suspect that kCura is a takeover target.

Gartner analysts John Bace and Debra Logan also called out challengers Symantec, EMC, IBM, and Nuix. Given the fact that Clearwell is already a leader, Symantec will move into that quadrant automatically. So, we will be left with EMC, IBM and Nuix. This is a really interesting and diverse group. I am not sure that EMC knows that they want to be when they grow up. IBM, as evidenced by its acquisition of PSS Systems, could obviously buy its way into the lead in the eDiscovery market. However, I believe that they understand that eDiscovery is actually just a subset of the overall Information Management and Information Governance market and therefore have their sights set on something much bigger.
The real interesting player in this list is super speedy Nuix. And although I have a bias as I like the Nuix technology and their management team, I truly believe that we are going to see some big moves from Nuix over the next few months and years.

The other players in the report that I like are CaseCentral and Exterro. CaseCentral is a pioneer in understanding and implementing true multi-tenant technology within the enterprise eDiscovery space and has also been expanding its reach back into the ECA and analytics space with connectors into EnterpriseVault from Symantec. Look for CaseCentral to have a major impact as the market moves to Information Governance and eDiscovery in the cloud. As another side note, it will be interesting to see how Symantec handles legacy relationships such as CaseCentral now that they own Clearwell. Maybe CaseCentral is next.

Exterro is the real wildcard in the bunch. They have absolutely outstanding technology with a suite that can take you from data mapping to legal hold to workflow management Unfortunately, they have a flawed channel strategy and they are somewhat difficult to work with. I predict that they will be acquired in 2011 or early 2012 and become a cornerstone component of a much bigger solution.

The player that Gartner contends they are tracking but was missing from the “magic quadrant” was StoreIQ. As a component player in enterprise eDiscovery and probably more likely in enterprise Information Governance, StoredIQ has some really interesting technology. However, they seem to be having some internal struggles in regards to who they are and how they are going to position and sell their IP. I look for StoredIQ to be acquired in 2011 or early 2012.

The one player that was not even mentioned was Digital Reef. They have a very interesting and fairly comprehensive SaaS-based platform. With new executive management to help with the next phase of their growth, look for Digital Reef to make some noise in the market in 2011 and beyond.

Riding the Wave of Early Case Assessment

2011-05-04T14:57:00.001-07:00

This past weekend, I finally emerged from a rather lengthy project and therefore I now have a bit of time to get back to my Blog. At the top of my list was the desire to comment on an article entitled, “Riding the Waves of Early Case Assessment” published on April 26, 2011 on the Law.com. The author, George Rudoy is CEO of Integrated Legal Technology, a legal technology and services consultancy, based in New York, does an excellent job of framing some of the issues surrounding Early Case Assessment (ECA) and adds some biting yet very true commentary on some of the early technology winners. My only real complaint with the article is that he didn’t solicit any input from me (just kidding). I guess that I will need to invite him to join my LinkedIn network and also join my Early Case Assessment Association Group (http://www.linkedin.com/groups?gid=1827179&mostPopular=&trk=tyah).

First of all, Early Case Assessment (ECA) is both a very clever marketing term that has no doubt propelled vendors such as Clearwell way beyond the point where they should have been had it not been for the term (BTW – Clearwell’s success will be studied at Harvard business school in the years to come as an excellent example of how to successfully position a product in an emerging market). On the other hand and as many have pointed out to me as I have ranted on about the fact that ECA is actually a technology, the practice of ECA (whether you call it that or not) has been around for many years and is nothing new to the experienced and blooded litigator. I concede that fact. However, I also believe that technology now exists (actually has existed) for many years that can in fact advance the practice of ECA. It is just not being applied yet to what I would call the eDiscovery subset of the Information Governance market.

I have been an enterprise technology junkie and serial entrepreneur for many years and therefore I have an excellent understanding of what technology exists and what it can and cannot accomplish. And, since entering the litigation services/eDiscovery market about five years ago full time, I have been continuously amazed at the lack of the “market’s” interest in utilizing very pertinent and established technologies from other enterprise types markets (e.g. Information Governance, BPM, etc.). In addition, I had the great fortune of working with Dr. Herb Roitblat several years ago and learned more about semantic search and related technology such as predictive coding than was probably necessary for any normal person (even a technology junkie such as myself). Having this knowledge base as a foundation, I have developed what would the market would consider to be a fairly radical concept of ECA and where it fits in the EDRM. However, after reading George’s article, I think that I may have some company.

Without going into a long drawn out description of where ECA technology fits in the EDRM, just let me state that I believe we should be following an iterative process (i.e. like the Agile software development model) where we are constantly analyzing the entire dataset to determine what we should be looking for, how we are doing, risk assessments, etc. And, today’s available technology lends itself to this approach. Further, as we move more and more ESI to the Cloud, this approach becomes even more practical, less expensive and much more productive. In the coming weeks, I hope to set aside some time to address my model in more detail. So, stay tuned.

The full text of George Rudoy’s article is as follows:

Can you really conduct early case assessment, or is it simply a fancy name for a more traditional indexing and culling model? What exactly is "early case assessment" (ECA)?

While working on a project for one of my corporate clients, I had to delve deeper into this question and reached out to a few of my old industry friends and colleagues -- Gyorgy Pados of Capital Legal; Richard Cohen, of Renew Data; Rick Lutkus and Lori Chavez of Seyfarth Shaw; Michelle Mahoney of Mallesons Stephen Jaques; and Jonathan Maas of Ernst & Young -- to gain a better perspective on the widely debated phenomenon.

As the novelty of the ECA concept starts to wear off and more and more practical evaluation and understanding develops, it’s time to reflect on the positioning of ECA on the Electronic Discovery Reference Model (EDRM) framework. Is it mature enough yet to be used in the best way -- and embraced? What capabilities are properly framed "ECA"?

The legal technology industry uses ECA in various ways. ECA could refer to appliance, software, or software as a service to quickly collect/index, de-duplicate, and search electronically stored information (ESI) to provide fast analysis of its content. The concept is a platform or service to facilitate a quick fly-over of the ESI collection to gather key reports of data make-up, information, and communication histograms patterns, concepts and themes, keyword analysis, and evaluations. Most ECA products provide dynamic probing and data-evaluation facilities to arrive at the relevant ESI, very much like the traditional fact-finding early-case-evaluation approach to assess the strengths and weaknesses of the case. But is this the right way to define ECA, or should it mean something different, such as analytic capabilities prior to collection or indexing of data?

The premise of early case assessment is to give legal teams the ability to conduct up-front, fast, intelligent data gathering, with probative queries on the dataset to reduce it to a relevant universe that can be assessed. Legal teams have a need to see "what they got" faster than what traditional EDD services typically can provide.

Let us consider two often-mentioned vendors that offer early case assessment: Clearwell Systems and Guidance Software.

Clearwell has done well in quickly turning the need for ECA into widely used capabilities both prior to and after collection, and while it is debatable whether the company was first to hit the market with it, it is hard to dispute that it was the first commonly used tool. Guidance has been in the e-data business for many years, and its EnCase eDiscovery product has been in the e-discovery market since 2002. While a little late to the post-collection review stage, Guidance's tool can be effectively used for identification, preservation, collection, processing and producing load files for review platforms.

So let's compare and contrast.

EnCase offers ECA functionality prior to, during, and after the collection on the basis of its Optimized Distributed Search ("ODS") technology, which allows IT administration to place servlet on individual workstations and gain complete visibility to the end-points without having to index or migrate data. A high percentage of its customers are using these capabilities in support of multiple types of investigations (inappropriate activity, remote intrusion, e-discovery), and it would be valid to characterize EnCase as a comprehensive general-purpose discovery and forensic engine. Its ability to reach every node in a network, including desktops, laptops, and servers, make it a popular collection and processing tool.

However, as previously mentioned, the tool has had analysis and first-pass review capability for less than one year, and it lacks full-blown review capabilities.

The Clearwell Legal Discovery Solution claims to have "90% data culling rates, and improved defensibility in court that addresses each stage of the e-discovery lifecycle from identification and legal hold through review and production, delivering significant cost savings and improved case outcomes". Clearwell boasts quite an impressive list of clients (a certain reward for being the first on the scene in terms of in-house review capabilities) and enjoys instant recognition when the topic of ECA in the review context is mentioned.

However, there is a price to be paid for beating everyone else to the punch. Clearwell is now facing stiff competition and is rumored to lose potential clients over its pricing as well as limited data volume per appliance. It doesn't offer metadata-only collections, which are valuable for pre-collection analytics. Defensibility is also coming into question, with recent customer satisfaction issues (NDLO and Microsoft cases) challenging the supremacy of the product. While well defended by Clearwell, such challenges widen the opening for other products to capture some of their market share.

While the debate on the usefulness and effectiveness of ECA continues, it should be noted that how the term is defined continues to evolve. Some of the service providers adapted quickly enough to have ECA as part of their "arsenal" a few years ago. Many of these tools were designed to filter metadata after collection and help the company decide how much a case will cost. This is a noble objective, but not completely in line with the original intent of ECA -- which was to help an organization determine its risk exposure and make strategic decisions about a case based on that analysis.

RenewData, which spent considerable time and effort researching ECA, analytics, and keyword-development techniques, took its time selecting a suite of ECA tools and chose not to go with Clearwell, Guidance, etc. The company's desire was to deliver tools that were more in line with the definition of ECA based on review capabilities, and it felt that what was already on the market wasn’t quite there yet. Instead, it focused on building two proprietary content analytics tools -- Vestigate and Anagram -- which can together help clients sift through large amounts of data quickly and relatively inexpensively, and make the strategic decisions that ECA promises.

Rich Cohen, president of RenewData, explains: "We have taken a unique approach to ECA, one that focuses specifically on the language of the matter, versus leveraging metadata filtering or complex mathematical formulas to simply churn through documents quickly. The result is a much more mechanical, transparent process that delivers far greater insight and greater certainty that you’re making strategic case decisions based on all relevant data available."

Considering the risks at hand, this could be a significant step forward -- to be able to determine your risk exposure early on in a case, based on what human beings are seeing in the language rather than point to a "black box" purchased off the shelf. Clearly, ECA capabilities both pre- and post-collection continue to evolve.

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Infrastructure-as-a-Service (IaaS) in Simple Terms

2011-03-21T10:04:00.001-07:00

Martin Veitch, Editor in Chief of CIO Magazine interviews Fujitsu CIO and CTO

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Cloud Computing in Simple Terms

2011-03-19T14:32:00.001-07:00

Following is a video that explains Cloud Computing in really simple terms.

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140-Characters or Less!

2011-03-10T07:42:00.001-08:00

I am in the middle of a self imposed 60 day hiatus from posting articles to the “eDiscovery Paradigm Shift” blog and have been exercising my opinions about eDiscovery, Cloud Computing and Governance, Risk and Compliance (GRC) in 140- characters or less on Twitter (http://twitter.com/ediscoverygroup). And, I actually have over 400 fellow Tweeters that are interested in what I have to say. However, as a result, I have dramatically reduced posting original articles of more than 140 characters to my various LinkedIn Group, including: The eDiscovery Solutions Group (http://www.linkedin.com/groups?gid=1895044); The Early Case Assessment Group (http://www.linkedin.com/groups?gid=1827179); Enterprise eDiscovery in the Cloud (http://www.linkedin.com/groups?mostPopular=&gid=3663508); and, The International Association of Data Mapping Professionals ((http://www.linkedin.com/groups?gid=3036409). And, I am not sure I like the results. Therefore, after careful examination of these past 6 weeks weeks and with much soul searching, I am not convinced that Twitter affords me the same opportunity to fully express my opinion and commentary.

