Thu. Mar 28th, 2024

Content Assessment: Operational Metrics in eDiscovery

Information - 90%
Insight - 95%
Relevance - 90%
Objectivity - 95%
Authority - 95%

93%

Excellent

A short percentage-based assessment of the qualitative benefit of the recent post on eDiscovery operational metrics.

Editor’s Note: 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 900 individual responses to these optional questions have been received over the course of seven surveys.

The aggregate results of the answers to the business operational metric questions are shared in the following observations and charted overviews.

The Kinetics of Three eDiscovery Business Metrics in the Summer 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 900 individual responses to these optional questions have been received over the course of seven 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 Summer of 2020

General

  • In the summer of 2020, 91 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. This represents a strong number of participants given the summer survey was limited to 100 total responders to balance against the recent proliferation of new industry surveys and communications initiated during the current pandemic.
  • In the summer of 2020, 91% 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 87.2% of participants answering the optional business operational metric questions in the spring of 2020 survey.
  • In the summer 2020 survey, between 28.9% and 39.6% 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 20.9% of survey respondents reported DSO as increasing in the summer of 2020. This is an increase from 19.3% reporting DSO as increasing in the spring of 2020. This is also the highest percentage of respondents reporting DSO as increasing since the introduction of operational metric questions into the business confidence survey.
  • There was an increase (1.1%) in the summer 2020 percentage (23.1%) of respondents reporting DSO as unfluctuating when compared to spring 2020 reporting (22%). This is the third-lowest percentage of respondents reporting DSO as unfluctuating since the introduction of operational metric questions into the business confidence survey, with the lowest being the 22% reported in the spring 2020 survey.
  • 16.5% of survey respondents reported DSO as decreasing in the summer of 2020. This is a slight increase from reporting in the spring of 2020 when 15.3% of respondents noted decreasing DSO.

Monthly Recurring Revenue (Chart 2)

  • There was a strong increase (11.4%) in the summer 2020 percentage (26.7%) of respondents reporting increasing MRR when compared to spring 2020 reporting (15.3%). This represents a strong quarter over quarter growth from the spring of 2020 when the lowest percentage of respondents reporting MRR as increasing since the introduction of operational metric questions into the business confidence survey occurred.
  • There was a solid decrease (6.4%) in the summer 2020 percentage (18.9%) of respondents reporting MRR as unfluctuating when compared to spring 2020 reporting (25.3%)
  • Just under 26% (25.6%) of survey respondents reported Monthly Recurring Revenue (MRR) as decreasing in the summer of 2020. This is a slight decrease from the 26% reporting MRR as decreasing in the spring of 2020 and is the second-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 increased (4.2%) between the spring of 2020 (16%) and the summer of 2020 (20.2%). This is also the second-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 a decrease (3%) in the summer 2020 percentage (27%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to spring 2020 reporting (30%). This is also the second-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 slight decrease (0.7%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with 18% reporting a decreasing distribution of revenue in the summer of 2020. This is also the second-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-Days-Sales-Outstanding-Summer-2020

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

2-Monthly-Recurring-Revenue-Summer-2020

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

3-Customer-Distribution-Summer-2020

Running Listing of eDiscovery Business Confidence Survey Results

Additional Reading

Source: ComplexDiscovery

 

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