The Highest Level of Confidence in Three Years: 18 Observations on eDiscovery Business Confidence in the Fall of 2018

Article by Rob Robinson

The Business of eDiscovery in the Fall of 2018

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 twelve times since January 2016, with 1,193 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 fall of 2018. 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)

• More than half of survey responders (62.4%) continued to view the current eDiscovery business conditions as good. This represents a strong increase (+9.4%) over responses in the summer of 2018 survey. It also is the second highest rating for this metric since the initiation of the survey and is considerably higher than responses in both the fall of 2017 (55%) and the fall of 2016 (56.6%).
• More than one-third of survey responders (34.1%) continued to view the current eDiscovery business climate as normal. This represents a slight decrease (-5%) over responses received in the summer of 2018 survey. It is also slightly lower than responses in both the fall of 2017 (36%) and the fall of 2016 (37.2%).
• Only 3.5% of survey responders felt that the current eDiscovery business climate was bad. This rating is the lowest for this metric since the initiation of the survey and highlights that 96.5% of responders to the fall 2018 survey viewed current conditions positively (good or normal). This also is considerably lower than the summer 2018 survey results (-4.1%). It also is significantly lower than responses in both the fall of 2017 (9.0%) and the fall of 2016 (6.2%).
• Just under one-half of survey responders (44.7%) estimated that business conditions will be better in six months, a decrease of 5.3% over the last quarter. It is also lower than responses in both the fall of 2017 (55%) and the fall of 2016 (49.6%).
• The number of those who feel that the business climate will be the same in six months as today was higher quarter over quarter (51.8% vs. 45.5%) and was also higher than the fall of 2017  (49.50%) and the fall of 2016 (45.10%).
• The number of those expecting the business climate of eDiscovery to be worse in six months than today decreased quarter over quarter to only 3.5% of responders. This represents a 1% drop from responses from the summer of 2018 survey and is lower than responses in both the fall of 2017 (4%) and the fall of 2016 (5.3%).

Revenue Expectations (Chart 3)

• In the fall of 2018, 57.6% of survey responders feel that revenue in the next six months will be higher than today. This percentage is the same as in the previous quarter (summer of 2018). It is also slightly higher than responder views in the fall of 2017 (56%) and slightly lower that responder views in the fall of 2016 (59.3%).
• More than one-third of survey responder (36.5%) feel that revenue will remain the same over the next six months. This represents the first quarterly increase in this metric response since the summer of 2017 (five quarters).
• The percentage of responders who feel that revenue in six months will be lower than today decreased quarter over quarter from 7.6% to 5.9%. While slightly lower than the summer of 2018 results, the number is higher than those presented in the fall of 2017 (5%) and the fall of 2016 (5.3%).

Profit Expectations (Chart 4)

• 41.2% of responders in the fall of 2018 feel that profits will be higher in six months than they are today. This change is a decrease from the summer of 2018 survey where 45.5% of responders estimated profits to be higher in six months.
• Responders feeling that profits will be the same in six months as today increased quarter over quarter from 42.4% to 45.9%. This was higher than the results of the fall 2017 survey (45%), yet lower than the results of the fall 2016 survey (47.8%).
• The percentage of responders who feel profits in six months will be lower than today increased slightly quarter over quarter from 12.1% in the summer of 2018 to 12.9% in the fall of 2018. This concern is lower now than in the fall of 2017 (11%) and the fall of 2016 (10.6%)

Observations on Business Impact Factors (Chart 5)

• Increasing Types of Data was the primary eDiscovery business concern in the fall of 2018 with 20.1% of survey responders noting it as their top concern.
• The business impact of Increasing Volumes of Data increased quarter over quarter from 16.7% in the summer of 2018 to 18.8% in the fall of 2018.
• The view of Lack of Personnel as a major impact factor for eDiscovery business increased quarter over quarter to a rate of 17.6% in the fall of 2018. This rate is considerably higher than the views of responders in the fall of 2017 (11%) and in the fall of 2016 (9.7%).
• Data Security concerns decreased quarter over quarter from 19.7% in the summer of 2018 to 15.3% in the fall of 2018. However, this rate is higher than the views of responders in the fall of 2017 (13%) and in the fall of 2016 (9.8%).
• The business impact of Inadequate Technology on eDiscovery business increased strongly quarter over quarter, representing a top concern for 14.1% of survey responders. This is the highest level of concern for this metric response since the inception of the survey.
• The business impact of Budgetary Constraints on eDiscovery business decreased strongly quarter over quarter, representing a top concern for 14.1% of survey responders. This is by far the lowest level of concern for this metric response since the inception of the survey.

Chart 7: Survey Participant Level of Support Overview