140-characters is just not enough real estate for me to say what has to be said. Maybe I want to say too much? Maybe I just don’t understand all of the Twitter abbreviations and codes?

I guess that the advent of Twitter and other social networking sites, as well as the popularity of text messaging, have made short-form communication an everyday reality. But expressing yourself clearly in short bursts-particularly in the 140-character limit of Twitter-takes special writing skill. So, I actually bought and read Dom Sagolla’s book titled, “140 Characters: A Style Guide for the Short Form.” And, I have been studying other writer’s styles and trying to formulate a methodology and style of my own. Unfortunately, more often than not, I end up just deleting the end of my messages until I get down to 140-characters and I am sure that most times readers are left wondering what the heck I was talking about.

You would think the social media technology that is single handedly brining down the Middle East (please note that Mark Zuckerberg probably wants a little credit also) and enables Charlie Sheen to communicate his wisdom to millions would be sufficient to tackle the requirements of addressing the state of eDiscovery, Cloud Computing and Governance, Risk and Compliance (GRC). And maybe for some, it is. However, for me, Twitter just doesn’t get it done. Don’t get me wrong. Twitter definitely has a place. In fact, ironically, I will be Twittering this Blog posting (has Twittering risen to point where it needs to be capitalized?). And, when I want to let everyone know what coffee shop I am sitting in or want to organize a community to “take action”, I will definitely use Twitter. However, for the stuff that takes more than 140-character to express, I going back to writing my Blog at least a couple of times a week.

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eDiscovery: A Judge’s Guide to Reduce Costs

2011-01-25T08:14:00.000-08:00

The eDiscovery Institute, a 501(c)(3) nonprofit research organization, has just released a publication for judges titled, “Judges’ Guide to Cost-Effective E-Discovery.” Written by Anne Kershaw and Joe Howie, with a foreword by the Hon. James C. Francis IV, Magistrate Judge for the Southern District of New York, the paper provides a detailed, vendor-neutral look at technologies and processes that can greatly reduce the cost of handling Electronically Stored Information (ESI).

This publication is long overdue and will hopefully provide the foundation upon which the entire legal industry can begin to systematically reduce the overall cost of eDiscovery. The authors contend that there is currently technology and associated best practices available today, including de-NISTing, Duplicate Consolidation across custodians, email thread management and predictive coding, that can cut the cost of eDiscovery by 90%. Many forward thinkers in the vendor community have been aware of these technologies for several years. Now, with the knowledge learned by this publication, maybe Judges will have the ability to question counsel's use or non-use of available technology to forece eDiscovery out of the dark ages and into the modeern world of technology.

There is an excellent overview of the publication titled, “E-Discovery Burden, the Judges’ Guide, and an Alternative to AFAs ,” by co-author Joe Howie on the Inside Counsel Website dated January 21, 2011.

A copy of the full publication can be downloaded from the eDiscovery Institute website at: http://www.ediscoveryinstitute.org/JudgesGuide/.

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Bringing eDiscovery In-house: What Corporate Counsel Wants Versus What They Need

2011-01-17T14:01:00.000-08:00

2011 will be the year that a significant percentage of eDiscovery technology and services moves “in-house”. Historically, Corporate Counsel collaborated with outside counsel, litigation service providers, computer forensic companies and litigation technology consulting organizations to have this work completed. I would suspect that the reasoning or justification behind this outsourcing mentality was a byproduct of the days when litigation required thousands and thousands of boxes of documents to be scanned, digitized and reviewed using one of the document review technologies. And, this had always been done by third parties. This outsourcing partnership was part of the cultural fabric of “how things are done” and therefore most corporate legal staff didn’t and probably still don’t believe that it is something that should be or needs to be changed. After all, if its not broke… However, many casual observers think that it is broke and therefore does need to change. But, does that mean if you are an attorney / litigator that you need to do all of this eDiscovery technical stuff yourself?

Practicing Law not Technology Aside from the practice of medicine, practicing the art of law has risen to the very top of the intellectual food chain. However, having many friends that fit neatly into both categories, I have always found my doctor friends to be much more technically savvy and “up-to-date” on available technology than my lawyer friends (please note that I have identified gross exceptions on both sides of the isle). It may be that the technology demands of practicing medicine have advanced much more quickly than those of the legal profession. Or, it may be that the healthcare industry has already gone through the technology paradigm shift.

At any rate, and for the most part, this whole new world of eDiscovery, computer forensics, semantic search, automated coding and identifying Electronically Stored Information (ESI) / potential evidence on Facebook and Twitter has come as a huge cultural shock to most within the legal profession. After all, this is not something that was taught or required in law school and it not something that the previous generations of lawyers had to know much about. Well, things have changed! And so, I get back to my original questions and that it is, “what eDiscovery stuff does Corporate Counsel want brought in house versus what they need to have brought in-house?”

Cost In the perfect Corporate Counsel world and in an effect to maintain status quo and not tip the proverbial apple cart, I would guess that most Corporate Counsel would just as soon leave things the way that they are and pick up the phone and call outside counsel, their service providers, and their litigation consulting partners to deal with all of this eDiscovery when the need arises. However, I would further guess that over the past 24 months that corporate counsel has been under intense budgetary scrutiny from the Chief Financial Officer (CFO), the Chief Executive Officer (CEO) and maybe even the Board of Directors (BOD) to slash the cost of eDiscovery. And, unfortunately, upon further review, most Corporate Counsel have found that “outsourcing” eDiscovery work is needlessly expensive and outsourcing it through your outside counsel is outrageously expensive. With markup minimums of 100%, it doesn’t take a financial wizard to figure out that doing it yourself in-house is going to be much less expensive. At least from a direct cost standpoint. So, even though Corporate Counsel may not want to bring eDiscovery in-house, if they want to stem the cost, they really need to.

Technology So, given the fact the Corporate Counsel has to bring eDiscovery in-house to reduce the cost, that doesn’t mean that they even know where to begin from a technology standpoint. It’s probably one of those classic situations that they “don’t even know what they don’t know.” However, not to fear because within that very same corporation is another C level executive with the title Chief Information Officer (CIO) and I would bet that there is very little about eDiscovery technology that the CIO and his/her Information Technology (IT) group won’t understand. In fact, they (the CIO and IT) already have control over most of the Electronically Stored Information (ESI) that the Corporate Counsel may need to meet the demands of litigation. And, I would also suspect that they (the CIO and IT) have not been particularly pleased over the past few years as teams of outsiders, under the general order of Corporate Counsel, have descended upon their “turf” extracting, harvesting and just generally being a nuisance. Further to this, I would also suspect that they (the CIO and IT) believe that if just given the chance and the budget, that they could do a much better job fulfilling eDiscovery requirements at a significantly reduced cost. However, that may mean that the Corporate Counsel and the CIO may actually have to talk to each other and figure out how to cooperate and collaborate.

Cooperation and Collaboration Historically, no one in the legal department really wanted to venture down to the IT department and make an effort to figure out exactly what they did. Likewise, the last thing that anyone in the IT department wanted was to get a call from the legal department about anything. I contend that in the spirit of what is best for the corporation and the stockholders that this historically dysfunctional behavior needs to change. Corporations need to form new multi-stakeholder tasks forces and create new liaison positions to develop and formalize new lines of communication between the legal departments and the IT departments. It may not be what Corporate Counsel wants to do but it is definitely what they need to do.

I will admit that I have been overly aggressive with my sweeping generalities about the state of the entire industry. There are in fact numerous case studies of successful cooperation and collaboration of the legal and IT departments in the Global 2000.

I just think that we need to see more of it. And, despite what some may want, its what the the industry needs to reach the next level of success.

Legacy eDiscovery Pricing Model is Dead

2011-01-12T15:19:00.000-08:00

The King is dead. Long live the King (French: Le Roi est mort, vive le Roi!) is a traditional proclamation made following the accession of a new monarch in various countries, such as the United Kingdom.

The original phrase was translated from the French Le Roi est mort. Vive le Roi!, which was first declared upon the coronation of Charles VII following the death of his father Charles VI in 1422. In France, the declaration was traditionally made by the Duc d'Uzès, a senior Peer of France, as soon as the coffin containing the remains of the previous king descended into the vault of Saint Denis Basilica. The phrase arose from the law of le mort saisit le vif—that the transfer of sovereignty occurs instantaneously upon the moment of death of the previous monarch. "The King is dead" is the announcement of a monarch who has just died. "Long live the King!" refers to the heir who immediately succeeds to a throne upon the death of the preceding monarch.

The Legacy eDiscovery Pricing Model is Dead. Long Live the New eDiscovery Pricing Model (Legal Market Translation: end users are tired of paying way too much for eDiscovery) is a proclamation that we have been hearing for several years now. And, one that I have talked about on this Blog at some length.

2011 Could be the Year of Change? Given all of this, I believe, along with several others in the industry, that 2011 will be the year that sees an industry wide transition from per Gigabyte pricing based upon the amount of unprocessed raw Electronically Stored Information (ESI) to a more value based and more easily forecasted model. There are already some smaller regional litigation service providers that are offering flat fees for what amounts to Early Case Assessment (ECA), additional processing (if required to unpack data) and document review. However, it appears that most of the larger providers are still firmly entrenched in the legacy models.

The Cloud Will Effect Pricing 2011 is also the year of the eDiscovery moving to the Cloud with infrastructure-as-a-Service (IaaS), Software-as-a-Service (SaaS) and Platforms-as-a-Service (PaaS along with the other XXX-as-a-Service (XaaS) that will emerge (at least as a new acronym). And, this move will also have a dramatic effect on pricing. One of the value propositions for Cloud Computing is that there is NO UPFRONT COSTS FOR INFRASTRUCTURE and users only have to pay for what they use. In practice in the eDiscovery market when you start to examine private corporate clouds vs. true public clouds and what “users” will have to purchase / license, the full financial benefits of Cloud computing may not emerge immediately. However, I fully expect and would be very comfortable predicting that in the not too distant future in the eDiscovery market that there will be no upfront costs and pricing will in fact be based upon the value to the end user. The journey to that point, however, will be interesting and probably a bit bumpy.

Business Value-as-a-Service There is also a very new trend emerging that I call Business Value-as-a-Service (please not that this is my term and therefore you may not find it with Google Search or Bing) in which a large IT provider can offer to support an entire business line (e.g. corporate legal) with a all-you-can-eat comprehensive package of technology, consulting, services, training, etc. all for a flat monthly fee. The concept and the value proposition is to provide corporations with a predictable and repeatable cost structure. In some respects it is just a variation on a managed services approach. However, I think that the advent of virtualization and Cloud computing provide the added flexibility to be able to offer a truly comprehensive service for a flat fee.

