In 2017, the challenge for technology providers in the legal and data discovery spaces appears to be less about defining offering requirements and validating market needs and more about developing and delivering solutions that focus on specific tasks and processes that streamline the discovery of data and the conduct of eDiscovery.
The development of technology solutions typically revolves around a horizontal approach to extending offerings, a vertical approach to extending offerings, or a combination of horizontal and vertical approaches to extending offerings. In the legal and data discovery space in 2017, it appears that horizontal and vertical development will include:
These development approaches are being driven in the legal and data discovery space by many challenges1 including:
In determining market validation and market opportunity for data and legal discovery offerings in 2017 through the lens of end-user requirements, offering development approaches, and data discovery challenges, it appears there are three general markets that highlight the need for a discovery offering’s capabilities (validation) and what end users are ultimately willing to pay for those capabilities (market opportunity). These three markets are the legal discovery market, the data discovery market, and the SaaS market.
Definition: Electronic Discovery (Legal Discovery) is the process of identifying, preserving, collecting, processing, searching, reviewing and producing electronically stored information that may be relevant to a civil, criminal, or regulatory matter.2
The market for eDiscovery software and services spending worldwide in 2016 as aggregated from industry analyst reports and compiled by industry research blog, ComplexDiscovery3, highlights that spending should approximate $8.285B in 2016 growing at a rate of 13.15% CAGR to $13.597B in 2020.
Within the overall market, the software specific sector of eDiscovery spending is at approximately $2.21B in 2016 and expected to grow at a 14.75% CAGR to $3.849B in 2020. About 70% of software market spending is expected to be off-premise (SaaS/PaaS/IaaS)4 by 2020 with the remaining software spend being toward on-premise offerings. In both the software and service sector, approximately 63% of worldwide spending is in the United States.
The eDiscovery software market is currently addressed with software offerings that range from second-generation offerings that were designed for eDiscovery but not for integration or automation to fourth-generation offerings that were designed for eDiscovery, for integration, and for automation. The fourth-generation of offerings are beginning to experience accelerated usage as older generations of eDiscovery technologies are starting to become inefficient in addressing the growing amount of data and data formats organizations are dealing with as well as struggling with the requirement of law firm and legal departments to accomplish more with less staff and at lower costs. Additionally, as security continues to grow in importance, offerings that leverage the benefits of both cloud and on-premise approaches are becoming increasing attractive to law firms and corporations as they provide an optimal balance of economic efficiency and data security.
The unique combination of advanced capability, increasingly accepted delivery model, integrated automation, and hybrid security approach, positions fourth-generation, private, protected cloud offerings well for current and future success in addressing the software market opportunity. Additionally, vendors offering a complete portfolio of professional services with fourth-generation SaaS solutions are well positioned to address the services market opportunity.
Definition: Data Discovery is the exploration of patterns and trends within unstructured data with the objective of uncovering insight and driving action.5
While there is no specific defined market for data discovery based on the numerous technologies, markets served, and problem-solving approaches used as individuals and organizations seek to discover data by exploring of patterns and trends within unstructured data with the objective of uncovering insight and driving action, there definitely are estimated market sizes for very specific markets. The market opportunity for two specific markets, the Governmental, Regulatory and Compliance (GRC) market and the File Analysis market, are provided below to highlight areas and opportunities for vendors seeking to extend electronic discovery beyond the point of collection and to the point of data creation.
The Governmental, Regulatory, and Compliance Market
The enterprise governance, regulatory, and compliance market (GRC) includes software and services that enable tasks to include audit management, risk assessment, compliance and policy management, and information security and data management. According to Markets and Market Research6, the GRC market is expected to grow from $19.42B in 2016 to $38B by 2021, at a CAGR of 14.4%.
Offerings that combine legal discovery and data discovery capabilities to address the understanding of data type, location, and value, as well as containing tools to streamline audits, investigations and litigation appear well positioned to take advantage of the growth opportunity offered by organizations seeking to solve GRC-related challenges.
