Entries from February 2009 ↓
February 26th, 2009 — eDiscovery
George Socha released the 78-page EDRM search guide draft v. 1.14 on February 6th for public review and comment. The guide is meant as educational commentary for legal professionals and litigation software and service providers, including guidelines in developing “appropriate and effective search methods.” The guide is the work of 18 people from 15 organizations – some of the boldfaced company names I picked out from the document changes being Autonomy-Zantaz, Clearwell Systems and Vivisimo, as well as a number of law firms and others.
The guide offers a step-by-step scenario of litigation response involving two fictitious companies and their alliterative employees (e.g. Alex Arnold of Alpha Corporation and Bonnie Benson of Beta Corporation) embroiled in an intellectual property dispute. This example is used to illustrate the workflow that goes along with the EDRM. It was instructive and sometimes entertaining, for those of us who read mystery novels and are interested in the chase, anyway.
It also includes an in-depth primer on search methodologies and syntax, which tickled my librarian bone. This section would be at home in a library school curriculum, right down to the search query treatment of diacritics. Of course the flip side of this is that average users might find it too technical. Overall it’s a good read for anyone interested in search and information retrieval. Later sections deal with search documentation and validation of results.
I found the guide to be comprehensive in addressing the litigation response process and strategies for defensibility. It is straightforward in listing the actions that professionals in each role (general counsel, outside counsel, custodians, IT personnel, witnesses) must take, and overall it achieves a good balance of outlining the legal process and the resulting steps taken with each fictitious party’s ESI. I think it elegantly addresses one of the big criticisms of e-discovery products, references and approaches – namely that they are not always a happy marriage of IT and legal expertise, or do not encourage collaboration and mutual understanding between these two groups.
Rob Robinson of Orange LT has logged some early commentary on the guide here. Like Rob, I was a little surprised that there was not a section for judicial rulings regarding search. On the other hand it’s nice to read practical advice that is not mired in legal-speak. There are certainly plenty of other sources that provide history and explanation, and with the rapid succession of decisions being handed down lately it might be difficult to keep it current for the sake of the guide.
February 25th, 2009 — Content management
We have more year-end financials available this week so we can continue our look at the health of the WCM market.
Day Software, which is traded on the SIX Swiss Exchange and OTC in the US, released its year-end results today, with total 2008 revenues of CHF 27.8M ($23.9m USD), an increase of 11% from 2007. License revenue grew 8%. Day continued with a net loss on a GAAP basis, though it had a number of restructuring charges and claimed a return to non-GAAP profitability, when these charges are excluded. Day released a major upgrade to its flagship CQ5 in Q4, which I would have expected to delay Q4 sales as customers wait for the new version. So that fact combined with the overall business climate make modest growth from Day unsurprising.
We also get a bit of data from SDL on its acquired Tridion business. SDL’s year-end results include the note that it had “Tridion revenue growth of 16%.” Based on data we’ve tracked since SDL acquired Tridion in 2007, we had Tridion bringing in $42m in 2007 revenue, so 16% growth puts 2008 at $48.7m Growth has definitely slowed for Tridion, which reported 58% growth in 2007 over 2006, but we already knew that since SDL noted Tridion’s first-half 2008 sales grew only 11%.
To me this all seems to point to relatively stable growth in WCM overall. If we average in the outliers (FatWire/Sitecore and Vignette on the high and low ends respectively), we probably get to low double-digit growth in the 10-20% range, which is pretty much what the sector has been seeing for awhile now.
What about 2009? Growth may well slow some, but I still don’t see the WCM sector getting hitting particularly hard, as there is still a lot of work to be done on a lot of sites in nearly all verticals and geos. There may be more opportunities for open source and SaaS players to make some hay with potential cost savings, along with some projects getting delayed, downsized or chunked up, but I see organizations still buying WCM overall.
A related note: Our recent report on M&A prospects in WCM is available via the New York Times DealBook today.
February 20th, 2009 — Data management
Recent attempts to reach business event processing vendor Syndera by email proved unsuccessful, and just as I was about to reach out by more traditional means comes speculation that the company has shut down. Certainly www.syndera.com appears to no longer be operational.
