Ready, Set, Stay! Eighteen Observations on eDiscovery Business Confidence in the Winter of 2019

Article by Rob Robinson

The Business of eDiscovery in the Winter of 2019

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 core survey consists of nine multiple choice questions focused on factors related to the creation, delivery, and consumption of eDiscovery products and services. Additionally, in the fall of 2018 three new questions were added to determine responder sentiment regarding the business operational metrics of days sales outstanding (DSO), monthly recurring revenue (MRR), and revenue distribution across customer bases. The survey is open to legal, business, and information technology professionals operating in the eDiscovery ecosystem and individuals are invited to participate by ComplexDiscovery primarily via direct email invitations.

The survey has been administered thirteen times since January 2016, with 1,268 individuals responses. The role makeup of responders in the twelve surveys includes executive leadership, operational management, and tactical execution professionals.

The latest survey was administered in the winter of 2019. Based on the latest survey viewed through the results of past surveys, the following key observations were noted:

Eighteen Survey Observations

Observations on Business Conditions (Charts 1-4)

Business Climate (Chart 1 and 2)

• Just under 90% (89.3%) of respondents feel the current business conditions are good or normal. This represents a significant decrease in these same feelings from the fall of 2018 where 96.5% felt the conditions were good or normal.
• More than half of survey respondents (53.3%) characterized the current business climate as good. This represents a significant decrease from the 62.4% of respondents who viewed the business climate as good in the fall of 2018.
• Almost 11% (10.7%) of respondents classified the current business condition as bad. This represents the second highest percentage of respondents feeling this way since the inception of the survey, with only the 13.7% of respondents in the summer of 2016 registering greater concern in this area. This also represents a significant decrease in business climate confidence from the fall of 2018 where only 3.5% of respondents classified climate conditions as bad.
• Just over half (52%) of survey respondents feel that business climate conditions will be better in six months. This is an increase from the 44.7% who felt the same way about future conditions in the fall 2018 survey.
• The number of survey respondents feeling the business conditions will remain the same in six months was almost 8% (7.8%) lower in the winter of 2019 than in the fall of 2018.
• The number of respondents expecting the business climate of eDiscovery to be worse in six months increased slightly quarter over quarter from 3.5% in the fall of 2018 to 4% in the winter of 2019.

Revenue Expectations (Chart 3)

• In the winter of 2019, only 41.3% of survey respondents feel that revenue in the next sixth months will be higher than today. This percentage represents a significant decrease (16.3%) from feelings on this metric in the fall of 2018 and also represents the lowest rating for this metric since the inception of the survey in the winter of 2016.
• However, more than half of survey responders (50.7%) feel that revenue in the next six months will remain the same. This is a significant increase (14.2%) over feelings for this metric in the fall of 2018 and also is the highest response rate for this metric since the inception of the survey in the winter of 2016. It is also the first time in thirteen quarters that this response has exceeded 50%, with the previous high for this response being 43.6% in the summer of 2017.
• The percentage of respondents who feel that revenue in six months will be lower in six months than they are today increased slightly from 5.9% in the fall of 2018 to 8% in the winter of 2019. This 8% response rate is also the highest response rate for this metric since 10% characterized their feelings this way in the winter 2017 survey.

Profit Expectations (Chart 4)

• Less than one-third of survey respondents (28%) feel that profits will be higher in six months than they are today. This is a significant decrease from the fall of 2018 where 41.2% of respondents estimated profits to be higher in six months. It is also the lowest response rate to this metric since the inception of the survey, being significantly lower than the previous lowest response rate for this metric in the summer of 2016, where it was reported at 38.7%
• Correspondingly, respondents feeling that profits will be the same in six months increased significantly quarter over quarter from 45.9% in the fall of 2018 to 65.3% in the winter of 2019. This represents the largest quarterly change on this metric in the history of the survey and is the highest response rate for this metric since the inception of the survey in the winter of 2016.
• Interestingly, the number of respondents who feel that profits in six months will be lower than today dropped almost by half quarter over quarter from 12.9% in the fall of 2018 to 6.7% in the winter of 2019. This also is the lowest reported response rate for this metric since the beginning of the survey, tied with the 6.7% response rate for this metric in the spring of 2017.

Observations on Business Impact Factors (Chart 5)

• The impact of budgetary constraints on eDiscovery business performance was reported as the number one concern by 22.7% of survey respondents in the winter of 2019. This was the highest response rate for any of the present business impact factors and represents a significant increase in concern quarter over quarter, increasing from a 14.1% response rate in fall, 2018. Additionally, budgetary constraint impact has been noted as the top concern for respondents in seven of thirteen quarterly surveys to date.
• Increasing data volumes continue to be a strong concern for eDiscovery professionals with 21.3% of survey respondents viewing data volume challenges as potentially having a substantial potential impact on business in the next six months. This is the second quarter in a row this concern has increased, and it continues to represent a critical concern for survey participants.
• The percentage of respondents viewing the impact of increasing types of data as a top business issue decreased slightly for the second quarter in a row and is now viewed as the top concern by 18.7% of winter 2019 survey respondents.
• In the winter of 2019, the impact of inadequate technology on eDiscovery business performance reached its second-highest level of reported concern since the inception of the survey in 2016 with 13.3% of survey respondents listing it as the top potential issue impacting eDiscovery business.
• The percentage of respondents viewing the impact of data security as a top business issue decreased for the second quarter in a row and is now viewed as the top concern by 12% of survey respondents.
• The impact of a lack of personnel on eDiscovery business performance decreased during the last quarter and is now the top concern for only 12% of survey respondents. This represents a quarter over quarter decrease from the 17.6% of survey respondents who reported this as their top concern in the fall of 2018.

Chart 7: Survey Participant Level of Support Overview