We’ve written about the e-discovery services market a few times, describing the software landscape and discussing alliances between MSPs and application vendors. MSPs carving a niche in the legal market wrap a range of services around e-discovery software products. Those services include consulting, remote management, hosting, and services specific to the e-discovery process. But the trends don't end there.
Vendor ties give MSPs more influence over product directions and better integration for clients. Vendors get marketing and professional services allies. But while the partnering continues, some software vendors are gaining a bigger footprint in the services territory. Indeed, a newly published analysis of e-discovery services names a software vendor as the segment’s marketshare leader. Market research firm IBISWorld has published a report on the e-discovery service providers industry and found that Autonomy has 12.2 percent market share. Symantec Corp. also has 7.9 percent of the market. (HP is in the process of acquiring Autonomy; the deal is expected to be completed by the end of 2011.)
A spokeswoman for IBISWorld suggested that acquisitions have helped fuel the vendors’ push into services.
“There is a trend toward providers of the e-discovery software also offering support services,” she said. “As larger tech companies like Hewlett-Packard and Symantec pick up the smaller, specialized software providers, they also add more services to attract new clients and expand revenue streams.”
Symantec Corp. in July completed its purchase of e-discovery vendor Clearwell Systems. Hewlett-Packard agreed in August to acquire Autonomy, a software firm that offers e-discovery software and services among other product lines. That deal is slated to close in by year’s end. Autonomy earlier this year purchased the bulk of Iron Mountain’s digital operations, including e-discovery.
The software vendors’ presence in services puts pressure on MSPs to differentiate. That probably means acquiring and maintaining an in-depth knowledge of the e-discovery process as opposed to a solely technical focus. Some MSPs are well down this path already.
Rollup Ahead?There’s another upshot of e-discovery buyouts, however: IBISWorld’s report said acquisitions are shrinking the pool of services firms at an estimated average annual rate of 2 percent over the 5 years to 2011. The market watcher puts the population of e-discovery service providers at 612.
Still, that number of companies, and the lack of a dominant provider, would seem to make the sector ripe for a rollup. We’ll find out eventually if the e-discovery services prove sufficiently enticing to private equity firms.