2011 Theoretical Example So, what might a disruptive new pricing structure look like in 2011? One that would cause the market to chant, “Long Live the New King!”. Let’s assume that MegaCorp (my theoretical multinational conglomerate) has historically processed 25 terabytes of data with third party service providers and is looking to bring all of that in-house. Based on $500 per GB for processing (please note that this is just for example) , a 50% culling reduction, $25 per month per GB for review for 6 months and $5 per GB for Storage for another 6 months without review, the annual cost for eDiscovery for MeagCorp using the outsourcing model is about $15.5M.

If they decided to bring this in-house under a traditional model, the cost of the hardware and software would be about $5M in year one (1) with another $2M for annually for internal HR costs plus another $1.5M for Maintenance. Running these cost out over 3 years would be $11M (please note that this get really complicated when you start to factor in hardware obsolescence and upgrades, etc.). There is already a significant savings just bringing eDiscovery in house. However, what if pricing were calculated as a flat monthly fee with a five year buy in and some unlimited amount of usage?

What if we took the model and ran it out for 7 years, assumed that new hardware would have to be purchased/upgrades at least 2 times, HR expenses would remain somewhat constant and set a monthly fee of $350,000 for the full 7 years (please note that there is some amount of cost of money factored in)?

MegaCorp would have a predictable cost model, the vendor would have a build in predictable annuity and a new disruptive pricing model would be born. Please don’t read too much into my Theoretical Example as it is just “an example”.

Beyond 2011
Looking beyond pricing in 2011, I beleive that someday we will see self provisioned eDiscovery processing in the clouds with the user only paying for exactly what they use. True value based pricing. But then again, that is like science fiction in today's market.

Conclusion Everyone in the industry (with the lone exception of the service providers) have come to the conclusion that it is time for a new eDiscovery pricing model. And, I think that the market is wide open for new, innovative and disruptive alternatives. Should be an interesting year for all parties involved.

Linear Review is an Outdated Methodology

2011-01-05T09:08:00.000-08:00

As we trudge through the first week of 2011, I am going through my list of Blog posts that I wanted to comment on and the December 28, 2010 post on Linear Review by Venkat Rangan, Clearwell Systems CTO, seemed like a good place to start 2011. The post titled, “Reinventing Review in Electronic Discovery” discusses a topic that I am very familiar with and have been somewhat outspoken about it in the past couple of years. Review costs still comprise over 70% of the overall cost of eDiscovery and therefore as an industry, we need to find better ways to approach review and, more importantly, reduce the costs.

Given my background in enterprise class applications development methodology and technology, I lived through the paradigm shift when that industry shifted from legacy waterfall methodology (i.e. linear) to rapid applications development (RAD) and now agile development methodology. The increases in productivity were dramatic.

Mr. Rangan’s bases his Blog post on a excellent paper by The Demise of Linear Review by Bennett Borden of Williams Mullen. Mr. Rangan states that the paper, citing several factual data from various studies, as well as drawing parallel to other similar anachronisms of the past, makes excellent arguments for rethinking how legal review is performed in eDiscovery.

I hope that in 2011, the litigation market begins to understand and embrace both the practical and financial benefits of replacing linear review with newer and more effective review methodologies and technologies.

The full text of Mr. Rangan’s Blog post is as follows:

In a recent workshop that I attended, I had the privilege of sharing thoughts on the latest electronic discovery trends with other experts in the market. Especially interesting to me was discussing the provocatively titled paper, The Demise of Linear Review by Bennett Borden of Williams Mullen. The paper, citing several factual data from various studies, as well as drawing parallel to other similar anachronisms of the past, makes excellent arguments for rethinking how legal review is performed in e-discovery.

When linear review is mentioned, the first mental picture one conjures up is boredom. It has generally been associated with a mental state that is a result of repetitive and monotonous tasks, with very little variation. To get a sense for how bad this can affect performance, one only needs to draw upon several studies of boredom at the workplace, especially in jobs such as mechanical assembly of the 1920s and the telephone switchboard operators of the 1950s. In fact, the Pentagon sponsored study, Implications for the design of jobs with variable requirements, from Navy Personnel Research and Development Center, presents an excellent treatise on contributors for workplace fatigue, stress, monotony, and distorted perception of time. This is best illustrated in their paper:

Mechanical assembly, inspection and monitoring, and continuous manual control are the principal kinds of tasks most frequently studied by researchers investigating the relationship between performance and presumed boredom. On the most repetitive tasks, degradation of performance has typically been found within 30 minutes (Fox & Embry, 1975; Saito, Kishida, Endo, & Saito, 1972). The early studies of the British Industrial Fatigue Board (Wyatt & Fraser, 1929) concluded that the worker’s experience of boredom could be identified by a characteristic output curve on mechanical assembly jobs. The magnitude of boredom was inversely related to output and was usually marked by a sharp decrement in the middle of a work period.
How does this apply to linear review? Well, a linear review is most often performed using a review application or tool, simulating a person reading and classifying a pile of documents. The reviewer is asked to read the document and apply a review code, based on their judgment. While it appears easy, it can be one of the most stressful, boring, and thankless jobs for a well-educated, well-trained knowledge worker. Even with technology and software advances a reviewer is required to read documents in relatively constrained workflows. Just scrolling through pages and pages of a document, comprehending its meaning and intent in the context of the production request can make it stressful. To add to this, reviewers are often measured for their productivity based on the number of documents or pages they review per day or per hour. In cases where large number of reviewers are involved, there are very direct comparisons of rates of review. Finally, the review effort is judged for quality without consideration for the very elements that impact quality. Imagine a workplace task where every action taken by a knowledge worker is monitored and evaluated to the minutest detail.

Given this, it is no wonder that study after study has found a straight plough-through linear review produces less than desirable results. A useful way to measure effectiveness of a review exercise is to submit the same collection of documents to multiple reviewers and assess their level of agreement on their classification of the reviewed documents in specific categories. One such study, Document Categorization in Legal Electronic Discovery: Computer Classification vs. Manual Review, finds that the level of agreement among human reviewers was only in the 70% range, even when agreement is limited to positive determination. As noted in the study, previous TREC inter-assessor agreement notes as well as other studies on this subject by Barnett et al., 2009 also shows a similar and consistent result. Especially noteworthy from TREC is the fact that only 9 out of 40 topics studied had an agreement level higher than 70%, while remarkably, four topics had no agreement at all. Some of the disagreement is due to the fact that most documents fall on varying levels of responsiveness which cannot easily be judged on binary yes/no decision (i.e., the “where do you draw the relevance line” problem). However, a significant source on variability is simply attributed to the boredom and fatigue that comes with repetitiveness of the task.

A further observation on reviewer effectiveness is available from the TREC 2009 Overview Report, which studied the appeals and adjudication process of that year’s Interactive Task. This study offers an excellent opportunity to assess the effectiveness of initial review and subsequent appeals and adjudication process. As noted in the study, the Interactive Task involves an initial run submission from participating teams which are sampled and reviewed by human assessors. Upon receiving their initial assessments, participating teams are allowed to appeal those judgments. Given the teams’ incentive to improve upon the initial results, they are motivated to construct an appeal for as many documents as they can, with each appeal containing a justification for re-classification. As noted in the study, the success rates of appeals were very high, with 84% to 97% of initial assessments being reversed. Such reversals were across the board and directly proportional to the number of appeals, suggesting that even the assessments that were not appealed could be suspect. Another aspect that is evidenced is that the appeals process requires a convincing justification from the appealing team, in the form of a snippet of the document, document summary, or a portion of the document highlighted for adjudication. This in itself biases the review and makes it easier for the topic assessor to get a clearer sense for the document on their attempt at adjudicating the appeal. This fact is also borne out by the aforementioned Computer Classification vs. Manual Review study where the senior litigator with the knowledge of the matter had the ability to offer the best adjudications.

Given that linear review is flawed, what are the remedies? As noted in Bennett’s paper, intelligent use of newer technologies along with a review workflow that leverages them can offer gains that are demonstrated in other industries. Let’s examine a few of them.

Response Variation Response variation is a strategy for coping with boredom by attempting to build variety into the task itself. In mechanical assembly lines, response variation is added through innovative floor and task layouts, such as Cellular Layout. On some tasks, response variation may involve only simple alternation behaviors, such as reversing the order in which subtasks are performed; on others, the variety may take more subtle forms reflected in an inconsistency of response times. In the context of linear review, it can help to organize your review batches so that your review teams alternate classifying documents for responsiveness, privilege and confidential etc. Another interesting approach would be to mix the review documents but suggest that each be reviewed for a specific target classification.

Free-Form Exploration Combining aspects of early case assessments and linear review is one form of exploration that is known to offer both a satisfying experience and effective results. While performing linear review, the ability to suspend the document being reviewed and jump to other similar documents and topics gives the reviewer a cognitive stimulus that improves knowledge acquisition. Doing so offers an opportunity for the reviewer to learn facts of the case that would normally be difficult to obtain, and approach the knowledge levels of a senior litigator of the case. After all, we depend on the knowledge of the matter to be a guide for reviewers, so attempts to increase their knowledge of the case can only be helpful. Also, on a free-form exploration, a reviewer may stumble on an otherwise difficult to obtain case fact and the sheer joy of finding something valuable would be rewarding.

Expanding the Work Product Besides simply judging the review disposition of a document, the generation of higher value output such as document summaries, critical snippets, and document meta-data that contribute to the assessment can both reduce the boredom of the current reviewer as well as contribute valuable insights to other reviewers. As noted earlier, being able to assist the review with such aids can be immensely helpful in your review process.

Review Technologies Of course, fundamentally changing linear review with specific technologies that radically changes the review workflow is an approach worth considering. While offering such aids, it must be remembered that human judgment is still needed and the process must incorporate both increasing their knowledge as well as their ability to apply judgment. We will examine these technologies in an upcoming post.

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Big Week for Wisconsin

2011-01-04T13:25:00.000-08:00

Having been born and raised in Wisconsin, this has been a big week for all of us “Cheeseheads”. The Wisconsin Badgers won the Rose Bowl; The Green Bay Packers beat the Chicago Bears and made it into the NFL playoffs; and, most relevant to my Blog, the eDiscovery amendments to Wisconsin’s rules of civil procedure become effective. The amendments, affecting Wis. Stat. §§ 802.10, 804.01, 804.08, 804.09, 804.12, and 805.07, address for the first time the discovery of electronically stored information (“ESI”). Among other things, the amendments address issues including the parties’ obligation to meet and confer, the format of production, and safe harbor from sanctions when ESI is lost as the result of the routine, good-faith operation of an electronic system.

I would bet a Wisconsin Quarter that the lawyers of Wisconsin are more excited about the Badgers and the Packers than they are about the chagnes to the rules of civil procedure.

eDiscovery Trends and Predictions for 2011

2010-12-27T09:36:00.000-08:00

I guess that the my “eDiscovery Trends and Predictions” have officially become an annual post when my 8 year daughter announces that Daddy is in his office again this holiday season writing about some boring computer and legal stuff that isn’t going to happen until next year.

