Time for the Next Generation of Cloud Leadership

The cloud computing market is the now the "big thing" and there are hard revenue facts to back up that claim.  As an example, independent research firm Forrester Research expects the global cloud computing market to reach $241 billion in 2020 compared to $40.7 in 2010, according to a new Forrester report called “Sizing the Cloud”. This same Forrester Report indicates that although Infrastructure-as-a-Service (IaaS) is going to capture a significant share of this revenue, the Software-as-a-Service (SaaS) market will grow to to $92.8 billion by 2016.

This rapid growth is a classic technology market paradigm shift.  And, paradigm shifts, even in the fast paced world of Information Technology (IT) are often very hard for most people to grasp. It is not that they are necessarily resistant, lack intelligence or don't want to move forward.  The truth is that we see through a lens that is familiar and the unfamiliar is hard to grasp, especially if it requires us to think differently. The challenge is that the familiar will often not take us into the future. The world changes, and as it does the familiar often becomes our enemy, not our friend.

Interestingly, when change around us is a rapid as the move to cloud computing, we often cling to the familiar because it provides us with stability when in reality the familiar is destined to keep us from meeting new opportunities in our changing world. Think Kodak. While they clung to the familiar the world changed and they were caught unable to catch up. The familiar was their nemesis.

I see the same dynamics at play in the cloud computing market.  And, although I am not predicting an epic cloud computing failure on the level of a Kodak, I do predict some surprising changes in in both the vendor community and among major enterprises as a result of lack of leadership in successfully navigating the cloud.This begs the question about whether or not it might be time for the next generation of cloud technology leadership?

In 2011, I just got a chance to read a really interesting article titled, "Above the Cloud: The Next Generation of Cloud Leadership", published on November 9, 2011 by Darren Cinti, Matt Aiello and Jason Kranz. The basic premise of the article is that to fully deliver on the promise of cloud computing, cloud service providers (CSPs), Software-as-a-Service (SaaS) providers and customers will all require some new and highly specific leadership abilities.

Having just completed and published an in depth study of Information Governance and eDiscovery Practices for Cloud Service Providers (CSPs) that found several alarming flaws in cloud leadership with both vendors and the enterprise, I re-read the 2011 article by Darren Cinti, Matt Aiello and Jason Kranz with a more informed perspective.

General Issues with Cloud Provider Leadership

The current crop of cloud technology leaders on the vendor side of the equation have done an amazing job of monetizing the cloud during the early adopter phase of the technology adoption cycle.  The early Cloud Service Provider (CSP) leaders from organizations such as Amazon and RackSpace identified the demand for off site storage and dedicated hosting facilities and built the IT infrastructure to meet those demands.  And, these early bets have paid off as industry analysts estimate AWS to be a billion-dollar business with a 10% profit.  However, to continue to grow this business, CSP leadership is going to have to venture out beyond the outsourced data center and storage model into the IT solutions and managed services arena.  And, although organizations such as AWS with its Marketplace offering and  are showing signs of understanding this quickly evolving paradigm shift, I am not convinced that the leadership completely understands the subtle nuances of moving into software solutions.

As an example, as I found from the hundreds of interviews that I did with many of the CSP executives, 98% did not understand even the most general requirements for information governance or eDiscovery and didn't believe that they (as a CSP) had any need to provide such services.  At first I was perplexed by this response.  But, after further reflection, it began to make sense.  After all, why would an organization that had built a billion dollar business literally overnight need to consider changing their business model and expanding their offerings?

Darren Cinti, Matt Aiello and Jason Kranz answer this question in their article by stating that it is not only a matter of what markets to pursue and services to offer, but also a matter of business model innovation, which is a more rarefied strategic talent.  Does this mean that the current CSPs are "one trick ponies"?   This is probably the case for many that can't adopt to the new paradigm.  However, as indicated, organizations such as AWS seem to be at least making an attempt to expand its offerings.  However, I am going to contend that even AWS is going to have to bring in new leadership that understands this new software solutions paradigm to be successful.

