Executive Interview with CEO of CloudNine Discovery

History of CloudNine

CloudNine Discovery is a Houston based software and services company that has been around for about nine years.  The company's flagship product is OnDemand®, which was one of the very first Software-as-a-Service (SaaS) applications on the market for online document review and eDiscovery.  In addition, CloudNine backs up its software offering with a full set of  litigation services as may be required to support the requirements of large firms and corporations engaged in a lawsuit.
"We developed a solid reputation for project management and got to know our partners really well, so we got additional national projects and numerous inquiries from our partners requesting to offer our software to their clients. The software demand continued to grow and ultimately became our company focus while we assisted our partners with project management expertise in transitioning from providing scanning services to a full range of eDiscovery services, continued Mr. Jenkins.

Mr. Jenkins was also proud of the fact that CloudNine Discovery has been included in several lists of fastest growing companies, including the Inc. 5000 list in 2008, 2009 and 2011, Houston FastTech 50 in 2007 and 2009, and Houston Fast 100 in 2008 and 2009.

The Importance of SaaS Technology in eDiscovery

As the founder and CEO of one of the first SaaS technologies companies in the eDiscovery market, I was curious to learn what Mr. Jenkins thought about the importance of SaaS.

"I see it as very important.  I found it interesting that Gartner predicts that by 2013, SaaS and business process utilities will account for 75% of the expenses derived from processing, review, analysis and production of ESI," stated Mr. Jenkins."It’s also been reported that the Cloud Computing and Storage market is set to grow from 40.7 billion dollars in 2011 to more than 241 billion dollars by 2020.  (Forrester forecasted in May 2011)  This means more and more data will be stored in the cloud and companies will be looking to SaaS technology to help with discovery,: continued Mr. Jenkins.

I can appreciate Mr. Jenkins predictions about SaaS.  In fact, I predict that within five years that most eDiscovery technology will be SaaS based and most Electronically Stored Information (ESI) will reside in the cloud.  As such, it appears that CloudNine is in a great position.

Monolithic vs. Best-in-class Technology

I asked Mr. Jenkins if he thought that a monolithic solution that supported the entire EDRM or a best-in-class integrated approach was better.

"I believe in the best of class approach," stated Mr. Jenkins.  "There are so many areas of the EDRM, it would be cost prohibitive for any one company to have the best expertise in every single area.  Companies with dedicated resources focused on one area are going to have an advantage in supporting that particular area of the lifecycle versus a monolithic platform.  Many of the monolithic platforms have come together through acquisitions and those don’t always work out as planned," added Mr. Jenkins.
This is always an interesting debate.  Some buyers want a single vendor to call knowing that the trade-off is that they may not get the best solution across the board.  Other buyers are more interested in finding and integrating the best solutions and are willing to spend the extra resources to have to deal with multiple vendors.

Something else to think about in regards to this issue is that as the industry embraces SaaS based technology in the cloud, it is going to be theoretically easier to integrate disparate applications in a much more seamless manner than has been the case outside the cloud and behind the firewall.  I don't see the monolithic solutions going away, I just see the opportunity for users to have many more choices in the various categories of the EDRM.

CloudNine in Five Year

I am always curious about a founder's vision and therefore I asked Mr. Jenkins about where he thought ClouldNine would be in five years.

"As our three-time presence on the Inc 5000 list demonstrates we are focused on continued growth. Our company mission is to simplify the discovery process through innovative technology, so we will continue to develop in our core expertise, which includes self-service SaaS and managed cloud hosting," stated Mr. Jenkins.

If history is any indicator of the future, than CloudNine has a very bright future. However, I would add that with all of the consolidation going on within the eDiscovery market that providers such as CloudNine might in fact be an attractive takeover target (Please note that I am note aware of any pending transactions involving CloudNine.  I am merely stating my opinion about its future).

Click Here to read the full text of Mr. Jenkin's interview on the eDiscovery Solutions website.For more information about CloudNine, please visit it's website at: http://www.cloudninediscovery.com/.

Labels: Cloud Computing, CloudNine, eDiscovery, Regional Litigation Service Providers, Saas, Software-as-a-Service

posted by Charles Skamser @ 2:36 PM 0 Comments

Which Channel is Winning the eDiscovery Wars?

Having spent the better part of the last twenty (24) months meeting with the General Council of many of the Fortune 2000, Partners from many of the largest law firms in the country, regionally based litigation service providers, many of the well know litigation consulting organizations and most of the leading litigation technology vendors, I have a very in-depth understanding of the litigation market requirements and what solutions are going to work and which ones are not. However, I am still trying to figure which channel is ultimately going to win the eDiscovery Wars.

First of all, let me point out that there is a war going on in this market because according to the 2008 Socha-Gelbmann Electronic Discovery Survey, the eDiscovery market is going to be a $4.67 billion market by 2010. But, the question is who is the ultimate end user and who do they want to buy there eDiscovery solutions from?

