Outstanding Accounts? eDiscovery Operational Metrics in the Fall of 2020

In the fall of 2020, eDiscovery Business Confidence Survey more than 70 participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. 21.9% of survey respondents reported Days Sales Outstanding (DSO) as increasing in the fall of 2020. This is an incremental increase from the 20.9% reporting DSO as increasing in the summer of 2020 and is the highest percentage of respondents reporting DSO as increasing since the introduction of business operational metric questions to the eDiscovery Business Confidence Survey in the winter of 2019.

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Content Assessment: Content Assessment: Operational Metrics in eDiscovery in the Fall of 2020

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

94%

Excellent

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

Editor’s Note: This is the eighth quarterly eDiscovery Business Confidence Survey from ComplexDiscovery that has included three optional questions regarding business operational metrics. Since the introduction of specific operational questions around Days Sales Outstanding (DSO), Monthly Recurring Revenue (MRR), and customer revenue distribution, more than 960 legal, information technology, and business professionals have responded with their thoughts. 74 respondents shared their opinions on these three questions as part of the most recent survey and the aggregate results of the answers to all eight quarterly surveys seeking answers to these questions are shared in the following observations and charts.

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

General

  • In the fall of 2020, 74 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 intentional limiting of survey email requests to balance against the recent proliferation of new industry surveys and higher volumes of email communications initiated during the current pandemic.
  • In the fall of 2020, 89.1% 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 a slight decrease in percentage from 91.0% of participants answering the optional business operational metric questions in the summer of 2020 survey.
  • In the fall 2020 survey, between 29.7% and 39.7% 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 21.9% of survey respondents reported DSO as increasing in the fall of 2020. This is an increase from 20.9% reporting DSO as increasing in the summer 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 (2.9%) in the fall 2020 percentage (26.0%) of respondents reporting DSO as unfluctuating when compared to summer 2020 reporting (23.1%). This is the second-highest percentage of respondents reporting DSO as unfluctuating since the introduction of operational metric questions into the business confidence survey, with the highest being the 34.7% reported in the winter 2020 survey.
  • 12.3% of survey respondents reported DSO as decreasing in the fall of 2020. This is a solid decrease from reporting in the summer of 2020 when 16.5% of respondents noted decreasing DSO.

Monthly Recurring Revenue (Chart 2)

  • There was a marked decrease (3.7%) in the fall 2020 percentage (23.0%) of respondents reporting increasing MRR when compared to summer 2020 reporting (26.7%). This represents a decrease in quarter over quarter growth from the summer of 2020. It is also the second-lowest percentage of respondents reporting MRR as increasing since the introduction of operational metric questions into the business confidence survey occurred.
  • There was a slight increase (1.4%) in the fall 2020 percentage (20.3%) of respondents reporting MRR as unfluctuating when compared to summer 2020 reporting (18.9%)
  • Just under 19% (18.9%) of survey respondents reported Monthly Recurring Revenue (MRR) as decreasing in the fall of 2020. This is a strong decrease from the 25.6% reporting MRR as decreasing in the summer of 2020. However, it is still the third-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 (2.8%) between the summer of 2020 (20.2%) and the fall of 2020 (23.0%). This is also the third-lowest percentage of respondents reporting the increasing distribution of revenue across their customer base since the introduction of operational metric questions into the business confidence survey.
  • There was no change in the fall 2020 percentage (27.0%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to small 2020 reporting (27.0%). This is tied for the second-highest percentage of respondents reporting the unfluctuating distribution of revenue across their customer base since the introduction of operational metric questions into the business confidence survey.
  • There was also an increase (2.3%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with 20.3% reporting a decreasing distribution of revenue in the fall 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-Days-Sales-Outstanding-Fall-2020

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

2-Monthly-Recurring-Revenue-Fall-2020

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

3-Business-Climate-Overview+Six-Months-Fall-2020

Running Listing of eDiscovery Business Confidence Survey Results

Additional Reading

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ComplexDiscovery is an online publication that highlights data and legal discovery insight and intelligence ranging from original research to aggregated news for use by business, information technology, and legal professionals. The highly targeted publication seeks to increase the collective understanding of readers regarding data and legal discovery information and issues and to provide an objective resource for considering trends, technologies, and services related to electronically stored information.

ComplexDiscovery OÜ is a technology marketing firm providing strategic planning and tactical execution expertise in support of data and legal discovery organizations. Registered as a private limited company in the European Union country of Estonia, one of the most digitally advanced countries in the world, ComplexDiscovery OÜ operates virtually worldwide to deliver marketing consulting and services.

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