We previously noted that Tibco acquired ‘certain assets’ of the real-time BI software vendor for $1m in July, and those continue to be available in the form of the TIBCO Syndera Operation Suite.
As Marco Seiriö notes in his speculation, it is somewhat surprising that the company, which had raised over $20m in VC funding, only managed a return in the region of $1m. A sign of the times or a special case?
February 19th, 2009 — Content management
I commented in late January that there seem to be two schools of thought at the moment on spending in ECM — in that post, I was talking about downturns in ECM spending overall versus serious investment in information governance-related technologies, like archiving, records management and eDiscovery.
The same dichotomy seems to exist in specifically WCM at the moment as well, though for different reasons.
On one side of the WCM coin, we have Vignette, which turned in an ugly Q4, with revenue down 29.4% year over year and license revenue totalling just $7.3m or 19.5% of revenue. And we have the Autonomy acquisition of Interwoven, which was not primarily driven by Autonomy’s desire to be in the WCM business (here’s Nick’s take on Autonomy’s drivers). We’re not saying Autonomy won’t invest in WCM, it’s too early to make any kind of judgement on that. But nobody is pretending Autonomy would have bought Interwoven if it didn’t have the WorkSite and Discovery Mining businesses and expertise in the legal industry.
On the other side of the coin, we have FatWire, which yesterday announced 40% year-over-year revenue growth in 2008 taking it to $44m. This is the first time FatWire has publicly announced a revenue number, clearly it thought it had something worth bragging about (I was pegging FatWire’s 2008 revenue at about $40m, so it beat my not-entirely-informed estimate).
Obviously FatWire is a good deal smaller than Interwoven and Vignette and is growing from a smaller base. Still, it reports an overall strength in the market domestically and internationally that is intriguing. And it’s not alone in noting strength in the sector — Sitecore made a similar announcement back in November.
Is WCM a strategic investment you have to make when IT budgets are tight? More and more business is certainly done on the Web, customers spend more time researching buying decisions on the web, a lot of Web sites are in need of update, it’s a less expensive marketing channel, and so many companies can’t afford not to invest.
The counter argument to this was articulated, ironically, by Open Text CEO John Shackleton on the quarterly earnings call when he was asked about the Interwoven transaction. He said:
…one of the concern areas would be in the web content management where like most managers if someone came to me and said our website is looking a little old. We need to spend $1 million to clean it up. I wouldn’t see that as a must-have. So what we’re seeing is it’s not critical, people are putting off those decisions to upgrade their websites. I would see that Interwoven like our web content products is seeing some softness in the market.
That from a vendor with WCM in its portfolio, though it’s hardly the company’s focus.
So what do you think? Is FatWire simply absorbing some of the business that would have gone to Vignette and that’s enough to support the growth it needs as a smaller company? Or does WCM have some legs in a tough 2009?
February 18th, 2009 — Data management
Back in July last year we reported on the formation of a new open source cloud computing start-up called 10gen on our Cloud Cover and CAOS Theory blogs.
Seven months later and there have been a few changes at 10gen, such that this information management blog is arguably the most suitable venue for discussion of the implications of 10gen’s MongoDB, the cloud computing database which has now become its major focus.
A quick recap: 10gen launched as an open source platform-as-a-service play offering the MongoDB object database as well as an application server and file system. So far, so cloud stack.
However, the file system quickly became an interface layer to MongoDB while the company more recently decided that its application server runtime and MongoDB are better off apart and shifted its attention to the database, a standalone beta version of which was released last week.
As the two projects have diverged so will this post. To continue reading about the future of the Babble application server head for CAOS Theory, otherwise:
As this post from Geir Magnusson Jr, 10gen VP of Engineering & Co-Founder, at Codehaus describes, MongoDB is not your traditional database.
“As I argue when people give me the chance to speak about it, databases are changing – just look at what is available in the so-called “cloud” arena. It tends not to be a RDBMS if it’s scalable. The storage engine under AppEngine, or Amazon’s SimpleDB, or any of the Dynamo implementations, etc, all of which change your programming model to one that isn’t “tables and joins”. Or look at the excellent CouchDB, a JSON store. If the RDBMS isn’t being replaced outright (like it has to be in “the cloud”), it can to be augmented with other persistence technologies that are better suited for a portion of the data requirements of a system.”
