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Tuesday, December 18, 2007

Top E-Discovery Software Vendors: Responses to Yesterday’s Post

Yesterday’s post about the top e-discovery software vendors prompted a couple of interesting comments. George Socha posted a response here, disagreeing with my conclusions; and someone else (“top8”, whoever that is) asked whether one should “always listen to the top 5-10 songs on the list…[or] use the top 5 software products, regardless of one’s situation.”

To clarify, I whole-heartedly agree with George that there is no such thing as a “best” e-discovery service provider – as George says, it really does depend on your situation and I can think of many cases where a smaller, less well-known firm is a better choice than a national brand.

But e-discovery software is different for 2 reasons. First, and most importantly, in software there are increasing returns to scale which do not exist for service providers. The more companies that use a particular software product, the better that product becomes. Speaking from personal experience, when you have a large number of demanding customers, they force you to make your product better – and give you the money to do it. That’s why most technology markets are incredibly concentrated: everything from databases (Oracle) to search engines (Google) have a single dominant player. We are still in the early days of the e-discovery software market, but ultimately I expect it will follow suit and consolidate around a very small number of players.

The second difference between e-discovery software and service providers is that enterprises cannot change their software vendors as easily as they can change their service providers. Once software is deployed behind the firewall, it is fiendishly difficult to get it out, requiring enterprises to pick a single product for all cases. By contrast, it is easy to change service providers, so enterprises can pick the most relevant expertise on a case-by-case basis.

To answer the question posed by “top8”, I am not suggesting that everyone should only read Harry Potter, watch American Idol, and (Heaven forbid!) listen to Britney Spears. Those are matters of personal taste where diversity is what makes for a rich, vibrant society. But there are very good reasons why so many corporations rely on Veritas for backup software, Oracle for databases, Symantec/McAfee for anti-virus, IBM for developer tools, and so on. In software, the best products only get better. That’s why, 5 years from now, the list of top e-discovery software vendors will be even shorter.


Rob Robinson (InfoGovernance Engagement Area) said...

Excellent overview Aaref. For those who have operated in the technology realm, your comments hit the nail on the head when it comes to the factors effecting the life of a "solution" - whether provided as a pure product or as a product packaged as a service. More attention = more focus. More focus = more assignment of assets to improve the product/service. When a customer purchases an enterprise software product, the relationship moves from one of "what can you do for me today" to one of "how can we partner to better solve the technology challenge" because both vendor and customer then truly have an investment (time and money) in the game.

Additionally, as eDiscovery matures, it would seem it would follow the normal course of technology solutions - that is moving from service oriented delivery (dependent on a service provider)to product oriented delivery (ability to depend on internal resources trained on the product). Examples of this abound. Yes, there are reasons one may chose a service vs. a product - but all things being equal - most (not all) customers prefer to have control over the "solving of a technology problem" vs. being totally dependant on a solution provider to solve that problem. In eDiscovery - it may be that we are at the point of "Crossing The Chasm".

top8 said...

Thank you for addressing my question. I agree to the new logic. The best products tend to get better because they are used. Being on top of the list helps for that.

This is the sign of times - masses of users determine the success of the products and money comes later.

However, with the increasing democratization of the web, new contenders get better chances, using new technologies and new infrastructures such as Amazon EC2, The list of top provides may get smaller, but the providers have to work hard to make sure they are still on the list.

Top8 is the name of my blog and company.

Aaref Hilaly said...

Thanks for sharing your perspective. It's always great to hear from you.

I agree -- the technology world is incredibly competitive and firms can just as easily go down as up. So yes, today's top e-discovery software providers need to work hard to remain there in an increasingly competitive world.


Pushkar said...


Your blog and the comments posted on it are very intriguing. I won't hold you to this, but if you had to pick 3 companies that will survive this watershed moment, which three would you pick and why?



Aaref Hilaly said...

Hi Pushkar,

That’s a really hard question, given that the e-discovery software market is still its early, high-growth phase. My guess is that there will be 1-2 pure-plays like Clearwell who establish themselves as large, stand-alone e-discovery software companies; and, 1-2 companies (e.g., Guidance, Symantec) who will leverage their leadership in other markets (e.g., forensics, archiving) to also be major players in e-discovery. But really, it’s an open playing field right now, which is what makes this market so interesting.