So, without further ado, my eDiscovery Trends and Predictions for 2011 are as follows:

Further Consolidation of the eDiscovery Industry: 2010 was the year that the larger players in the eDiscovery market continued to acquire the smaller players. Further, major Information technology providers began to realize that ediscovery was going to be the “next big thing” and therefore they began to figure out which technologies, service providers and vendors they were going to acquire.   We will see more of the same in 2011.

eDiscovery in Social Media will Mature: Social Media in the form of popular applications such as Facebook, Twitter, Texting and other portable iPhone and Android type applications crossed the threshold of widespread use in 2010. 2011 will be the year that eDiscovery “begins” to catch up and integrates Social Media into collection technology and eDiscovery best practices. Further, the courts will also begin to recognize the serious potential of electronic “smoking gun” evidence being communicated and housed in Social Media. Please note that the court system has matured at an alarming rate in regards to the impact of social media. However, there are still way too many in positions of power that still believe that Facebook and Twitter are something that their 13 year granddaughters use and not a place that actual serious evidence may reside.

The Proportionality Debate will Continue: As the amount of Electronically Stored Information (ESI) has continued to increase at an accelerating rate, the cost of eDiscovery has had a chilling effect on access to the legal system. More simply stated, in many cases the common man cannot afford the cost of litigation. As such, proportionality in eDiscovery has become a hot topic of debate in regards to reducing the overall cost of litigation. I believe that everyone should have equal access to the court systems. However, I don’t believe that this should be achieved by restricting eDiscovery. Technology is progressing at such an accelerating rate that the over cost of finding, collecting and analyzing all potentially pertinent data should continue to decrease. Therefore, I predict that in 2011, the Proportionality Debate will shift to a discussion about which technologies should be more main stream as opposed to “how much data is enough" to seem like we conducted a fair review of the evidence.

Predictive Coding will Emerge as More Mainstream: As an example of a technology that could have an effect on the Proportionality Debate, I predict that Predictive Coding or Categorization will emerge in 2011 as more mainstream.   The sometimes passionate debate will continue to rage on in regards to the viability of this technology and some will continue to argue that it just to difficult to understand how it works. However, in the end, the algorithms are actually not that difficult to understand and the potential to reduce the overall cost of eDiscovery are so dramatic that it is a trend that cannot and will not be denied any longer.

eDiscovery will move to the Enterprise: This is a carry over from both 2009 and 2010. However, it is a very important paradigm shift that will continue to re-defining the eDiscovery market in 2011 and therefore will continue to have a dramatic impact on vendors, service providers, consultants and the Information Technology (IT) departments of the enterprises that are taking on the eDiscovery task.

eDiscovery in the Cloud: It will come as no surprise that I am going to predict that 2011 will see further migration of eDiscovery technology to the Cloud. Stay tuned to my Blog for further developments and updates on this topic.

Additional Single Source End-to-end eDiscovery Offerings: It will also some as no surprise that I am going to predict that 2011 will see additional Single Source End-to-end eDiscovery platforms. The market is beginning to realize that solutions that address a single component/requirement of the EDRM are too restricting and moving data between them or trying to integrate them is just too difficult and expensive.   Therefore, in 2011, I predict that we will see more vendors taking on the task of integration and offering Single Source End-to-end eDiscovery platforms in the form of appliances and in the Cloud.

eDiscovery Workflow: Application workflow and process workflow has been an accepted component of the enterprise for many years. Therefore, as eDiscovery moves to the Enterprise and becomes the responsibility of the IT department, eDiscovery workflow will emerge as a required component.

Self Provisioning eDiscovery: As eDiscovery moves to the Cloud and into the Enterprise in 2011, I predict that the concept of flexible self provisioning will emerge as an end-user requirement.   Stay tuned to my blog in 2011 for additional thoughts and details on this topic.

Disruptive Pricing Models will Emerge in 2011: The cost of eDiscovery is still way too high and much of the costs are still being driven by legacy pricing models that reward vendors and service providers based on the amount of data that is processed. 2010 saw some providers starting to buck this trend. I predict that in 2011 the market is going to see some very disruptive pricing models that are finally going to bring eDiscovery costs in line with other like information technology processing costs.

eDiscovery will Become Part of GRC: You have all heard me talk about this emerging trend over the past several years. And therefore, I predict that in 2011 the enterprise will continue to understand that eDiscovery is actually just part of the larger requirement to provide systems and support for Governance, Risk and Compliance (GRC).

I could continue my list. However, it is the holidays and my 8 year wants to play “Just Dance 2”. So, I hope that everyone enjoys my list of eDiscovery Trends and Predictions for 2011 and has a very a Happy New Year.

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Merry Christmas and Happy Holidays 2010

2010-12-22T07:02:00.000-08:00

Where is eDiscovery Market Consolidaton Heading?

2010-11-30T09:29:00.000-08:00

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.

Is Cloud Computing Cannibalizing Legacy IT Revenue Streams?

2010-11-11T11:36:00.000-08:00

Preferred / State-of-art Information Technology (IT) infrastructure and delivery mechanisms have gone through a myriad of changes in the last 30 years. We started with centralized process on mainframes, introduced the laptop computer, move to client/server, introduced Web 2.0 and mobile computing and are now contemplating a major move to the cloud.

Each of these “paradigm shifts” required that users migrate from the old to the new and in the process disrupted the business models and the revenue streams of the hardware and software manufacturers, Independent Software Vendors (ISVs), Resellers, Value Added Reseller (VARs) and IT consultants.

In an article on the CRN.com site by Joseph F. Kovar, titled, “IBM: Cloud Computing Will Cannibalize Other Parts Of The IT Business,” Mr. Kovar sites IBM sources as saying that they are in fact forecasting that they will cannibalize their legacy business units as a consequence of their cloud initiatives.

According to Mr. Kovar, Richard Michos, vice president of channel strategy for IBM, told a group of solution providers attending the Xchange Tech Innovators conference on Wednesday that, “IBM expects to add about $3 billion of net growth to its business by 2015 but…IBM will actually grow its cloud business by $12 billion, as the growth in cloud computing is expected to erase $9 billion worth of sales of its current hardware, software, and services.”

As indicated, this is not a new trend and is a natural result of any major paradigm shift in the industry. What is interesting from my perspective is how the vendors and the consultants in the litigation services and Governance, Risk and Compliance (GRC) markets will react to this inevitable model. And, that the industry will look like after the paradigm shift is complete.

Anaysts are predicting an accelerating shift in demand for eDiscovery infrastructure and technology in the cloud in the next five (5) years within the litigation services market. And, as a result, I predict major changes in the leading vendor and service provider landscape. If IBM is forecasting change, I would advise anyone in any industry that is moving to the cloud to take note of how it will affect your current revenue stream and mix. In some cases current product lines and resulting services will fade away and be replace by completely new opportunities. In some csaes this will present the opportunity to provide migration services and maybe even technology.

Recent history has proven that many in the litigaton services and technology market are slow to change and slow to even admit that there is a change. And, many have suffered as a result. This time around, it will be interesting to watch the dynamics of how the old and the new react.

One thing for sure,it is definitely going to be an entertaining and potentially profitable time to be in eDiscovery.

The full text of the portion of the Kovar article that talks about IBM cannibalizing its legacy IT revenue stream is as follows:

IBM (NYSE:IBM) expects the adoption of cloud computing to add significant growth to its business over the next five years even as it cannibalizes much of its existing business.
Richard Michos, vice president of channel strategy for IBM, told a group of solution providers attending the Xchange Tech Innovators conference on Wednesday that cloud computing is one of four "megatrends" IBM expects to impact its goal to increase business over the next five years, and that they had better prepared for those impacts.

IBM is planning on earning $20 per share by 2015, compared to about $11.45 per share now, Michos said. "Obviously, we have a lot to do in a short time," he told the solution providers. "And we can only do it with you."

One of those megatrends is cloud computing, which IBM expects to add about $3 billion of net growth to its business by 2015. IBM is investing about $6 billion in R&D for cloud computing, he said.

However, lest solution providers think $3 billion is not a big deal to a company like IBM, Michos said that to reach that goal will require IBM actually grow its cloud business by $12 billion, as the growth in cloud computing is expected to erase $9 billion worth of sales of its current hardware, software, and services.
That cannibalism of existing business by the growth in cloud computing caused Juan Rosario, owner of Daroc Computing, an Texas, El Paso-based solution provider, to stop and think about the impact of cloud computing on his business.

"For a small businessman like me, with small shops and repair shops, the cloud will be a threat," Rosario said. "Seventy percent of my business comes from fixing things. One of the promises of the cloud is that there is no virus, no software upgrades."

Rosario said he is afraid the cloud could one day put small companies like his out of business. "I need to look at how to use the cloud," he said.

Phillip Durant, president of American Computer Enterprises, a Daphne, Alabama-based solution provider, said that Michos certainly showed the importance of being part of the move to adopt cloud computing.
"If IBM is focused on the cloud and putting $6 billion in R&D into the cloud, it shows us we need to be there," he said.

Michos told solution providers to not worry about whether IBM will swoop in and grab cloud customers from them. "Won't happen," he said. "We don't have the manpower to do that."

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eDiscovery from Database Management Systems

2010-11-03T16:43:00.000-07:00

I have spent the majority of my career building software and services companies that develop and sell enterprise class applications running on large SQL databases for the Fortune 2000. Therefore, when I read Jason Kruse’s article on the Law Technology News Blog titled, “Database Discovery Is Dubious, but Unavoidable”, I had to smile and agree.

Jason basically states that if the legal community thought that harvesting electronic evidence from email systems was difficult, they haven’t seen anything yet as extracting information from databases (where most enterprise electronic information is stored) is going to prove to be much more challenging. Further, there is going to have to be much more cooperation between the legal department and the Information Technology (IT) department.

As an enterprise application development expert, I have spent many hours trying to figure out how to get data into databases. As an eDiscovery technologist, I am looking forward to the challenge of getting it back out again. The next few years are going to be fun.

The full text of Jason’s article is as follows:

Structuring data into databases has long been a solution to store complex data that can be retrieved and reported in variable ways. That data solution, however, has a legal problem in the e-discovery context.

It took years for many litigators and judges to become comfortable with discovery of e-mail and other electronic records. But as more forms of electronic records enter into discovery disputes, lawyers are back on unfamiliar ground. "There are still types of evidence that lawyers prefer to ignore and hope will go away, the way e-mail discovery was ten years ago," says Rob Brunner, who leads the Financial and Enterprise Data Analytics practice at FTI Consulting. "And I hate to say it, but e-mail was an easy problem compared to what's next."

Brunner is speaking specifically of structured data, especially electronic evidence from databases. However, structured data includes a broad swath of content types, including common sources most might consider a document, such as e-mail. Any time a software system, whether a large, enterprise database or an e-mail server, pulls information from a number of different files and merges them into a single view, it is functioning like a database. Unstructured data is commonly defined as data that is not stored in a database or in a semantically tagged document.

Structured data is discoverable in litigation, but lawyers are finding that there is little guidance for handling it. "This is an issue that's only going to demand more attention, because we're swimming in this kind of information," says Brunner. "In trying to explain why discovery of this information is important, I like to point out that 500 out of 500 Fortune 500 companies have structured data. It's something you won't be able to avoid in many cases."

With structured data, information is in the form of separate files that are linked so that information can be pulled from different sources, analyzed, and compiled. For example, a typical corporate human resources system contains information about employees that can be viewed as individual employee records or compiled into statistics about the entire work force.

Like the mass of ice below an iceberg's waterline, the amount of structured data is often the bulk of corporate data, but is rarely seen. According to the Data Warehousing Institute, a technology research firm, approximately 47 percent of corporate data is structured in nature, compared to 31 percent of unstructured data. (The remaining 22 percent was described as semi-structured data.)

