Forensic Update

Reflections on information management within the legal and regulatory arena

The Promising ROI of eDiscovery Software…

Posted by Johnny Lee on September 13, 2010

Gartner LogoLast December’s Gartner report provided a new perspective for the debate for companies weighing whether to bring a portion of their Electronic Discovery (“eDiscovery”) management in-house.  While there is certainly a significant amount of nuance to this dialog that is difficult to quantify, the Gartner report strongly indicates that those companies with the wherewithal to in-source this function no longer have to guess at valuations related to the Return on Investment (“ROI”).

While the report does make some bold claims (e.g., a three-to-six-month payback period for eDiscovery software, even for systems costing $1 million or more), it is important to note that the cost savings required for such impressive returns must, of logical necessity, hinge on two key factors.  Namely, the organization [1] must be wrestling with significant (legal and/or regulatory) case loads to tip the balance and [2] must possess a staff capable of fully exploiting these technologies (especially in the areas of early case assessment and in-house data collection and evidence preservation).  Neither of these factors is especially trivial, and both should receive careful thought before embarking upon a serious in-sourcing transition.

The ROI math, of course, makes sense if a company is willing to invest in the technology itself as well as the proper implementation and continued use of these applications AND–perhaps equally important–the long-term retention of the skilled personnel required to integrate such cutting-edge technology into a cohesive program.  For many companies, the bitter irony is that they might be willing to take this plunge, only to have their newly trained and optimized program dismantled by personnel that now have a vastly more marketable skillset–one with a higher market demand and the logical corollary of higher salary demands.

Accordingly, while the diminishing return here is something to be wary of, there is good news for companies taking a systemic approach to addressing risk management in this area.  Put differently, Gartner’s analysis helps to quantify some of the “fuzzy math” that has heretofore been the province only of the vendors pitching their wares.  This makes the decision tree easier to follow, but the softer aspects of the ROI must still be considered.  Simply put, companies can realize the promised ROI only if they genuinely think in terms of a program that integrates policy, process, technology, and people into a sustainable model.

To read the full Gartner write-up, please click here.

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