The Ultimate End Users and who makes the Buying Decisions
The ultimate end users in this market are the parties to the law suite with defendants leading the way with their deep pocketed insurance partners. However, historically and for a variety of reasons that are quickly changing, end users have conceded the management of litigation to outside council and therefore the control over the buying decisions and the "channel" to the end users was through the law firms.

As such, there are thousands of regionally based litigation service providers that service their local law firms and most of the litigation technology vendors and consulting organizations have a law firm channel. Further, over the past ten (10) years, most of the largest law firms in the country and many of the smaller law firms have also setup their own litigation service organizations.

So, it would seem that the law firms are winning the eDiscovery channel wars. Or are they?

Law firm Partners Questioning What they Do Best - Practice Law
Over the past twenty (24) months, I can even count how many law firm partners have told me that they went to law school to either change the word or make a lot of money or both and are not sure how they woke up one morning to find out that they were actually running litigation technology and service companies. Well, this is a bit of an exaggeration on their part. But, I have gotten the message or question loud and clear; why have law firms morphed into technology and document service providers? The answer is obvious; money and control. We forget sometimes (probably not that often) that law firms are a business and therefore are not different than any other business in their pursuit of higher revenues, greater profit margins and all of the other lofty goals of capitalism.

However, with the accelerating volume of Electronically Stored Information (ESI) and the changes to the Federal Rules of Civil Procedure (FRCP), I believe that we have reached a cross roads or what I would call a paradigm shift in the market. As a result, it is my observation that both the end users and the law firms are starting to realize that providing litigation technology and services in this new eDiscovery environment is no longer a game for amateurs. Or, put a different way, it may be best left to the technology and consulting professionals to figure out.

Therefore, I predict that law firms will be displaced as the defacto channel into the eDiscovery market. Obviously, they will always be the best source for references and leads and will also always have to be a partner in almost any matters. However, with ten (10) years I don't see many of them being in the litigation services and technology business. It's not what they do best.

Service Providers
The next group in the channel mix are the regionally based litigation service providers that have been providing local law firms with copying, scanning, blowbacks and other printing services. Over the years these organizations have formed a very strong bond with their law firm clients and have filled a very important market niche. However, with the accelerating volume of Electronically Stored Information (ESI) and the changes to the Federal Rules of Civil Procedure (FRCP), I believe that we have also reached a cross roads or what I would call a paradigm shift in regards to the regional service providers. As a result, it is my observation that both the law firms and the regional service providers are starting to realize that providing litigation technology and services in this new eDiscovery environment is a much different business model and takes a much more technologically complex staff to offer than the standard bread and butter litigation services that they have been offering in the past.

Therefore, I predict that over the next five (5) years regional service providers will either have to dramatically change their product offerings with a more technology and/or technology services bent or they will fade from the landscape like the dinosaurs.

The eDiscovery Consultants
The eDiscovery consulting game is a relatively new endeavor that has proven to be extremely profitable. As already indicated, with the accelerating volume of Electronically Stored Information (ESI) and the changes to the Federal Rules of Civil Procedure (FRCP), the end users, the law firms and in some cases the regional service providers have all been turning to the eDiscovery Consultants for help. And, at a very hefty per hour price tag I might add.

However, I am not convinced that this actually represents a litigation services channel. In most circumstances consultants want to increase their billable hours and stay as agnostic as possible in regards to partnering with and/or recommending required litigation technology.

The End Users
As with all paradigm shifts, these are interesting times for determining channel alignment. The end users are beginning to figure out that eDiscovery is a very technology oriented endeavor with the requirement for their internal Information Technology (IT) organizations to be heavily involved. Therefore, the solutions and third party relationships that they require to be successful are are more similar to the types of relationships that the IT department has then the legal department has historically had. As such, and with the IT players in tow, they are becoming less inclined to turn to their law firms or their regional service providers for answers or solutions. Alternatively, and with prompting from their IT organizations, they are turning to the new eDiscovery consultants and the eDiscovery technology vendors directly for assistance.

So, based upon my myopic twenty four (24) month US wide observation of this market, the winner of the eDiscovery Channel wars is going to the the litigation technology vendors with assistance from the eDiscovery consultants.

Postmortem on Law Firms and Service Providers
Without seeming to hedge my prediction, I have to say that the imminent demise of both the law firm and the regional service provider in the brave new world of eDiscovery is probably an exaggeration. However, for all the reasons that I have pointed out, it is going to become more and more difficult for these two groups to compete without making a commitment to make some dramatic changes and some "investments" in their organization to keep pace with the demands of the marketplace.

Labels: eDiscovery, eDiscovery Channel, eDiscovery Consultants, Law Firms, Paradigm Shifts, Regional Litigation Service Providers

posted by Charles Skamser @ 2:44 PM 1 Comments