The File Analysis Market
File analysis software enables data architects, legal and security professionals, storage managers, and business analysts to understand and manage unstructured data stores, reduce risk and costs, and make better information management decisions for unstructured data.
The opportunity for file analysis software, according to Gartner7, is that approximately 50% of midsize and large enterprises will utilize file analysis for managing unstructured data and by 2021, 80% of current file analysis solutions will be embedded into risk mitigation, storage optimization, and information governance platforms.
Offerings leveraging file analysis-type technology in their data discovery capability appear to be well positioned to compete with data and legal discovery competitors seeking to increase their capability to extend discovery to the point of data creation.
Definition: Software as a Service is software that is owned, delivered and managed remotely by one or more providers. The provider delivers software based on one set of common code and data definitions that is consumed in a one-to-many model by all contracted customers at anytime on a pay-for-use basis or as a subscription based on use metrics.8
The market for cloud-based services and infrastructure spending across all segments, to include SaaS, PaaS, and IaaS, reached $110B in 2015 with a CAGR of 28% according to research published by Synergy Research Group9. Within the cloud-based services and infrastructure market, SaaS offerings grew at approximately 30% annually with private and hybrid cloud offerings growing at approximately 45% annually.
SaaS-delivered platforms from private, protected cloud environments, appear to be well positioned to take advantage of the market acceptance of cloud-based services as well as benefit from its unique private, protected cloud implementation.
On a topical level, the market opportunity for legal and data discovery will probably be manifested in numerous articles and research reports highlighting emerging terms and trends including:
With unique opportunities, terms and trends, it appears that 2017 will be a year filled with numerous occasions for end-users and solution providers to address the challenges of data and legal discovery and benefit from the market opportunities for earlier data discovery (horizontal development) and deeper legal discovery (vertical development).
1ComplexDiscovery. (2016, December 2). Revenue and Profits on the Rise? eDiscovery Business Confidence Survey – Fall 2016 Results. Retrieved from http://www.complexdiscovery.com/info/2016/12/02/revenue-and-profits-on-the-rise-ediscovery-business-confidence-survey-fall-2016-results/
2Grossman, M., & Cormack, G. (2013). The Grossman-Cormack Glossary of Technology-Assisted Review. Federal Courts Law Review, 7(1). Retrieved from http://www.fclr.org/fclr/articles/html/2010/grossman.pdf
3@ComplexD. “EDiscovery Market Mashup: Worldwide Software and Services Overview.” Blog post. @ComplexD. N.p., 30 Apr. 2016. Web. 22 Nov. 2016. (Mashup Taken From Sources to Include Gartner Research, IDC, Transparency Market Research, Market and Markets)
4PaaS = Platform as a Service, IaaS = Infrastructure as a Service.
5All, A. (2014, September 18). Data Discovery Is Changing Business Intelligence – Enterprise Apps Today. Retrieved from http://www.enterpriseappstoday.com/business-intelligence/data-discovery-is-changing-business-intelligence.html
6Market and Markets. “Enterprise Governance, Risk, and Compliance (eGRC) Market.” Enterprise Governance Risk Compliance Market by Component & Software – 2021. Market and Markets, 16 July 2016. Web. 22 Nov. 2016.
7Dayley, Alan, Guido De Simoni, Jie Zhang, Garth Landers, Marc-Antoine Meunier, JP Corriveau, and Julian Tirsu. “Market Guide for File Analysis Software.” Gartner Technology Research. Gartner, Inc., 19 Sept. 2016. Web. 22 Nov. 2016.
8Gartner, Inc. (n.d.). SaaS – Software As A Service – Gartner Research. Retrieved from http://www.gartner.com/it-glossary/software-as-a-service-saas/
9NV, Synergy Research Group Reno. “2015 Review on Cloud Market from Synergy Research Group.” Synergy Research Group. Synergy Research, 7 Jan. 2016. Web. 22 Nov. 2016.