This was one of the themes of my talk at our client event in Boston last year, and nothing has happened since then to change my mind. As Geir explains, the interesting thing about the new cloud databases (for want of a better term) is that they force users to think differently about what a database is for – and specifically to think beyond the realms of the relational.
We see similar forces at work in the data warehousing space driven by column-oriented architectures, but the end result is the same as users are increasingly thinking beyond what already know to consider the best database management tools for the job at hand.
As Geir adds of MongoDB: “It works fine as a database, but you can’t think relational. If you want to just replace MySQL with something else, but don’t want to rethink your data model, MongoDB isn’t for you.”
February 10th, 2009 — eDiscovery
By way of follow-up, I wanted to answer the questions that I didn’t get to here, so that everyone can share. I haven’t answered absolutely every one here – I don’t have a figure for market growth rate, for example.
Q: Do law firms, enterprises, etc prefer choosing a service that is on-premise vs. SaaS? Why?
I answered this on the call, but it obviously varies depending on the size of the company involved, the amount of times they’ve done eDiscovery, whether they’re a law firm or not. Bear in mind that the early days of eDiscovery were dominated and to some extent still are – by services companies like Fios and Kroll Ontrack that provide outsources data processing. So the common FUD tactic used by on-premise vendors to knock SaaS, i.e. that customers won’t like their data leaving their premises and ending up on someone else’s server, doesn’t- or at least shouldn’t – really apply here. Sensitive data has been removed from organizations for eDiscovery purposes for more than a decade like that already.
The larger companies will, on the whole, still prefer eDiscovery to be handled in house in terms of the software they use, though you should remember they almost always engage outside counsel, and the two of them need to be working with compatible systems, so large organizations are starting to have purchasing influence over the technology used by law firms.
One key thing for vendors to remember is that if they’re selling their eDiscovery as something to be used in a reactive eDiscovery process which almost all of them are to one extent or another – it’s hard to sell a reactive product to the enterprise if it isn’t quick to deploy — and that’s where SaaS and appliance have an advantage.
Q: You mentioned IT organization not be capable of pulling together different apps…do you see this a benefiting ECM vendors re: single repository play or is a federation across the data stores more likely?
If ECM vendors can solve a problem of both the legal and IT department simultaneously then it obviously should be good for them. How they do that could be either way. Some of the larger vendors will go all out tp optimize their own repositories so that the full benefits of their particular eDiscovery offering can only be had by putting all the content in their repositories. But others are proving successful with ‘manage in place’ federation architectures too. It’s not a case of one or the other winning overall, we don’t think.
Q: The sector seems quite fragmented do you envision a lot of consolidation? Which vendors do you think could possibly be acquired and how should a buyer consider picking the right vendor?
A: We envisage some consolidation certainly, though a lot has already happened. I’m not going to name names on the blog, beyond what I said on the call, that among acquirers we would expect HP and Symantec to feature, though there are others mentioned in the report. There are also segments and companies mentioned as potential targets in the report too.
As for how a purchaser should pick a vendor – I’m assuming the questioner means in the light of potential consolidation – then you need to do some homework on the stage the company is at, the amount of investment its taken on and has left, profitability or otherwise, the history of the management and so on. At the end of the day, if it gets bought, it then depends which company it gets bought by; if it’s one that just grabs the customers, I’m sure competitors will be offering favorable deals to switch before the ink is dry on the deal.
Q: One of the companies I noticed was not mentioned in the presentation was H5? Is this a company that you follow? How is the business model of this firm different?
Yes, H5 is in the report. It does have a slightly different model from other software or service providers we’ve looked at in that it offers a combination of consulting services and automated review as an alternative to outside attorney review. Plus, it offers up-front scope model, rather than billable hours.
Q: How does eDiscovery tie into other Security tech like Log Managements, or storage of Emails, IM etc? Should eDiscovery be the central control point for Enterprise security?
This is a very interesting question. And one that I’ll deal with in a separate post soon. Watch this space.