IGNORED NO LONGER
The Sedona Conference, a nonprofit legal think tank largely concerned with preservation and production of electronically stored information in civil litigation, has announced that it will publish a commentary on the discovery of information from databases after December 2010.

This will be one of the first such efforts to provide guidance for the discovery of structured data. "The commentary focuses on what is the basis of relevance in a database," says Conrad Jacoby, the founder of efficientEDD.com and editor of the forthcoming document. "Structured data is so difficult to define that we have to start by building the most basic groundwork for discovery of this information."

Unfortunately, the drafting committee found the issue of discovery of structured data so problematic that it had to scale back its ambitions. Initially, the organizers had hoped to address structured data in many forms, including the emerging problem of structured data that is accessed over the web. But in the end, the commentary only addresses database evidence, and ignored all other structured sources. "This is a complicated conversation to have and sometimes the sides talked past one another," says Jacoby. "It's a matter of vocabulary. You can have really excellent lawyers and technical people, but their vocabulary and logic are not the same. The same words can have different meanings and you can go around and around and around."

For example, Jacoby says defining a word as simple as "search" created a headache for his group. In many cases, a database only logs the first words of the text field, meaning a lot of data is not easily retrievable. "You might look at a database and assume that a database query would search all records in the database," he says. "But it turns out that some information is not indexed or searchable. So then what are you searching? Is it even possible to get all relevant information out of a database cost-effectively?"

Structured data is often important for litigation, especially for establishing damages and issues of liability. Unfortunately, it is often ephemeral and endlessly changing. Jocoby points out that automated transaction logs for many businesses are continually deleted and overwritten from point of sale systems. A cash register often keeps a record until cash out, and then the record is uploaded to a regional, then a national database, then it is often overwritten when a credit card transaction clears. "Even finding a record is hard," he says. "A record could be in multiple places or none of the expected places."

A CREDIBILITY PROBLEM
The Sedona Conference and many court systems still struggle with very basic questions, such as how to identify discoverable structured data for litigation. Databases are different in almost every organization. Even the common systems are typically customized for each customer. But even more problematic, many databases are purpose-built and understood in depth by only a few people. "The nastiest issues arise with proprietary systems," says Craig Carpenter, vice president of marketing with Recommind. "You tend find them in large multinationals and the odds are that only 15 people on the planet know how to access some of these systems."

Discovery of databases can become expensive, but for different reasons than the discovery of e-mail and other records. In e-mail, much of the cost is in human review to protect privilege when producing a collection of records. With databases, cost overruns are more likely to arise when you are trying to get information out of a system. "In many cases, pulling a single record is impossible without preserving the larger data set," says Jacoby. "That's when people say, 'fine, then give me the whole database,' and the producing party resists, and now you have a fight on your hands."

Though database files are discoverable in electronic form, courts have been reluctant to grant plaintiffs broad access to them for litigation. Courts struggle with information that is not contained in discrete documents, unlike the static artifact traditionally considered to be a document. There is little case law regarding authenticating structured data, but there are procedures that can be used to try to verify information pulled from such sources is complete.

For example, experts recommend that the most basic step to take in database discovery is to review the regular checks a database makes of the records it produces, which make sure that the results of a database search query and the production information match. Most databases are designed with complex reporting and data mining tools and lawyers can take advantage of these functions to obtain detailed reports of information being produced. "There is no industry checklist, but you can do some verification to make sure data is at least not corrupted," says Brunner.

Because information stored in a database is constantly changing, both the producing and requesting parties can manipulate data and present it in any light they choose. "Just because it comes out of a database doesn't mean it is accurate," says Jacoby. "I think courts make that mistake, and it's important to make sure that a judge understands a database record can be wrong."

Database evidence is often incomplete and misleading, and validating the integrity of data does not validate its meaning. Unlike written records, which can be read and interpreted based on their literal meanings, database records are often stripped of context when produced for litigation. "A pharmaceutical company may have 10,000 adverse records in a database for a particular drug, but how many of those are legitimate complaints?" Jacoby says. "You can slice and dice data all kinds of ways that may be statistically valid but misleading."

To head off this problem, lawyers need to be conversant in the language of structured data and be able to explain issue to the court so that records are presented accurately. Experts say that the problems of database discovery are so complicated and technical that sometimes the only way to communicate the issues is to find simple analogies to technology that laymen understand. "I testified a year and a half ago in a $250 million suit, and I struggled to explain to the judge how things work," says Brunner. "I described the system as a big calculator, as in 'you put the data into the computer and add it up to create a record.' It was an oversimplification, but it worked."

Unfortunately, e-discovery vendors have been slow to respond to this issue. Brunner specializes in this kind of discovery, but he says the industry has yet to provide a reliable, reusable road map for structured data in e-discovery as it has for other data types. "Services have developed to address the low hanging fruit like e-mail and other file types that are relatively easy to build a solution for," says Brunner. "We're just beginning to tackle the question of how you create a repeatable process for structured data."

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Building ROI for an eDiscovery Cloud Computing Model

2010-11-01T10:53:00.000-07:00

Cloud Computing is an important step in the evolution of Enterprise Information Technology Systems. And, without a doubt represents that next big paradigm shift in eDiscovery Information Technology.

As such, I plan to dedicate my blog for the remainder of the year to investigating and reporting on Enterprise eDiscovery in the Cloud. As an adjunct to this blog, I have also started a LinkedIn Group called “Enterprise eDiscovery in the Cloud”. Click Here to join this LinkedIn Group.

As a place to start the discussion, I want to present and then begin to analyze an absolutely outstanding whitepaper titled, “ Building Return on Investment from Cloud Computing”, by Mark Skilton, Director, Capgemini and other members of the Cloud Business Artifacts Project, that I found on the OpenGroup Website.

Cloud Computing is not a sliver bullet; is not going to be easy or inexpensive to implement; and, may not necessarily be the correct infrastructure and/or application delivery mechanism for either vendors or end-users within the eDiscovery market. However, done properly with an appropriate amount of planning and with the support of the “right” partners. I predict that Cloud Computing will be the “next big thing” and will propel eDiscovery technology capabilities to a level not readily available today.
The full text of the whitepaper by Mark Skilton and other members of the Cloud Business Artifacts Project is as follows;

Introduction

Cloud Computing has been described as a technological change brought about by the convergence of a number of new and existing technologies.
The promise of Cloud Computing is primarily the following key technical characteristics (see Above the Clouds [4]):

The ability to create the illusion of infinite capacity; the performance is the same if scaled for one, to a hundred, or a thousand users with consistent service-level characteristics.
Abstraction of the infrastructure so applications are not locked into devices or locations.
Pay-as-you-go usage of the IT service; you only pay for what you use and with no or minimal up-front investment costs. You typically just use the service through a connection and device.
The service is on-demand; able to scale up and scale down with near instant availability. Typically, no forward planning forecast is required.
Access to applications and information from any access point.

But this is only half the story. These technical characteristics can also be found in non-disruptive technology solutions. The rate of change and magnitude of cost reduction and specific technical performance impact of Cloud Computing are not just incremental, but can give a five to ten times order of magnitude improvement.

The Capacity-Utilization Curve

The famous graph used by Amazon Web Services illustrating the capacity versus utilization curve has become an icon in Cloud Computing. The model illustrates the central idea around Cloud-based services enabled through an on-demand business provisioning model to meet actual usage.

The Capacity versus Utilization Curve
Why this matters to business is that one of the core precepts of Cloud Computing is to avoid the cost impact of over-provisioning and under-provisioning. This is in addition to the opportunity for cost, revenue, and margin advantages of business services enabled by rapid deployment of Cloud services with low entry cost, and the potential to enter and exploit new markets.
We contend that in years from now, when Cloud Computing is seen in a historical context, the capacity versus utilization curve will be seen as an iconic model that had the same effect as previous well known business models.

Iconic Business Models
Examples of these include:

The Moore’s Law model that establishes the concept of exponential growth in computational power but has subsequently been seen in other technology areas, including storage and network
The technology hype cycle that established the emergence of innovation lifecycles, and is developed in publications by Charles H. Fine [2] and Clayton M. Christensen [3]
The Boston Consulting Group Growth-Share Matrix that can be used to show how key industrial markets and products and services undergo transitions as the maturity lifecycles emerge, grow, and recede

But what does this potential icon mean for business? Matching capacity and actual utilization on demand improves operational efficiency, but is that all there is to it? Capacity and utilization are Key Performance Indicators (KPIs). They measure how much or how little something is being used. But is this aligned and being used to generate Return on Investment (ROI)?

Race to the Bottom versus Quality of Service (QoS)

The positioning of Cloud Computing, while initially seen as a disruptive technology influence on both buyer and seller prospects, is now evolving into a trade-off between low-cost arbitrage and added value Quality of Service (QoS).

Race to the Bottom
The terms “race to the bottom” or similarly the “prisoner’s dilemma” refer to the competing drive between participants in a market driven by the need to make the greatest cost savings. The term is often seen in a negative context, as the lower costs and margins are seen as a detriment to the participants. Massively scalable services from Cloud Computing providers have the effect of driving down costs and prices, as the dynamics of competition are shifted by the presence of potentially rapid cost reductions and huge data center investments.
The counter-balance to this is the Quality of Service (QoS), and the associated Cost of that Service (CoS) that characterizes the value of the cost per unit of performance provisioned (see the discussion on the Financial Value Perspective of Moving from CAPEX to OPEX and Pay-as-you-go).
The differentiator of Cloud Computing is not just the utility infrastructure computing services, but includes all the higher-level services that enhance and build business service value. We see this as the influence and scope of the movement from IT-centric to business-centric services across a wider services continuum, with utility services for infrastructure at one end, and with business-centric software and business processes delivered as a service from the Cloud at the other.
In addition, the need to provide adequate security should be considered. People are willing to pay a little more for a service if they are assured that there will be good security measures in placed.
This issue is highlighted in this White Paper as it has a direct bearing on the Cloud Computing ROI debate and how it is measured:

Pricing and costing of Cloud services
Funding approaches to Cloud services
Return on Investment (ROI)
Key Performance Indicators (KPIs)
Total cost of ownership (TCO)
Risk management
Decisions and choices evaluation processes for Cloud services

The discussion of the market dynamics of Cloud Computing is not developed further in this White Paper, but is a recommended area of research going forward as more products and services become Cloud-enabled.

Traditional IT Compared to Cloud Computing

The iconic capacity versus utilization curve of Figure 1 provides a yardstick of current thinking in Cloud Computing provisioning. It is shown here for increasing demand, but the same model can be applied to both growth and decline of capacity demand in a periodic pattern typical of many businesses.
The following shows some of the characteristics of traditional IT compared to Cloud-Computing.
Traditional IT

Hardware is hosted on the premises of the organization and/or manage hosted.
Hardware and software is provisioned for peak demand.
Service management monitoring is used to generate forecasts of demand usage and current SLA performance.
Chargebacks and compensations are used to adjust usage and payments.
Under-provisioning and over-provisioning of capacity can result from unforeseen demand changes.
Business invests in ownership of assets that can be enhanced and extended through IT programs and development.
Changes to IT involve migration and divestment/investment issues and programs.

