Content Assessment: Temperatures Rising? eDiscovery Operational Metrics in the Spring of 2023
Information - 94%
Insight - 93%
Relevance - 92%
Objectivity - 95%
Authority - 96%
A short percentage-based assessment of the qualitative benefit of the recent post on eDiscovery operational business metrics in the spring of 2023.
Editor’s Note: We are pleased to highlight that for the eighteenth time, the quarterly eDiscovery Business Confidence Survey conducted by ComplexDiscovery featured three optional questions on business operational metrics. Since the introduction of specific operational questions regarding Days Sales Outstanding (DSO), Monthly Recurring Revenue (MRR), and customer revenue distribution, over 1,620 legal, information technology, and business professionals have contributed their valuable insights. In the most recent survey, 67 respondents shared their opinions on at least one of these three questions. The subsequent observations and charts present the aggregate results of all eighteen quarterly surveys.
The Kinetics of Three eDiscovery Business Metrics in the Spring of 2023
The spring 2023 eDiscovery Business Confidence Survey serves as a valuable tool for gauging the business confidence levels of individuals working within the eDiscovery ecosystem. As a non-scientific quarterly survey, it explores various factors related to the creation, delivery, and consumption of eDiscovery products and services through nine core multiple-choice questions. Moreover, the survey delves into the business operational metrics of Days Sales Outstanding (DSO), Monthly Recurring Revenue (MRR), and revenue distribution across customer bases with three optional questions:
- Participants were asked to evaluate the trajectory of their organization’s DSO during the last quarter, which reflects the average number of days required for credit sales to be converted into cash or the collection of a company’s account receivables.
- The survey also inquired about the trajectory of the organization’s MRR in the past quarter, representing the income a company can reliably expect every 30 days, excluding revenue from one-time purchases billed at the time of purchase.
- Lastly, participants were prompted to describe the distribution of their organization’s revenue across their customer base during the last quarter, focusing on the reduction of revenue concentration among the group of customers who repeatedly purchase a business’s products or services.
Survey respondents were presented with four answer choices for the optional business operational metric questions: Increasing, Unfluctuating, Decreasing, and Do Not Know.
The subsequent observations and charted overviews display the aggregate results of the responses to these business operational metric questions. By offering a unique vector view of these crucial measurements’ trajectories, the findings may prove beneficial to business and legal professionals as they assess the current state and trends within the data and legal discovery landscape.
Key Observations in the Spring of 2023
In the spring of 2023, the eDiscovery Business Confidence Survey revealed several trends in operational business metrics, which are crucial for understanding the industry’s financial health and future prospects. The three key metrics assessed were Days Sales Outstanding (DSO), Monthly Recurring Revenue (MRR), and Distribution of Revenue Across Customer Base.
For DSO, the spring 2023 survey showed a decrease in the percentage of respondents reporting an increase, dropping from 22.8% in the winter to 14.9%. However, there was a rise in the percentage reporting DSO as unfluctuating, up to 37.3%. A higher percentage of respondents also reported a decrease in DSO, reaching 10.4%, while 37.3% did not know their DSO status. The DSO trends are significant as they provide insights into the average time taken by companies to collect payment from clients, reflecting cash flow efficiency and credit control effectiveness. (Chart 1)
In terms of MRR, the spring 2023 survey saw a considerable increase in respondents reporting an increase in MRR, jumping to 38.2% from the previous quarter’s 15.8%. There was a slight decrease in the percentage of respondents reporting unfluctuating MRR (22.1%), and a drop in the percentage reporting a decrease in MRR (5.9%). MRR trends are vital for eDiscovery businesses because they indicate the stability and growth of recurring revenue streams, which can help predict future cash flows and assess overall business performance. (Chart 2)
Regarding the Distribution of Revenue Across Customer Base, the spring 2023 survey highlighted a substantial increase in respondents reporting an increasing distribution of revenue (37.3%). The percentage of respondents reporting unfluctuating revenue distribution fell to 28.4%, while the percentage reporting a decrease also declined to 4.5%. These trends in revenue distribution are essential for eDiscovery ecosystem stakeholders as they provide a sense of customer concentration and revenue diversification, which can impact the resilience and sustainability of a business. (Chart 3)
In summary, the spring 2023 eDiscovery Business Confidence Survey revealed trends in operational business metrics that are critical for understanding the financial health and growth prospects of the eDiscovery industry. DSO trends pointed to improvements in cash flow efficiency and credit control, while MRR trends showed signs of growing recurring revenue streams. The Distribution of Revenue Across Customer Base responses suggested increased diversification and resilience among eDiscovery businesses. These trends are crucial for stakeholders in the eDiscovery ecosystem, as they provide valuable insights into the industry’s current state and future direction.
(Charts Can Be Expanded for Detailed Viewing)
Chart 1: An Aggregate Overview of Days Sales Outstanding (DSO) TrajectoryeDiscovery Business Metric Trajectory - Days Sales Outstanding - Aggregate - Spring 2023
Chart 2: An Aggregate Overview of Monthly Recurring Revenue (MRR) TrajectoryeDiscovery Business Metric Trajectory - Monthly Recurring Revenue - Aggregate - Spring 2023
Chart 3: An Aggregate Overview of Distribution of Revenue Across Customer BaseeDiscovery Business Metric Trajectory - Distribution of Revenue Across Customer Base - Aggregate - Spring 2023
Past Survey Results
- Spring 2023 Survey (25 March – 14 April 2023)
- Winter 2023 Survey (22 January – 27 January 2023)
- Fall 2022 Survey (11 September – 22 September 2022)
- Summer 2022 Survey (10 June – 27 June 2022)
- Spring 2022 Survey (18 March – 23 March 2022)
- Winter 2022 Survey (6 January – 12 January 2022)
- Fall 2021 Survey (5 October – 12 October 2021)
- Summer 2021 Survey (22 June – 6 July 2021)
- Spring 2021 Survey (28 March – 11 April 2021)
- Winter 2021 Survey (3 January – 12 January 2021)
- Fall 2020 Survey (21 September – 1 October 2020)
- Summer 2020 Survey (26 June – 10 July 2020)
- Spring 2020 Survey (2 April – 15 April 2020)
- Winter 2020 Survey (28 December 2019 – 11 January 2020)
- Fall 2019 Survey (29 September – 17 October 2019)
- Summer 2019 Survey (1 July – 17 July 2019)
- Spring 2019 Survey (1 April – 18 April 2019)
- Winter 2019 Survey (27 December 2018 – January 10, 2019)
- Fall 2018 Survey (14 October – 26 October 2018)
- Summer 2018 Survey (4 July – 24 July 2018)
- Spring 2018 Survey (7 April – 20 April 2018)
- Winter 2018 Survey (24 December 17 – 15 January 2018)
- Fall 2017 Survey (5 October – 17 October 2017)
- Summer 2017 Survey (6 July – 31 July 2017)
- Spring 2017 Survey (14 April – 1 May 2017)
- Winter 2017 Survey (20 January – 6 February 2017)
- Fall 2016 Survey (11 October – 1 December 2016)
- Summer 2016 Survey (1 August – 31 August 2016)
- Spring 2016 Survey (1 May – 31 May 2016)
- Winter 2016 Survey (15 February – 29 February 2016)
- An eDiscovery Market Size Mashup: 2022-2027 Worldwide Software and Services Overview
- An Abridged Look at the Business of eDiscovery: Mergers, Acquisitions, and Investments
Complete Presentation: Market Kinetics – Operational Metrics – Spring 2023 (PDF) – Mouseover to Scroll0 - Business Confidence - Operational Metrics - 042123
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