This leads us to an examination of the hundreds if not thousands of Software-a-Service (SaaS) providers.  Building upon the multi-billion dollar success of salesforce.com, application developers funded by VC's looking for the next big ".com" throughout the world have jumped into the SaaS fray offering literally just about any type of software solution that you can imagine. However, many are having trouble "Crossing the Chasm" from early adoption and success to a full blown and financially viable business model.  Possibly, that reason is that most of the early SaaS companies were and still are started and run by technologists.  However, it probably takes a sales, marketing and customer services leader to take them to the next level.  And, in the world of SaaS, these next generation leaders are hard to find.

Darren Cinti, Matt Aiello and Jason Kranz quoted the CEO of a SaaS provider who asks, "How do you monetize the customer long term?" Answering that question requires the ability to find the right combination of services, delivery, and internal resources in a rapidly evolving competitive landscape to produce a reasonable profit for the provider and real value to the customer. Bottom line, it take a next generation leader.

The last group that I am going to comment on in regards to cloud providers are the big legacy software providers such as Oracle, Microsoft and IBM.  Historically, these giants have offered their legacy software to corporations under large and very expensive enterprise wide license schedules with 20%-40% annual maintenance and millions of dollars in associated custom programming and services to ensure that these systems work.  Corporate buyers didn't really like this model but it was the only game in town.  As the age old saying goes, "an enterprise IT buyer was never going to lose their job by choosing IBM whether the solution worked or not".

With the advent of SaaS over the past 5 years, the legacy providers now have competitive.  As an example, why would an enterprise of any size not license salesforce.com on a per seat basis and not have to pay for any of the IT infrastructure costs?  The answer is that you wouldn't.  And therefore, the legacy providers have been forced to respond.  However, it has not been as easy as you may think.  Offering a SaaS solution requires planning and time.   These organizations just can wake up one morning and decide that starting today they are going to offer SaaS solutions.  They either have to build new applications from scratch or acquire an existing code base.  Further, once they have the new SaaS offering in place, they then have to go to their installed base and begin the sales discussion that they now offer the option of SaaS.  And, this process is wrought with danger as it signals to customers that SaaS is now an option.  As a result, many decide that they should begin looking at alternative vendors.  In short, many legacy providers have experienced client cannibalism at best (competition between the legacy software sales team and the new SaaS sales teasm) and loss of clients to competitors at worst while they attempt to make the transition to offering the option of SaaS.

None the less, these legacy vendors have few options.  Therefore, Oracle, Microsoft and IBM have all jumped into the cloud game with some pretty spectacular IaaS, PaaS and SaaS offerings.  However, it has not been without at least a "pound of flesh" as I know many legacy software sales executives that were making a million plus per year and have been replaced with telemarketing sales people selling and supporting SaaS solutions. Once again, successfully making this transition to the cloud is going to take next generation leadership.

General Issues with Cloud User Leadership

I am not going to rehash all of the operational and financial savings that can be realized by moving to the cloud.  Instead, I am going to comment on the leadership aspects of what the enterprise  needs to do to be successful leveraging the cloud.

Most Global 2000 organizations have very competent IT leaders that run massive international organizations with multi-million dollar budgets.  However, how many of these leaders truly understand the value of the cloud and how many are willing to dismantle these massive organizations in the spirit of doing what's right for their share holders? And maybe an even more fundamental question is how many Global 2000 Board of Director members and C level executives understand the value of the cloud and are directing their IT executives to move forward with cloud migration plans?  The answer to both of these questions is "not very many" and therein lies the gap in leadership.

Darren Cinti, Matt Aiello and Jason Kranz state that in organizations that employ the cloud, the focal point will inevitably be CIOs. They will have to understand how cloud computing can best support the business, both operationally and strategically. They will have to work collaboratively with other functions and parts of the business to realize the greatest possible value from the cloud and to uncover additional uses. And they will need to be trusted advisers to their CEOs, helping assess the trade-offs, risks, and advantages of various uses and deployments of the cloud for the company. More specifically, CIOs will need a comprehensive understanding of the issues in key business and operational areas.