Q: How important do you feel legal holds solutions are?
They’re an important part of the preservation stage of the EDRM, but technically not that hard ti implement. Autonomy and Recommind are two vendors that have recently introduced such a function into their eDiscovery offerings.
Q: How do you think demand for eDiscovery solutions will be impacted in tight IT spending environment?
There will be tension between eDiscovery as capital expenditure versus operational expenditure, as there always is, but obviously large scale cap ex spending is something all organizations are trying to avoid right now. It’s hard to see however how in highly litigious industries eDiscovery can be anything other than non-discretionary spending. There will be pricing pressure on some vendors and companies will do whatever they possible can to reduce data volumes if they’re still being charged by the gigabyte. That model will also be called into question by the largest customers.
Q: Could you comment on the kind of data that is fair game in a discovery process? for example, what about IMs or even data that is stored in the cloud like salesforce.com transactions?
A: Anything stored electronically is fair game in an eDiscovery process. With something like data in a Salesforce.com database that’s obviously a lot easier to extract than if some instant messaging systems, And if your organization relies on one of the free pubic IM tools, like AIM, then you could have great difficulty retrieving it, unless the logs are stored locally on desktops, as it can be quite easily, with iChat on Macs, for example.
Q: Where can I get access to this presentation and report?
The report information is here and the presentation will be emailed to you – drop us a note at this address. The webinar will be available for download very soon too. I’ll put a link up here as soon as I have it.
Q: Why can’t I hear anything?
A: We got this question a few times. So I’d like to apologize and say thanks to all of your that persevered with our audio problems – we couldn’t get he webinar tool’s audio channel to work, despite it having worked perfectly in two prior run-throughs. I have much more sympathy than before now for vendors doing live demos – I feel your pain
February 5th, 2009 — eDiscovery
I heard from veterans that this year’s LegalTech New York was smaller than last, but I can’t say that knowledge made it any less intimidating for a first-timer. Several in the booths told me that despite the lower numbers, the quality of customer was going up – there were fewer tire-kickers and swag-grabbers and more substantial customer prospects. An encouraging sign in a down economy.
Not surprisingly, in the booths and in the conference halls one of the biggest themes was cost. This jibes with a key finding from our December report on e-discovery and e-disclosure, basically that they’re out of control. Another of our projections, the moving of e-discovery in-house in corporations, was a concurrent theme as one of the best means of reducing those spends. Vendors seem to be moving further leftward in the Electronic Discovery Reference Model (EDRM) towards the earliest stages of data creation in order to capture more of the revenue from this, also as we reported.
The YouTube town hall meeting gave good insight into what issues are important to the legal community in dealing with the challenges of e-discovery. Some of the hot-button issues:
Search methods in review, their transparency and defensibility.
International e-discovery considerations such as cultural differences, data privacy and the importance of Unicode in multilingual review.
Monica Bay, editor-in-chief of Law Technology News (LTN) made points in a youtube question
about jargon involved in vendor claims (some that resonated with my own experience) – namely that the same ten terms of jargon are used by all vendors to describe their considerably different products, and these are often not well understood by potential buyers.
In my experience, terms such as concept search can be confusing and early case assessment can vary greatly in definition and execution from vendor to vendor, but now seem to be offered by many of them with minimal explanation.
To build on that point, it’s a common complaint in any market that vendors are “selling what they have,” versus what the customer needs, but in such a critical area as e-discovery this can be downright dangerous. The consumer needs to be armed with information and expertise in order to make an informed choice – probably one of the reasons that service providers and consultants remain some of the most trusted entities in the field.
The hottest topic NOT discussed in the panels and sessions (at least the ones I attended) was the Autonomy-Interwoven acquisition and what it will mean for the market, about which 451 subscribers can learn more here and here.
Overall the show brought together some of the best minds in the industry for a slightly dizzying wealth of legal and market information. Let me not forget a big “thank you” to the several vendors who met with me to discuss their products and views on the market landscape over the three days. Here’s looking forward to next year.
For additional perspective, see the excellent coverage from Rob Robinson of Orange LT, Whit Andrews at Gartner, and Sean Doherty at Law.com