A Cause to Pause? eDiscovery Operational Metrics in the Spring of 2020

In the spring of 2020, 150 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. Exactly 26% of survey respondents reported Monthly Recurring Revenue (MRR) as decreasing in the spring of 2020. This is a significant increase from the 10% reporting MRR as decreasing in the winter of 2020 and is the highest percentage of respondents reporting MRR as decreasing since the introduction of business operational metric questions to the eDiscovery Business Confidence Survey in the winter of 2019.

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The Kinetics of Three eDiscovery Business Metrics in the Spring of 2020

The eDiscovery Business Confidence Survey is a non-scientific quarterly survey designed to provide insight into the business confidence level of individuals working in the eDiscovery ecosystem. The survey consists of nine core multiple-choice questions focused on factors related to the creation, delivery, and consumption of eDiscovery products and services. Additionally, the survey includes the following three optional questions focused on the business operational metrics of days sales outstanding (DSO), monthly recurring revenue (MRR), and revenue distribution across customer bases.

  • How would you characterize the trajectory of your organization’s Days Sales Outstanding (DSO) during the last quarter? DSO represents the average number of days it takes credit sales to be converted into cash, or when a company’s account receivables can be collected.
  • How would you characterize the trajectory of your organization’s Monthly Recurring Revenue (MRR) during the last quarter? MRR is income that a company can reliably anticipate every 30 days. Revenue from one-time purchases billed at the time of purchase is not included in MRR.
  • Which of the following statements best describes the distribution of your organization’s revenue across your customer base during the last quarter? Distribution is the reduction of revenue concentration across the customer base. The customer base is the group of customers who repeatedly purchase the products or services of a business.

Survey participants were presented with four potential answers to the optional business operational metric questions and asked to select one. The choices were as follows:

  • Increasing
  • Unfluctuating
  • Decreasing
  • Do Not Know

The three optional questions regarding business operational metrics were introduced into the quarterly eDiscovery Business Confidence Survey during the winter 2019 survey and to date, almost 800 individual responses to these optional questions have been received over the course of six surveys.

The aggregate results of the answers to the business operational metric questions are shared in the following observations and charted overviews. They provide an interesting vector view of the trajectories of these important measurements and the results may also be helpful to business and legal professionals as they consider the current conditions and trends in the business of data and legal discovery.

Key Observations in the Spring of 2020

General

  • In the spring of 2020, 150 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. This is higher than the number of participants that answered the optional business metrics questions in the winter 2020 survey when 124 survey participants responded to at least one optional business operational metric survey question.
  • In the spring of 2020, 87.2% of eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric questions in the quarterly survey. This is an increase in percentage from the 84.9% of participants answering the optional business operational metric questions in the winter of 2020 survey.
  • In the spring 2020 survey, between 33.3% and 43.3%  of the respondents (depending on the question) did not know whether DSO, MRR, or distribution of customer revenue-based measures were increasing, unfluctuating, or decreasing.

Days Sales Outstanding (Chart 1)

  • Exactly 19.3% of survey respondents reported DSO as increasing in the spring of 2020. This is a negligible decrease from 19.4% reporting DSO as increasing in the winter of 2020. This is also the second-highest percentage of respondents reporting DSO as increasing since the introduction of operational metric questions into the business confidence survey.
  • There was a decrease (12.7%) in the spring 2020 percentage (22%) of respondents reporting DSO as unfluctuating when compared to winter 2020 reporting (34.7%). This is also the lowest percentage of respondents reporting DSO as unfluctuating since the introduction of operational metric questions into the business confidence survey.
  • 15.3% of survey respondents reported DSO as decreasing in the spring of 2020. This is a significant increase from reporting in the winter of 2020 when only 6.4% of respondents noted decreasing DSO.

Monthly Recurring Revenue (Chart 2)

  • There was a dramatic decrease (19.4%) in the spring 2020 percentage (15.3%) of respondents reporting increasing MRR when compared to winter 2020 reporting (34.7%). This is the lowest percentage of respondents reporting MRR as increasing since the introduction of operational metric questions into the business confidence survey.
  • There was a slight increase (0.3%) in the spring 2020 percentage (25.3%) of respondents reporting MRR as unfluctuating when compared to winter 2020 reporting (25%)
  • Exactly 26% of survey respondents reported Monthly Recurring Revenue (MRR) as decreasing in the spring of 2020. This is a significant increase from the 10% reporting MRR as decreasing in the winter of 2020 and is the highest percentage of respondents reporting MRR as decreasing since the introduction of business operational metric questions to the eDiscovery Business Confidence Survey in the winter of 2019.

Distribution of Revenue Across Customer Base (Chart 3)

  • The percentage of survey respondents reporting an increasing distribution of revenue across their customer base significantly decreased (24.3%) between the winter of 2020 (40.3%) and the spring of 2020 (16%). This is also the lowest percentage of respondents reporting increasing distribution of revenue across their customer base since the introduction of operational metric questions into the business confidence survey.
  • There was an increase (4.2%) in the spring 2020 percentage (30%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to winter 2020 reporting (25.8%). This is also the highest percentage of respondents reporting unfluctuating distribution of revenue across their customer base since the introduction of operational metric questions into the business confidence survey.
  • There was also a strong increase (11.4%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with 18.7% reporting a decreasing distribution of revenue in the spring of 2020. This is also the highest percentage of respondents reporting decreasing distribution of revenue across their customer base since the introduction of operational metric questions into the business confidence survey.

Survey Charts

(Charts Can Be Expanded for Detailed Viewing)


Chart 1: An Aggregate Overview of Days Sales Outstanding (DSO) Trajectory

1-An-Aggregate-Overview-of-DSO-Spring-2020

 


Chart 2: An Aggregate Overview of Monthly Recurring Revenue (MRR) Trajectory

2-An-Aggregate-Overview-of-MRR-Spring-2020

 


Chart 3: An Aggregate Overview of Distribution of Revenue Across Customer Base

3-An-Aggregate-Overview-of-Customer-Revenue-Distribution-Spring-2020

Running Listing of eDiscovery Business Confidence Survey Results

Additional Reading

Source: ComplexDiscovery

A Matter of Pricing? A Running Update of Semi-Annual eDiscovery Pricing Survey Responses

First administered in December of 2018 and conducted four times during the last two years with 334 individual responses, the semi-annual eDiscovery Pricing Survey highlights pricing on selected collection, processing, and review tasks. The aggregate results of all surveys as shared in the provided comparative charts may be helpful for understanding pricing and its impact on purchasing behavior on selected services over time.



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