I contend that the Global 2000 needs a new breed of CIO, one that is less technical and more business savvy with the ability and willingness to lead and not worry about maintaining previous IT empires.  I contend that is it going to take next generation cloud leadership.

Conclusion

The cloud is no longer something that is going to possibly happen and may just be a fade.  The paradigm shift to the cloud is underway and therefore technology providers and technology users alike need to examine their current leadership and determine if a change may be required to at least provide the opportunity for success.

It is not that current leadership is not necessarily resistant, lack intelligence or don't want to move forward.  The truth is that we see through a lens that is familiar and the unfamiliar is hard to grasp, especially if it requires us to think differently. The challenge is that the familiar will often not take us into the future. The world changes, and as it does the familiar often becomes our enemy, not our friend.

Darren Cinti, Matt Aiello and Jason Kranz conclude that as cloud computing develops over the next two to three years, leadership will be critical to the success of providers and buyers alike. Cloud customers whose CIOs understand and address those critical business and operational issues – security, integration of services, technical talent, legal/privacy/compliance, and vendor management –will get a head start on using the cloud more extensively and realizing its benefits: cost-savings, ability to access services on any device anywhere, reliability, scalability, and the agility those attributes confer on the business. For technology product and services companies, the impact of the new model of cloud delivery is even broader, affecting almost all functional areas of the organization from engineering and development and customer service through sales and marketing up through the key roles in the C-suite. Those providers that get it right will win the race to be market leaders while laggards will likely fall by the way side. In this new world, CEOs and Boards of provider companies and buyer companies will need to make sure that they are hiring executives with the right competencies – and they will have to move expeditiously as more companies compete for cloud talent that is already in very short supply.

Under any circumstances, being a part of this paradigm shift is nothing less than spectacular.

Labels: Amazon, AWS, Cloud, Cloud Computing, Cloud Service Providers, CSPs, eDiscovery, IBM, Kodak, Microsoft, Oracle, Rackspace

posted by Charles Skamser @ 11:34 AM 0 Comments

Virtual eDiscovery Arrives

On Monday April 17, 2012, X1 Discovery out of Pasadena, California announced a major release of X1 Rapid Discovery, it’s Early Case Assessment (ECA) and Search platform.  This latest version of X1 Rapid Discovery (X1RD) is actually a major rewrite of the architecture and user interface resulting in the first virtual Early Case Assessment (ECA) platform that users can remotely deploy to wherever Electronically Stored Information (ESI) is located.

I had to the chance to talk with Skip Lindsey, EVP Sales and Business Development at X1 Discovery about the genesis of  X1RD.  He indicated that they wanted to build on the success that they had seen providing advanced search and ECA to traditional enterprise clients with ESI behind a firewall by expanding support to the cloud.  However, they didn’t want to be just another “me too” ECA cloud platform.  Therefore, they decided to expand X1RD capabilities to run as a virtual application designed specifically to run in a private or public cloud environment in addition to its legacy support for traditional enterprise environments.  He also indicated that they wanted X1RD to be highly scalable, easy for users to install and manage remotely, easy for users to move the virtual components to the data and conducive to a very disruptive pricing model.  I think that they accomplished those goals and most certainly have earned a first mover status in the ECA platform market.

In today’s complex enterprise environment, X1RD should be a very attractive multi-purpose ECA alternative for users that currently have ESI scattered around behind their corporate firewall, in private clouds and maybe even held captive with one of the Cloud Service Providers (CSPs).  The major paradigm shift is that X1RD enables users to move the ECA process to the ESI whereas current ECA technology requires that ESI be collected and moved to the ECA platform either manually or over slow Internet pipes. 

