Last week marked the release of the 4th annual Gartner Magic Quadrant for eDiscovery Software report. In the early days of eDiscovery, most companies outsourced almost every size-able project to vendors and law firms so eDiscovery software was barely a blip on the radar screen for technology analysts. Fast forward a few years and the enterprise ediscovery software market has ballooned to a $1.8 billion business in 2014 that is expected to grow to $3.1 billion by 2018.
Growth in the enterprise eDiscovery software business has increased steadily in recent years because most organizations have elected to manage much of the eDiscovery process internally rather than paying vendors and law firms to manage the process for them. Advancements in eDiscovery technology have made this fundamental shift from an “outsourcing” to “insourcing” model possible because modern technology enables organizations to automate an eDiscovery workflow that once was manual, costly and prone to risk. More specifically, instead of paying service providers huge sums of money to collect, process and cull electronically stored information (ESI), forward thinking organizations have increasingly leveraged technology to automate these steps to save time and money.
Not surprisingly, the software companies who have been able to automate the steps in the eDiscovery process are overwhelmingly represented in Gartner’s “leader’s quadrant” this year. For years, the holy grail for eDiscovery software providers and the companies they serve has been to provide a single solution that manages the entire eDiscovery process. Minus a few exceptions, most of the providers in the leader’s quadrant began their quest for the holy grail by developing a single point solution to handle a particular step in the eDiscovery process such as “legal hold” or “collection.” Since then, these same companies have continued the race to integrate point solution functionality into a single eDiscovery technology platform because that is what customers demand.
What is noteworthy for prospective buyers is that the solution providers in the leader’s quadrant have chosen to run the race for the Holy Grail differently. Some have continued to focus more on an outsourcing model which is counter-intuitive considering the Magic Quadrant report is focused on “enterprise” software. Similarly, at least one provider has driven the majority of their revenue by leading with professional service engagements which also strays from the pure play enterprise software approach. For those in the leaders quadrant who do focus almost exclusively on selling eDiscovery software to enterprises, some have focused on growing their point solution offerings by licensing third party technologies or by acquiring other companies. Only a few have grown their eDiscovery solution portfolios by developing their own code across a comprehensive and integrated offering that includes legal hold, network collection, Office 365 integration, advanced search and filtering, early case assessment and predictive coding technology.
The difference between these approaches may seem trivial to attorneys or others who may not be technology gurus. However, as the competitive landscape continues to blur, identifying providers who have written their own code for all modules in their eDiscovery platform may be the most critical differentiator between the many solutions offered today. This is a lesson many customers have learned the hard way by investing small fortunes in so-called eDiscovery “platforms” that were nothing more than loosely cobbled together point solutions and/or 3rd party software that did not work well together. The reason this is true is simply because integrating different computer programming language and technologies together can be painstaking and is frequently unsuccessful. Perhaps this is a challenge the Open Source movement will help change over time, but for now, making different technologies work together to offer an effective eDiscovery platform can be difficult.
Although this year’s Gartner Magic Quadrant did not change significantly, I suspect that the next few years will see greater separation between providers who have truly integrated eDiscovery platforms and those who do not. In addition to being able to cover the entire EDRM spectrum, other key integration points should include the ability to integrate with archiving technology and cloud solutions like Microsoft Office 365. Inclusion of an integrated and transparent predictive coding module is also becoming “must have” technology for any provider to legitimately claim “end to end” functionality. While some vendors in the leader quadrant can patch together workflows using acquired or partner products, IT and legal users often suffer because of the complexity associated with deploying, managing, maintaining and using such solutions. We are distinguished by our “eDiscovery-in-a-box” approach and simplicity for legal users. Perhaps Gartner's 2015 or 2016 eDiscovery Magic Quadrant will reveal whether or not my observation about the future of eDiscovery is accurate. In the meantime, please feel free to read this year’s Magic Quadrant and share your own observations with us.
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