Cloud Computing

Hardware and/or software is hosted off-premise (public or hybrid) or on-premise as a private Cloud service.
Services are provisioned and used based on actual demand, providing this elasticity as a managed service.
Services are typically focused on short-term “burst” demand to gain cost savings over provisioning and owning the assets.
Statistical automated scaling is used to optimize the shared virtual assets.
Risk is transferred from the buyer to the seller/provider of the Cloud service.
Cloud sellers and providers seek to grow amortized economies of scale through increasing the numbers of users of the shared resources.
The IT infrastructure and operation is masked from the service user. Cloud is more than just SaaS.

New Technology Adoption Lessons from Other Industries

Understanding the characteristics of Cloud Computing can be assisted by observations from other industries that are in the process of transformation. Lessons from alternative power sources such as solar energy and wind power contain examples of issues that resonate with familiarity in the Cloud Computing context.
When comparing Cloud Computing to solar and wind energy there are similar adoption issues:

Potential unlimited energy resource
Challenges to distributing efficiently
Demonstrating its value over traditional/other alternatives

Solar Energy and Wind Power
Just taking a look at the solar energy and wind power characteristics:

Global current human demand in 2009 is 16 terawatts; this is predicted to rise to 20 terawatts by 2020 (refer to Wikipedia: World Energy Resources and Consumption).
Sunshine on earth area 120,000 terawatts (174 petawatts – 30% reflected back); that is, 60,000 times more than demand (refer to Wikipedia: Solar Energy).
100 square miles of solar farms with today’s technology could collect enough power for the whole of the USA (refer to US Department of Energy on solar energy).
Germany is a leader in solar power – a country with average to poor locality for sunshine but demonstrating leadership (refer to Wikipedia: Solar Energy).
10/15 solar farms can generate 1.3 Gigwatts = medium size coal power station (refer to Wikipedia: Solar Farm).
California law states 20% power from renewables by 2010 (refer to the California Energy Commission on renewable energy programs).
President Barack Obama Federal Renewables Policy requires 25% from renewables by 2025 (refer to the US Environmental Policy).
25% of UK electrical power could be sourced from 6000 220m tall wind turbines positioned 100 miles off-shore in the North Sea (refer to the UK Government Carbon Trust).

New Technology Adoption from a Buyer’s and Seller’s Perspective

Examining the issues of effective wind power or solar energy compared to contemporary energy sources draws parallels with the challenges we also see in defining new technology adoption.
Sellers of resources and services characteristically focus on their operation and technical development, and how they can enable effective business models for existing and potential new customers and markets.
Buyers are typically not concerned about how the sources of energy, resources, or services were generated and delivered. They seek to understand whether their businesses can be supported by the products or services, and whether these can be reliable and cost-effective. Buyers want to know the choices on offer and how they may be able to enhance or swap resources and services for improved business performance.
The following shows some of the concerns of buyers and sellers of new technology.
Buyers

Don’t care where the service comes from or what medium was used to generate it.
Does the service address the business requirement?
Is the QoS reliable?
What are the switching costs from one energy provider to another?
Is the service cost effective?
There are advocates and dissenters.
Can I use the service when and where I need it?

Sellers

Efficiencies of production compared to existing alternatives.
Storage of the service and use in service to meet on–demand needs at point of use.
The cost of (architecture) to deploy and distribute the service.
Purchasing incentives and direct governance investment.
There are advocates and dissenters.
Location, security, and access?

In Cloud Computing the common themes in engaging sellers and buyers in the new technology provisioning model includes three key questions:

How does Cloud Computing compare to traditional IT? This principally relates to the comparison of service-level performance and license costs.
What can I not put in the Cloud? Answers typically include UNIX systems, mainframes, and very high I/O applications, but pretty much anything can be co-located or hosted in an elastic virtual container environment. Beyond the technical definitions there are the business processes and provisioning models that set Cloud Computing apart from its predecessors of utility computing and virtualization.
How does Cloud Computing impact revenue and budget lines? This issue involves the cost/performance enabled by virtualization and economies of scale, and the lowered need for up-front investment. Movement of revenue to Cloud providers may need to be balanced by sale of added-value services.

Above and Beyond the Clouds

There are many definitions and viewpoints provided by the sellers of what is now termed “Cloud Computing”. Much of the vocabulary used is defined from the perspective of IT performance and capacity, and the impact of cost savings of asset ownership and variable seller service costs. Yet all these have direct cost-benefit impact on the business consumers of the end services and how they compete and deliver products and services in their industry.
Many business IT departments have addressed emerging trends through actions to drive cost reduction and leverage IT service providers’ adoption of Cloud style services. Many industry organizations and leading IT suppliers of software, hardware, and services, seeking to address their customer needs, have vigorously evaluated and followed a Cloud-style strategy. The challenges and issues are in the transition from the current traditional IT to the new potential capabilities of Cloud Computing. They must be expressed in a language that business end users can understand, and relate to investment, cost improvements, or business performance.
Closer to home in understanding the issues of Cloud Computing, we can draw upon the University of California, Berkeley RAD Lab. White Paper Above the Clouds [4]. This highly informative paper identifies the technical issues for Cloud adoption, and its potential for business benefits and technical challenges. The paper also sheds light on the value that these technical scenarios can provide to business:

Avoid missed business opportunities from under-provisioning and over-provisioning (Page 1)
Responsive Service to variable demand (Page 2)
Pursue emergent and explorative new business market opportunities hitherto unforecast or predicted (Page 2)
Perform cost associative tasks fast and lower cost (Page 2)
Decouple utility services and brokering from business front end (the “fab-less” chip foundries example) (Page 3)
Make more money from amortizing economies of scale (Page 4)
Leverage existing investments through hybrid means (Page 4)
“Anywhere” services, “border-less” delivery (Page 4)

This interpretation of the Above the Clouds White Paper in a business-issue context illustrates some interesting aspects of Cloud Computing potential.
The decoupling of resources and provisioning (what can be termed “back end”) from the “front end” business use through intermediation follows much the same argument as Why Buy the Cow [5] from Ivar Subrah on how on-demand powers the economy and The Big Switch [6] by Nicolas Carr that takes the analogy even further with distributed industrial IT services.
The business of IT becomes that of leveraging the products and services through competing platforms and channels to defend, attack, and build customers and market share (see the discussion on the Importance of a Business Perspective of the Cloud).
However, a secondary issue from this, described as a “race to the bottom” by many industry observers, arises where commodity charging lowers the cost, removing margin benefits. The counter-balance to this is the Cost of Service (CoS) and Quality of Service (QoS) charges and added value on top of the products and services. We explore this in the next section.
Even after the passing of time from the date of publication of Above the Clouds [4], the technical challenges are still evident, but they are becoming less so with the evolution Cloud services and technology.
The Above the Clouds paper famously asserts that Private Cloud is not Cloud Computing (Page1) as it is not open to the general public, which is part of the original definition. This illustrates that definitions of Cloud are still evolving, and perhaps the definition commonly assumed in the marketplace today does not necessarily require openness, though it still retains the central concepts of elastic capacity and provisioning.

Building Return on Investment from the Cloud

The central theme of this White Paper is how to go beyond the initial capacity and utilization benefits described in Cloud Computing.
The view of capacity and utilization is a technology provider/seller viewpoint which is essentially based on key performance indicators (KPIs) rather than business benefit metrics.

IT capacity, as measured by storage, CPU cycles, network bandwidth, or workload memory capacity is an indicator of performance.
IT utilization, as measured by uptime availability and volume of usage is an indicator of activity and usability.

But effective cost/performance ratios and levels of usage activity do not necessarily imply proportional business benefits. They are just indicators of business activity that are not in themselves more valuable than lower operating cost. There are, however, business metrics that translate the indicators of the capacity-utilization curve to direct and indirect benefits to the business, as illustrated in Figure 5.

Business Metrics Derived From Capacity/Utilization
These metrics are described in the following sections.

Speed of Cost Reduction – Cost of Adoption/De-Adoption

The introduction of Cloud Computing as an option transforms cost of ownership and changes the dynamics of the provisioning cycle in a number of fundamental ways.
The speed and rate of change of cost reduction can be much faster using Cloud Computing than traditional investment and divestment of IT assets. In Cloud Computing the buyer can move from a CAPEX to an OPEX model through purchasing the use of the service rather than having to own and manage the assets of that service. This responsibility is transferred to the service provider.

Speed of Cost Reduction, Cost of Change
The use of Cloud Computing to the user also potentially means a movement to a pay-as-you-go style billing model which can have different tariffs and contractual obligations compared to traditional IT ownership. These can include minimum usage periods and flexible pricing per usage profiling (see the discussion on the Financial Value Perspective of Moving from CAPEX to OPEX and Pay-as-you-go).
The key issue is the ability to adopt and remove the service either at the point of use (to scale up and down) or to make choices to use new services or change service provider.
Migration between Cloud services is still a challenge. There are portability and interoperability issues.. And hosting corporate and personal data and knowledge on the Cloud can make customers of Cloud services dependent on the providers.
There is a trade-off between the benefits of speed, cost, and Quality of Service (QoS) from a particular Cloud service provider and their ecosystem of services versus the flexibility and choice of alternative services and Cloud solutions.
The cost of change in an ROI business case is less in Cloud Computing as the choice of selected Cloud services is more stable and more cost-effective than traditional ownership.

Optimizing Ownership Use

The use of IT has become an enduring feature in all organizations today. The investment in data, knowledge, and infrastructure assets and software code now represent many lifeblood operations for businesses.
But many of the issues of cost of ownership are often decoupled from choices made during selection of new IT, and the impact on the long-term running and maintaining of these IT services and subsequent business usage is not properly considered:

Technology design choices and purchasing are often done by strategic or tactical contractual purchasing based on project requirements, with little consideration for optimizing running and maintainance over the whole system lifecycle, but
The cost of maintenance and modifications often represent a significant part of the asset lifecycle beyond initial provisioning.

The ability to “design and provision for run”, so that the choices of IT procurement are aligned with the best options and performance for long-term operation, has long been an ideal goal of business and IT. But, while technical trends such as OO, SOA, and Web 2.0 have brought functional improvements, the improvements in runtime infrastructure support have always been illusive.
A key aspect of moving to Cloud Computing is the ability to select hardware, software, and services from defined design configurations to run in production. Cloud Computing in effect seeks to bridge the design-time and run-time divide and optimize service performance. Patches and upgrades or new technology are in theory invisible to the end user of the service as they are included as part of the automatic asset management features.

Optimizing Ownership Use
Cloud Computing can help an enterprise achieve the goal of a more cost-effective asset–management lifecycle process for the IT portfolio, to optimize both design and run-time performance.
While the capacity-utilization curve can reflect overall usage, this can be broken down to identify which assets need to be supported in this way and to rationalize, consolidate, and optimize the assets that need to perform for business goals.
The key benefits to Cloud Computing ROI from a business case perspective are in the optimization of the total asset portfolio.

Rapid Provisioning

Elastic provisioning to scale up and down to actual demand creates a new way for enterprises to scale their IT to enable business to expand.
The provisioning time compression from a week to hours, for example, demonstrated by Cloud Computing sellers/providers is a means to rapid provisioning that is not just about saving time but is also defining a new business operating model.
Organizations can review and develop business plans and then deploy infrastructure and services in a more rapid and proactive way.
Customization and development, testing, and support can also been seen in a new light with the provision of IT services in a dynamic fashion targeted at business needs.
Buyers and sellers can view rapid provisioning as a marketplace of services. Sellers can offer rapid provisioning services that sustain buyer needs for existing IT services, offer choices for innovation, and enable rapid introduction of new technology.