Current ECA Best Practices
Currently, an enterprise faced with responding to a legal matter has to identify where all potentially responsive ESI may be located, figuring out what they need to harvest and then collect and aggregate the ESI to a centralized physical location before they can even start the process of analysis and first pass review.  This process can take weeks and months and cost thousands if not millions of dollars.  Adding ESI stored with a Cloud Service Provider (CSP) has only exacerbate the situation by adding another layer of complexity, more time and more cost.  For a more detailed overview of virtualization, please see “Virtualization is the Key to Future eDiscovery Software”.

X1RD Changes the ECA Paradigm
X1RD completely changes the ECA paradigm.  X1RD users have the ability to remotely load the X1RD virtual application into the computing environment of their choice as long as they have the appropriate credentials to do so.  Once loaded, uses can then remotely configure, though a drag and drop user interface, as many X1RD virtual ECA processing engines as may be required to collect, index and process a given set of ESI. Please note that users will have the flexibility to configure X1RD on a single physical machine with multiple virtual machines or on multiple physical machines, each with multiple virtual machines.  Because X1RD has done such a good job of masking the complexities of configuring and managing this virtual environment from users, its value may be lost on many users.  However, this flexibility has tremendous operational and financial benefits.

As an example, because X1RD enables users to break up a large processing task into multiple smaller processing units that can  run on very inexpensive machines, it doesn’t require users to purchase and/or provision high-end and expensive servers.    X1RD enables users to either leverage the computing resources that they currently own foregoing the requirement to invest in large expensive servers that will sit idle for most of the time waiting for the next big ECA job.

X1RD installs in a matter of minutes and the user interface is attractive, easy to understand and provides everything that a litigation knowledge worker requires to search, analyze, review, tag and generate a load file in today’s eDiscovery environment.   Further, for those clients that don’t want to run their own X1RD environment, X1RD lends itself to a managed services model that enables Managed Service Providers (MSPs) to run X1RD for clients from a remote location. 

X1RD and the Amazon Cloud
As recently reported on the New York Times Bits Blog, in a post titled, “Amazon Creates a Software Rental Store”, Amazon.com’s Amazon Web Services (AWS) business, facing looming competition for its business of renting online data storage and computing, is introducing a store where customers will be able to rent business software from a number of third-party providers, including I.B.M., Microsoft and SAP.  And now, X1RD is the first virtual ECA platform listed in the Amazon Web Service (AWS) ISV catalog.

Although there are other ECA and Document Review platforms running in the Amazon Web Services (AWS) cloud such as NextPoint, there is a very distinct difference as AWS clients will be able to remotely load X1RD into their AWS computing environment and configure it to collect, search, analyze, complete first pass review and generate a load file without having to move any ESI. Its the paradigm shift that I eluded to earlier that enables users to move X1RD to the ESI as opposed to the legacy approach of moving ESI to the ECA platform.

Currently, X1RD will be able to provision and configure computing power, memory and storage from AWS as required for any ECA processing task large or small, provision X1RD from X1 Discovery and be processing ESI in a matter of hours. Once completed with the responsive ESI exported, users will be able to shut down this ECA environment and only pay for what they utilized.  It’s a much different model and the industry has ever seen.

With the announcement of the AWS partnerships with IBM, Microsoft and SAP, it will be interesting to see what AW does with the X1RD opportunity from a marketing perspective.  As indicated in “Amazon is Overlooking the Financial Value of eDiscovery”, there is a latent demand for eDiscovery and Information Governance in the Cloud.  And, in fact not providing such services may in fact be a barrier to entry for some enterprise clients.  I am very encouraged by the announcement that AWS has added X1RD to its ISV catalog and optimistic that AWS may in fact understand that providing Information Governance, Search and eDiscovery may be one of the keys for Amazon to increase the $1.19 Billion in revenue that AWS posted for 2011 to a much higher level than could have ever been imagined with just IaaS or even standard PaaS services.

