Gartner Releases 2012 “Magic Quadrant for E-Discovery Software”

Gartner recently released its now yearly report “Magic Quadrant for E-Discovery Software.”  The report analyzes the biggest names in the eDiscovery software field and categorizes them into one of four groups: Leaders, Challengers, Visionaries, or Niche players.  The report focuses heavily on consolidation within the industry as well as the EDRM lifecycle, placing a high value on companies and software that service the entire EDRM lifecycle.

The writers designated six companies as leaders:

- AccessData

- Autonomy

      - Guidance Software

      - Recommind

      - Symantec (Includes Clearwell)

      - ZyLAB

To be leader the company had to offer functionality that covers the complete EDRM lifecycle.  Additionally, offering predictive coding technology was an important positive factor in this analysis.

Some changes from the 2011 report include the exclusion of Epiq and IPRO because they no longer met at least one criteria for inclusion in the Magic Quadrant, the inclusion of KPMG and UBIC in the Magic Quadrant, and the change in status for FTI and kCura from leaders to challengers. 

kCura and FTI were no longer considered leaders because both focus on the right hand side of the EDRM only, rather than focusing on the complete model.  This fact emphasizes how much weight the Gartner writers placed on servicing the EDRM lifecycle.  To be clear, the report noted that kCura’s Relativity product is still a best in class product.  It also spoke very highly of FTI noting “[t]he company performs well all over the world, whereas others in its class do not necessarily have the presence or ‘bench strength’ to cover the globe, which is what many corporations need.”  Nevertheless, it likewise noted that many vendors are responding to the market with “broader end-to-end” functionality.

I agree with the report that the industry is moving toward greater consolidation and products that do it all, and I have written about that movement on this blog (http://endangeredanimals8.blogspot.com/2012/04/consolidation-of-services-and.html)  However, I believe that Gartner placed too much emphasis on this factor by making it a requirement to be a leader in the Magic Quadrant.  Certainly, one-stop products and companies that do it all offer convenience, and perhaps cost savings, and can absolutely be the best choice for you and your companies.  Likewise, I continue to think that more and more products will move in that direction.  However, at this point in time, choosing a product that does it all means sacrificing quality and functionality for convenience; products and companies that service the entire EDRM lifecycle may be competent at each area, but they are not going to be the best at each area.  Depending on your situation, choosing multiple products that are the best product available for each task may be a better option.  You should ask yourself, do you want one product that does everything, but only one of those things really well, or do you want three or four products that are all the best at what they do?  There is no one answer, but it is something to consider, and this will remain a choice you have to make until there is one product that is the best at everything, which could take a while.

Although the Gartner report is subjective and by no means does it analyze every product or company in the industry, overall, the creators did a good job and the report provides some interesting information and analysis.  The report concludes that the eDiscovery software industry will remain relevant while becoming more competitive, and that consolidation and the proliferation of one-stop shops and products will continue.  This prediction is spot on.

Consolidation of Services and Functionality: A Growing Trend in the eDiscovery Field. Will It Cost Customers in the Long Run?

Reed Smith, a US based international law firm, announced this week that they would be bringing Relativity in-house, continuing their expansion into the eDiscovery market (in 2011, the firm established a team dedicated to eDiscovery that has grown to over 50 lawyers). This marks a developing trend in the industry; many law firms are taking deliberate steps to ensure they keep eDiscovery work in-house and take back any business they may have lost to traditionally lower cost eDiscovery vendors and service providers. From the firms’ perspective, this makes sense; keep as much business inside the walls as possible, even if that means making capital expenditures.

Reed Smith indicated they would utilize Relativity primarily for document review, which is a relatively cheap (from the firms perspective) and easy way for the firms to make money off their clients. Money, that previously often went to eDiscovery vendors who offered superior technology. Many other firms are employing a similar strategy. With the acquisition of programs like Relativity, the vendors no longer clearly offer superior technology, and decisions about who performs the work become more contingent on relationships, which are often to a law firm’s advantage. In the long term, this is smart business for the firms.

From the clients’ perspective though, this could mean higher costs, as law firms traditionally charge higher rates than their eDiscovery vendor counterparts do. For the eDiscovery vendors, it obviously hurts them, as Firms like Reed Smith will take some, although not all, business that the vendors previously attracted because they had better technology and tools.

Software companies are likewise consolidating the functionality they provide either via development or via acquisition. One need not look any further than KCura’s Relativity for an example of the former, while Symantec ‘s acquisition of Clearwell is a clear example of the latter. Both KCura and Symantec offer products regarded as best in class, and both are aggressively expanding those products’ capabilities, sometimes at the expense of other less dynamic companies and products that not that long ago were consider must-haves in the eDiscovery world.

KCura is aggressively developing Relativity, once limited to review functionality, on both the front and backend of the review process. KCura is improving Relativity’s processing capabilities, adding the ability to ingest and process raw/native data, and creating tools like Fact Manager, which allows users to track and manage important facts, people, and documents within Relativity. The first improvement is a direct attack on programs like Law Prediscovery, while the later provides direct competition to CaseMap, a Lexis product.

By developing and adding these new functions, KCura has not only increased Relativity’s value and utility, but it is threatening formerly symbiotic products by poaching their customers; if you are going to use Relativity for a given matter, and especially if you are going to use it for multiple matters, it simply makes more sense to use the functionality built into Relativity and included in the price rather than license and pay for multiple products. While products like Law Prediscovery and CaseMap and will remain viable options for those not using Relativity, they will also begin to see their customer base shrink because of Relativity, which could mean difficult times ahead if they are unable to adapt quickly.

What all of this consolidation and expansion likely means is that it is going to be more difficult for the small and niche services and software providers to survive. eDiscovery shopping may become more convenient, as one-stop shops and applications become more common, but it may also become more expensive, as customers are forced to pay law firm prices and purchase programs that do everything and have a price tag to show for it.