Optimizing Time to Deliver/Execution
The impact of rapid provisioning on ROI business cases can be profound. Examples in the government/federal sector as well as financial services and consumer goods are already evident and pointing the way to the emergence of online Cloud-based marketplaces as de facto standards for current and future trading between suppliers and buyers of services.

Increase Margin (Make More Money)

One of the core precepts of Cloud Computing is to avoid over-provisioning and under-provisioning. This is in addition to the opportunity for cost, revenue, and margin advantages of business services enabled by rapid deployment of Cloud services with low entry cost, and the potential to enter and exploit new markets.
What makes Cloud Computing exciting is that the potential for business is not just the incremental change improvement but the disruptive transformational effect Cloud Computing can have from the possibilities of new business operating models.
Cloud Computing enables business to pursue new and existing markets by rapid entry and exit of the products and services. It enables enterprises to “land and expand” in markets with an infrastructure and service capacity that can grow with the business.

Optimizing Margin
Cloud Computing removes the need for additional infrastructure to test and enter markets for business (a key benefit feature particularly for small to medium size organizations).
Cloud Computing has an impact on the margin through cost reduction and through economies of scale to make more use of the same resources.
The impact on a ROI business case is that an enterprise can make more money or better use of existing investments through Cloud Computing.
There are many cases of companies large and small that can enter and develop service offerings through a “long tail” (refer to the publication by Chris Anderson [7]) approach enabled by Cloud Computing infrastructure. Existing and new markets can be attacked and entered through speculative and well-timed interventions to exploit and grow business performance.

Dynamic Usage – Elastic Provisioning and Service Management

The focus on capacity and utilization can be taken further through arrangements with Cloud Computing service providers/sellers that enable dynamic usage provisioning.
Traditional licensing associated with ownership, number of users, support, and maintenance costs and services are being challenged by the pay-as-you-go model found in on-demand Cloud Computing.
Cloud Computing is more than restructuring software and hardware and support licenses into a kind of periodic rented or lease license. It is targeting the end usage of the services at the point of real business need of the number and scope of users of the IT service (see the discussion on the Importance of a Business Perspective of the Cloud).
With either fixed usages volumes or variable functional usage, new innovative consumption models enabled by Cloud Computing allow businesses to consider using IT in a flexible and agile way.
This can range from the “freemium”, “contractless” service that you use or pay by credit card and advertizing revenues or specific pre-allocated bands of services and software functionality over a defined period of use (see the discussion on the Financial Value Perspective of Moving from CAPEX to OPEX and Pay-as-you-go).

Elastic Provisioning
Cloud Computing can change the ownership process from buyer to seller in the sense that IT becomes a commodity purchase, and buyers focus on outcome-based performance and choices.
The impact of dynamic provisioning on the Cloud Computing ROI business case is that the façade of service management becomes more “digital”. With the emergence of Internet services, it is now commonplace in residential markets for services and products to be viewed and provisioned online.
This expectation is now translated via Cloud Computing into the business world, where online service catalogs, self service, and automated services are increasingly part of the consumer experience.

Risk and Compliance Improvement

The green sustainability issue is equally valid in Cloud Computing and seen by a number of industry observers as an argument that moving into a Cloud environment will help organizations improve their carbon footprint.
This perhaps shifts the problem to the Cloud service providers as their industry potentially becomes a huge sink for electrical emissions from massive scale computing data center services.
It is expected that this challenge will be met as technological and design improvements address the energy consumption growth patterns. The benefit to the economic and emission footprint from the use of shared services is expected to have an improved impact compared to leverage of existing assets.

Green Costs of Cloud – Sustainability
A secondary effect, however, is the growth of more Cloud service users as the Cloud Computing paradigm takes off. As the cost and emission footprint per Cloud service falls, more services per cost can be consumed. As more advanced services emerge (the term “multiplicity” – see [8] – is now starting to emerge as large workload and cost-sensitive processing is moved to the Cloud and multiple processing made possible) then so can “usage creep” occur as the consumption rates further increase the usage of Cloud Computing services.
The alignment of compliance is a wider issue that includes green and legislative issues facing organizations and specific industry sector policies.
The impact on the ROI business case from using Cloud Computing services is directly relevant to sovereignty, security, and management of services risk containment. Cloud Computing domains cut across these complex issues and are directly affected by decision processes to adoption off-premise services.

Discussion: Financial Value Perspective of Moving from CAPEX to OPEX and Pay-as-you-go

Software as a Service (SaaS), utility computing, and Cloud Computing are recent themes in IT that seek to change the provisioning and utilization of IT.
Key to this is the change in cash flow and cost of capital investment.

Cash Flow

Moving to a pay-as-you-go model means the cashflow of your business is changing. Sources of revenue and outgoing cash expenditure are on a usage basis based on a unit such as time, volume, or component. Cash flow – Cash Flow after Taxes – is a financial measure of a business ability to generate cash flow through its operations. Moving from a CAPEX to an OPEX model develops the use of operational expenses rather than capital assets and the treatment of operating statements rather than balance sheet management. Cash flow describes revenue, cash, and working capital changes that flow within part of the operating expenses liquidity and available usage of funds. Adopting the Cloud Computing paradigm seeks to make more money (increase revenues) while driving capital costs down through greater efficiencies of working capital and OPEX changes. Calculations of Net Present Value (NPV) of investments often need to consider the discounted cash flows of the cost of capital (WACC) to assess the value of the investment return. Cloud Computing seeks to minimize or zero upfront investment and to drive improved asset usage ratios, Average Revenue Per Unit, Average Margin Per User, and cost of asset recovery.

Cost of Capital

Moving from CAPEX to OPEX is a change in the basis of capital investment usage as upfront and ongoing costs are changed by the Cloud Computing business model. The focus is on the ability to maximize the leverage of that capital to acquire IT and business services while minimizing the risk to the business in capital used for initial investment and ongoing maintenance charges. While moving away from investments in long-term assets may be seen as context of Cloud Computing, this implies a move towards long-term OPEX-style service where QoS and costs are still equally relevant regardless of asset ownership. The common factor is the business performance and SLA requirements.
A company with a high cost of capital (WACC) and which would benefit from bringing in their tax shield (high CFAT), is a candidate for shifting CAPEX to OPEX – but other aspects of the business context may contradict that candidacy such as availability of appropriate solutions and security constraints on using shared services. If CAPEX to OPEX is desired, then the company should be considering and evaluating outsourcing solutions, including public Cloud solutions, hybrid Cloud, and Private Cloud solutions.
Cash flow can be an important indicator if CAPEX to OPEX is the focus. Pay-as-you-go can be seen as easier on cash flow than pay-upfront. But both cash flow considerations may not necessarily exist in the same business scenario. For example, a business may want to improve cash flow through moving to a direct usage model but still retain investment in CAPEX for differentiated private business processes.

OPEX

Using an OPEX model can potentially remove and release capital that would otherwise be used for initial investment and ownership of IT assets. Alternatively, investment in a Cloud Computing platform may require capital investment and changes to the payment and funding of the service as it is amortized over a wider shared service model for economies of scale.
The cost of capital from sources of equity and cost of debt point of view can change for private and public/federal industries that have stock market/shareholders or government sources of funding.
If the overall goal is to maximize the use of capital by best use of the debt and equity funds, in Cloud Computing the use of OPEX moves the funding towards optimizing capital investment leverage and risk management of those sources of funds.

Pay-as-you-go and Pay-by-the-drink

There are other ways of getting the equivalent to pay-as-you-go besides outsourcing/public Cloud. Financing and leasing are both forms of pay-as-you-go, as is a monthly software “rental fee” – or any other form of software licensing which shifts payments into the future. A close cousin to “pay-as-you-go” is “pay-by-the-drink” – usage-based billing. This type of billing can be construed to help with cash flow, but arguably, usage-based billing is only beneficial (to the subscriber) if bill amounts are predictable and controllable. If not, then neither the subscriber or the provider can budget effectively, and consequently the subscriber pays a premium for bursting capacity, and/or the provider (and thus the subscriber) oversubscribes the resources and runs the risk of a capacity shortage (“brownout”).
If the billing basis is not tied to business activity or business outcome metrics, then most commercial utility service buyers typically opt for a monthly or annual baseline fixed rate. In other words, of the billing is tied to metrics which the business can predict and control (business metrics) then the preference is for usage-based billing: but if the billing is based on IT infrastructure and/or application metrics which the business cannot readily correlate to the business activity enabled, then fixed rate billing is preferred. Likewise, residential buyers of utility services such as cell phone service are being offered fixed rate monthly billing to ease budgeting.
The following section examines some of the metrics and performance indicators that drive business towards the Cloud Computing value model.

Cloud Computing Key Performance Indicators and Metrics

Cloud Computing introduces an expanded context for service-oriented business and IT.
Developing ROI models that show how Cloud Computing adoption can benefit both business and IT consumers and providers involves examining the key technology features and business operating model changes.
This section gives an overview of ROI models to support Cloud Computing assessments and business cases in two aspects:

Key Performance Indicator ratios that target Cloud Computing adoption, comparing specific metrics of traditional IT with Cloud Computing solutions. These have been classified as cost, time, quality, and profitability indicators relating to Cloud Computing characteristics.
Key Return on Investment savings models that demonstrate cost, time, quality, compliance, revenue, and profitability improvement by comparing traditional IT with Cloud Computing solutions.

The overview of Cloud Computing ROI models considers both indicators and ROI viewpoints.
Figure 12 shows an overview of Cloud Computing ROI models and KPIs.

Cloud Computing ROI Models and KPIs

Cloud ROI Cost Indicator Ratios

Figure 13 shows the cost indicator ratios, and outline explanations are given below.

Cloud Computing ROI Models – Cost Indicator Ratios
Availability versus recovery SLA:

Indicator of availability performance compared to current service levels

Workload – predictable costs:

Indicator of CAPEX cost on-premise ownership versus Cloud

Workload – variable costs:

Indicator of OPEX cost for on-premise ownership versus Cloud; indicator of burst cost

CAPEX versus OPEX costs:

Indicator of on-premise physical asset TCO versus Cloud TCO

Workload versus utilization %:

Indicator of cost-effective Cloud workload utilization

Workload type allocations:

Workload size versus memory/processor distribution; indicator of % IT asset workloads using Cloud

Instance to asset ratio:

Indicator of % and cost of rationalization/consolidation of IT assets; degree of complexity reduction

Ecosystem – optionality:

Indicator of number of commodity assets, APIs, catalog items, self service

Cloud ROI Time Indicator Ratios

Figure 14 shows the time indicator ratios, and outline explanations are given below.

Cloud Computing ROI Models – Time Indicator Ratios
Timeliness:

The degree of service responsiveness
An indicator of the type of service choice determination

Throughput:

The latency of transactions
The volume per unit of time throughput
An indicator of the workload efficiency

Periodicity:

The frequency of demand and supply activity
The amplitude of the demand and supply activity

Temporal:

The event frequency to real-time action and outcome result

Cloud ROI Quality Indicator Ratios

Figure 15 shows the quality indicator ratios, and outline explanations are given below.

