Service provider takeaway: Service providers can cut their customers' electronic data discovery costs by offering
specialized data processing services.
With electronic data discovery budgets steadily on the rise, storage service providers are in a great position to capture some of that money by offering electronic data discovery services that cut costs for customers. You can tap into that market by turning your attention to your customers' legal departments rather than restricting your services pitch only to IT departments.
Here's why electronic data discovery services make sense for storage service providers: Electronic data discovery is a very expensive proposition for any company involved in litigation. Data that's subject to investigation first needs to be processed in preparation for review, and then it needs to be reviewed. The cost for processing data is high, but reviewing that data is even more expensive. By reducing the amount of data that must be reviewed -- which can be enormous -- your customers can save on the cost of processing as well as reviewing.
In a traditional electronic data discovery project, costs break down along the following lines: Processing data from its native format into a hosted review system, along with some other services such as deduplication, costs about $1,500 per gigabyte, on average. If a customer has 100 GB of data, the cost to process it is about $150,000. That price could vary depending on the electronic data discovery project. Then there's the review cost: At DCIGInc.com, we estimate the cost for the review of that processed data at about $2.50 per document-page reviewed -- significantly more expensive than the per-gigabyte processing cost.
George Socha Jr., an electronic data discovery luminary and process consultant, confirmed that review consumes most of the budget in all electronic data discovery projects. (It's important to note that legal review of data is a qualitative process and best left to companies like Stratify Inc., a division of Iron Mountain Digital, or your clients' internal legal groups.)
By using tools that your clients probably don't know exist, you can plug into the electronic data discovery process and save your customers money by reducing the amount of data to be processed and reviewed. Clearwell Systems Inc.'s Clearwell Intelligence Platform, for instance, is an appliance-based system that identifies duplicate email and document attachments. It filters email according to domain, sender and receiver to further winnow the amount of data that needs to be reviewed. Beyond that, it handles reporting and hosting (in your client's data center, of course) and offers privacy controls.
Standard pricing for Clearwell Intelligence Platform is $65,000 per 100 GB of managed data. Compared with processing fees of about $1,500 per gigabyte of data, Clearwell Intelligence Platform costs clients about $650 per gigabyte to reduce the data required for review. By reducing the amount of data to be reviewed (which, again, is more expensive per gigabyte than the processing work), companies can realize significant savings -- a minimum of $200,000 per 100 GB, assuming 1% is actually reviewed.
As an alternative to a product like Clearwell Intelligence Platform, there are specialized electronic data discovery service providers, such as Huron Consulting Group Inc., that deliver multiple services. But those providers generally don't articulate those services (such as filtering, data reports, tape processing, hosting and file preparation for review) in their processing fees.
The bottom line is that this is great business opportunity for service providers. Expanding your IT sales and services to a key business group in your clients' organizations should move to front and center as a priority for 2008 through 2010. You can be assured that most companies' legal business units have the capacity to purchase software that would reduce their electronic data discovery budgets. This service area can be a win for both you and your customers.
About the author
Joshua Konkle is vice president of consultancy DCIGInc.com. He has worked in a variety of end user roles, including technology training and product management, and has been a director for SNIA's Data Management Forum. Joshua has spoken at archive and electronic data discovery conferences across the country.