Disruptive Pricing
X1 is also pushing the pricing envelope by pricing X1RD at $1,000 per day or $5,000 per week for “all you can eat” or process.  As an alternative, they also offer the option of a $25,000 perpetual license with 20% annual maintenance.  This pricing model is very aggressive and is going to put downward pressure on the legacy model of pricing ECA processing on a per gigabyte basis.

Final Observations and Comments
As indicated in “eDiscovery will follow the Cloud Computing Boom”, with the expanding volume of ESI in the cloud, the demand for Information Governance and eDiscovery is sure to follow.  However, just moving your ECA or Document Review platform to the Cloud is not necessarily the answer as it still requires users to move large amounts of ESI to that platform.  The most efficient model is to move the ECA application to the ESI.  And, it appears that with the release of most recent version of X1RD that X1 Discovery has become a first mover in the race to capture this market.

In addition, in today’s complex enterprise environment, X1RD should also be a very attractive multi-purpose ECA alternative for users that currently have ESI scattered around behind their corporate firewall, in private clouds and maybe even held captive with one of the Cloud Service Providers (CSPs).

As has been reported on several other blogs about this subject, with X1RD forging the way, other ECA vendors are sure to follow. However, that may be easier said then done,   With years of experience designing, developing and maintaining complex enterprise class applications, I would suggest that many current legacy ECA vendors have code bases that would be literally impossible to move to the cloud as self-provisioning and remotely configurable virtual apps that can run on almost any class server.   The only option would be a complete re-write which in many cases is a very dangerous path for a software vendor with a large installed based as it opens up that base to explore alternatives such as X1RD.  As such, I am not convinced that  many legacy ECA vendors will follow this trend.

One thing is for sure, the demand to process ESI that is in the cloud is going to continue to increase. And, it appears that users are going to have several options to address this demand; moving the ESI to the ECA platform or moving the ECA platform to the ESI.

Either way, the next few years are certainly going to be exciting times in the eDiscovery in the Cloud market.

Labels: Analytics, Cloud Computing, Cloud Service Providers, Early Case Assessment, ECA, eDiscovery, IBM, SAP

posted by Charles Skamser @ 8:50 AM 0 Comments

Evolving from eDiscovery to Information Governance

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.

Labels: Autonomy, Early Case Assessment, ECA, eDiscovery, HP, IBM, Information Goverance

posted by Charles Skamser @ 9:28 AM 0 Comments

eDiscovery from Magic to Mainstream Technology

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

Labels: Copier, Costs, Early Case Assessment, eDiscovery, FRCP, IBM, OCR, Paper, Scanning, Typewritter, Xerox

posted by Charles Skamser @ 12:18 PM 0 Comments

The Post Autonomy World

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.

Labels: Autonomy, Cloud, eDiscovery, HP, IBM, Informatoin Governance, Symantec

posted by Charles Skamser @ 11:17 AM 0 Comments

Cloud Computing is Maturing

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.

Labels: CEO, CFO, Cloud Computing, Compliance, eDiscovery, ESI, Forrester, Fujitsu, IBM, Information Governance

posted by Charles Skamser @ 3:50 PM 0 Comments

Gartner Predicts eDiscovery Market at $1.5 Billion by 2013

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.

Labels: Autonomy, CaseCentral, Early Case Assessment, ECA, eDiscovery, Exterro, Gartner, IBM, kCura, Nuix

posted by Charles Skamser @ 1:52 PM 2 Comments

Where is eDiscovery Market Consolidaton Heading?

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

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

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

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

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

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

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

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

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

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

Labels: Autonomy, Consolidation, eDiscovery, EMC/Documentum, IBM, Integreon, IronMountain, Market Trends

posted by Charles Skamser @ 10:29 AM 0 Comments

Is Cloud Computing Cannibalizing Legacy IT Revenue Streams?

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."

Labels: Cannibalize, eDiscovery, IBM, Paradigm Shift

posted by Charles Skamser @ 12:36 PM 0 Comments