Cloud ROI Quality Indicator Ratios
Experiential:

The quality of perceived user experience
The quality of User Interface (UI) design and interaction – ease-of-use

SLAresponse error rate:

Frequency of defective responses

Intelligent automation:

The level of automation response (agent)

Cloud ROI Profitability Indicator Ratios

Figure 16 shows the profitability indicator ratios, and outline explanations are given below.

Cloud ROI Profitability Indicator Ratios
Revenue efficiencies:

Ability to generate margin increase/budget efficiency per margin
Rate of annuity revenue

Market disruption rate:

Rate of revenue growth
Rate of new market acquisition

Cloud ROI Savings Models

Figure 17 shows the savings models, and outline explanations are given below.

Cloud Computing ROI Savings Models
Speed of time reduction:

Compression of time reduction by Cloud adoption
Rate of change of TCO reduction by Cloud adoption

Optimizing time to deliver/execution:

Increase in provisioning speed
Speed of multi-sourcing

Speed of cost reduction:

Compression of cost reduction by Cloud adoption
Rate of change of TCO reduction by Cloud adoption

Optimizing cost of capacity:

Aligning cost with usage, CAPEX to OPEX utilization pay-as-you-go savings from Cloud adoption
Elastic scaling cost improvements

Optimizing ownership use:

Portfolio TCO , license cost reduction from Cloud adoption
Open Source adoption
SOA re-use adoption

Green costs of Cloud:

Green sustainability

Optimizing time to deliver/execution:

Increase in provisioning speed
Reduced supplycchain costs
Speed of multi-sourcing
Flexibility/choice

Optimizing margin:

Increase in revenue/profit margin from Cloud adoption

Discussion: The Importance of a Business Perspective of the Cloud

From a business perspective, the way an organization operates differentiating business processes and their Quality of Service (QoS) is key to business operating success. Identifying competitive business processes as well as standard commodity operations will improve the focus of innovative market growth and cost of service optimization activities made possible by business models based on Cloud Computing opportunities.
Just focusing on infrastructure improvements may result in cost rationalization but may miss the impact and value of applications and business processes to the end customer. QoS is an essential ingredient in evaluating the business effectiveness. The elements of QoS are made up of infrastructure, resources, activities, and services spanning the whole lifecycle of business.

Amortization of Economies of Scale

In Cloud Computing the operating challenges experienced from one customer can be proactively fixed for all the other customers of the Cloud service by using a shared platform. Amortization of problems is just one example of how a Cloud solution can achieve more favorable QoS levels. So, value can be leveraged from amortizing economic economies of scale across the collective membership potential of a service ecosystem created by the Cloud.

Business Portfolio Focus

Just looking at Cloud Computing from a technical infrastructure point of view is potentially missing the wider picture of the impact of technology on the business.
Overall, what matters is defining the value to business. Value can be defined in many ways. It does not just mean the financial values of Total Cost of Ownership (TCO) and Return on Investment (ROI), but can also mean customer value, seller provider value, broker value, market brand value, corporate value, as well as technical value of the investment.
Your business is a portfolio of business processes. Using portfolio management techniques, group your business processes into three domains where the processes in each domain have common IT enablement solution selection criteria (for example, differentiating based on IT, differentiating not based on IT, and not differentiating), and apply the solution selection criteria.
The business perspective also includes consideration of whether using Cloud services can help facilitate interactions with business partners or partner organizations – for example, by using SOA or EDI through the Cloud – and whether using Cloud services may endanger any existing interactions, where suppliers of data impose particular conditions for handling confidential data.
The work of the Cloud Business Artifacts (CBA) Project in The Open Group Cloud Computing Work Group is seeking to identify the key Cloud buyer questions and in a language business can understand and use to target solutions to meet real business requirements.

Conclusion

Cloud Computing is an important stage in the development of IT systems, comparable with the emergence of the mainframe, the minicomputer, the microprocessor, and the Internet.
Cloud Computing can provide many advantages over conventional approaches to IT provisioning, which can translate into significant improvements in ROI. But what makes it particularly exciting is that its potential effect on business is not just incremental improvement, but disruptive transformation through new operating models.
This White Paper provides an analysis of how to build and measure ROI that will help businesses to reap the benefits of Cloud Computing, and take advantage of its potential for incremental improvement and disruptive transformation of business processes.
Our understanding of Cloud Computing is currently at an early stage. This is an initial analysis. ROI models will evolve as the technology matures. This evolution will be reflected, and key indicator ratios will be described in more detail, in future deliverables of The Open Group Cloud Computing Work Group and its Cloud Business Artifacts and Cloud Business Use-Cases projects.

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eDiscovery in the Cloud is Obviously Working

2010-10-13T09:17:00.000-07:00

eDiscovery in the cloud is obviously working as this week Autonomy. a global leader in eDiscovery and GRC infrastructure software for the enterprise, announced that they are now managing over 17 Petabytes of email, documents, and multimedia data on 6,500 servers on 8 data centers around the world. Seventeen Petabytes is equal to more than 11 times the size of the 10 billion photos on Facebook, or 226 years of HD video.

I think that this announcement answers questions about whether or not the enterprise will allow its data outside the firewall. And, to a certain degree answers the debate about the future of cloud computing in the eDiscovery and GRC markets.

As a cloud based, software-as-a-service (SaaS) evangelist of the past 10 years, I am really pleased to see that cloud based computing is gong mainstream and gaining momentum within the enterprise. And, I am even more pleased to see these trends in eDiscovery and GRC market.

However, as I am also a best-in-class advocate and evangelist, it is disappointing to see that a vendor with a monolithic solution based on a proprietary database (IDOL) seems to have taken the lead in cloud based computing. Don’t get me wrong, I am very impressed with what Autonomy has accomplished and have tremendous respect for their technology. That being, said I am now curious about market penetration and acceptance, hosted data amounts and SaaS based application utilization by best-in-class component technologies in the same markets that Autonomy is playing.

We all know about the success of salesforce.com. I wonder which technology vendor or technology vendors will take on Autonomy with an more open systems best-in-class type approach and rise to the level of success as a salesforce.com?

In some respects, the answer to the question of who is competing with Autonomy may be found in the fact that there are no other providers that have put all of the “best-in-class” solutions together along with workflow management under a single enterprise class data center. And that each of the individual SaaS based technology providers is only marketing a component of the overall solution and therefore doesn’t really have a single source solution to compete with Autonomy.

So, is the answer that some service provider needs to bring all of this together? I have been studying several potential candidates over the past 12 months and will be reporting on their offering(s) and their potential impact on the market before the end of the year. Stay tuned.
The full text of the Autonomy press release is as follows:

Cambridge, UK and SAN FRANCISCO – October 12, 2010 – Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software for the enterprise, today announced that Autonomy's private cloud computing platform has reached a new data processing milestone, extending its lead as the world's largest private cloud. Autonomy private cloud now manages over 17 Petabytes of email, documents, and multimedia data on 6,500 servers on 8 data centers around the world. Seventeen Petabytes is equal to more than 11 times the size of the 10 billion photos on Facebook, or 226 years of HD video.

The continued dramatic growth of Autonomy's private cloud is the result of Autonomy's unique, meaning-based approach to cloud computing, as well as the rapid adoption for multichannel marketing applications. Powered by Autonomy's Intelligent Data Operating Layer (IDOL), Autonomy's private cloud automatically recognizes concepts and patterns in the billions of files it ingests and indexes every day. The ability to automatically understand the meaning within all forms of data provides a significant advantage to the customer, whether it's a compliance officer or lawyer responsible for archiving and reviewing emails, video, and social media posts around a particular case, or a chief marketing officer looking to deliver the most relevant and proven content to a website visitor in real-time.

As a result, Autonomy is now the dominant leader in a range of private cloud computing applications. Autonomy is driving rapid uptake amongst marketers looking for a cost-effective, fast, and turnkey platform for hosted marketing applications. For instance, a marketing team can form a virtual chain with its network of design and advertising agencies, to securely collaborate on the development of rich media content. Autonomy's cloud-based marketing modules include Autonomy Optimost, Autonomy TeamSite, and Autonomy Virage MediaBin.

Likewise, corporate legal departments are increasingly turning to Autonomy to form a virtual private chain with their law firm partners, in order securely collaborate on relevant information for a particular investigation or case. This cloud-based approach to eDiscovery results in radically compressed timeframes for the eDiscovery process. Autonomy's private cloud processed 36,000 eDiscovery audits year-to-date, producing 48 Terabytes of eDiscovery data. Autonomy's cloud-based information governance modules include Autonomy Consolidated Archive, Early Case Assessment, Introspect, Legal Hold, Records Manager, Supervisor, and iManage WorkSite.

"Most technology providers consider cloud computing to be nothing more than making the contents and applications in a digital storage box accessible via the internet," said Mike Lynch, CEO of Autonomy. "However, Autonomy's meaning-based approach to cloud computing brings intelligence to a range of applications, from archiving to eDiscovery to marketing. Autonomy provides the ideal platform for our Protect and Promote customers, who are dealing with an increasing array of content to govern and apply policy to, produce for eDiscovery investigations and review, and who are seeking greater agility in launching multichannel campaigns that resonate with their customers."
Autonomy's private cloud is hosted in state-of-the-art and high-security data centers. The data centers are under 24/7 surveillance, and each one undergoes annual Statement of Accounting Standard number 70 or "SAS 70" audits. Two fully synchronized, geographically separated systems provide complete data and system redundancy and parallel processing of all tasks. The design addresses all aspects of multi-tenancy, such as multiple firewalls and virus protection, and is ideally qualified to support the performance and volume requirements that are necessary for processing the rapidly expanding number of corporate formats and unified communications – including all forms of text, audio, and video.

About Autonomy
Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software for the enterprise, spearheads the Meaning Based Computing movement. IDC recently recognized Autonomy as having the largest market share and fastest growth in the worldwide search and discovery market. Autonomy's technology allows computers to harness the full richness of human information, forming a conceptual and contextual understanding of any piece of electronic data, including unstructured information, such as text, email, web pages, voice, or video. Autonomy's software powers the full spectrum of mission-critical enterprise applications including pan-enterprise search, customer interaction solutions, information governance, end-to-end eDiscovery, records management, archiving, business process management, web content management, web optimization, rich media management and video and audio analysis.

Autonomy's customer base is comprised of more than 20,000 global companies, law firms and federal agencies including: AOL, BAE Systems, BBC, Bloomberg, Boeing, Citigroup, Coca Cola, Deutsche Bank, DLA Piper, Ericsson, FedEx, Ford, GlaxoSmithKline, Lloyds Banking Group, NASA, Nestlé, the New York Stock Exchange, Reuters, Shell, Tesco, T-Mobile, the U.S. Department of Energy, the U.S. Department of Homeland Security and the U.S. Securities and Exchange Commission. More than 400 companies OEM Autonomy technology, including Symantec, Citrix, HP, Novell, Oracle, Sybase and TIBCO. The company has offices worldwide. Please visit http://www.autonomy.com/ to find out more.

Autonomy and the Autonomy logo are registered trademarks or trademarks of Autonomy Corporation plc. All other trademarks are the property of their respective owners.

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