Category Archives: Cloud Data

Important SaaS Architecture Considerations for Legal Tech Software

by Kunjan Zaveri

With nearly all eDiscovery software now being offered on a SaaS basis, the cloud architecture decisions supporting the vendor’s platform are pivotal. Decisions on architecture design can lead to either very successful or very poor outcomes. The right architecture depends on the company’s SaaS delivery strategy, their customer profile and size, and the volume and nature of their anticipated transactions. These considerations are especially important in the legal tech space, which has some unique requirements and market dynamics such as heighted security and customization for large clients, and channel support (requiring platform portability), which are generally not as relevant to general SaaS architecture considerations.

At a high level, it is important to understand the two main SaaS architectures: multi-tenancy and single-tenancy. In cloud computing, tenancy refers to the allocation of computing resources in a cloud environment. In SaaS, tenancy is categorized into two formats: single-tenant SaaS and multi-tenant SaaS. In the single-tenant SaaS environment, each client has a dedicated infrastructure. Single-tenant products can’t be shared between clients and the buyer can customize the software according to their requirements. Multi-tenancy is an architecture where a single instance of a software application serves multiple customers. In a multi-tenant SaaS environment, many organizations share the same software and usually the same database (or at least a portion of a common database) to save and store data.

Single-tenancy and multi-tenancy SaaS each have their advantages and disadvantages, and the selection of either approach by a legal tech SaaS vendor should depend on their overall product and go-to-market strategy. Here are some of the advantages of a single-tenancy architecture:

1. Improved Security

With single-tenancy, each customer’s data is completely isolated from other customers with fewer and more trusted points of entry. The result is better overall security from outside threats and the prevention of one customer accessing another’s sensitive information, either intentionally or inadvertently.

2. Reliable Operations and Individual Tenant Scalability

Single-tenant SaaS architectures are considered more reliable as there is not a single point of failure that can affect all customers. For example, if one client uploads a massive amount of corrupt data that taxes resources and crashes the system, it won’t affect another clients’ instances. Single-tenancy is actually more scalable within an individual client instance, while multi-tenancy can better scale the addition and management of many customers.

3. Customization

Many large customers need specific features or unique security measures that require custom development, which can be very difficult in a multi-tenancy environment. Companies that use single-tenancy architecture can upgrade their services individually. Rather than waiting for the software provider to launch a universal update, users can update their accounts as soon as the download is available or decline patches that are not needed by a specific customer.  

4. Portability

With single-tenancy, a vendor can host their platform in their own SaaS environment, a channel partner’s environment, or enable their customers to install the solution behind their firewall or in their private cloud. Multi-tenancy SaaS does not allow for this flexibility.

Multi-tenant SaaS Advantages

Multi-tenancy is commonly utilized as most SaaS offerings are consumer or otherwise high-volume commoditized offerings, which necessitates such an architecture. Here are some of the key advantages of multi-tenant SaaS architecture over single-tenant:

1. Lower Costs

Since computing services are all shared under a multi-tenant architecture, it can cost less than a single-tenant structure. Scaling across the customer base is easier as new users utilize the same uniform software and resources as all the other customers.

2. Efficient Resources Spread Across all Customers

Because all resources are shared and uniform, multi-tenant architecture uses resources that, once engineered, offer optimum efficiency. Since it’s a changing environment where resources are accessed simultaneously, multi-tenant SaaS software needs to be engineered to have the capacity for powering multiple customers at once.

3. Fewer Maintenance Costs

Maintenance costs are usually associated with a SaaS subscription and aren’t passed through to the customer or incurred by the channel partner like with a single-tenant structure.

4. Shared Data Centers

Unlike a single-tenant environment, a vendor doesn’t have to create a new instance within the datacenter for every new user. Customers have to use a common infrastructure that removes the need to continually add partitioned instances for each new tenant.

So which architecture is the right one for a legal tech SaaS vendor? It completely depends on the company’s strategy, pricing, and nature of the offering. To illustrate this point, consider the examples of two hypothetical legal tech SaaS vendors: Acme and Widget.

Acme provides do it yourself data processing on a high-volume, low-cost basis, handling about 700 matters a week at an average project value of $400. Acme’s customer base is primarily small to medium size law firms and service providers who have multiple projects on different cases over the course of a year. Acme’s clients do not want to fuss with hardware or any software maintenance requirements.

Widget offers an enterprise-grade compliance and security data analytics platform, sold at an average sale price (ASP) of $400,000, but as high as $2 million for a dedicated annual license. Widget has 32 active enterprise customers and hopes to grow to 70 customers in three years with an even higher ASP. About a third of Widget’s clients prefer that Widget host the solution in Widget’s cloud instance. Another group of clients are large financial institutions that, for security and governance purposes, insist on self-hosting the platform in their own private cloud. The rest are instances sold through channel partners who prefer to host the platform themselves and provide value added services. Many Widget customers have particularized compliance requirements and other unique circumstances that require customization to support their needs.

For Acme, the correct choice is multi-tenancy. Acme offers a commoditized SaaS service, and it needs a high volume of individual customers to drive more transactional revenue growth. A single-tenancy architecture would prevent the company from scaling, would be too expensive, and unmanageable. However, some legal tech companies who have opted for this architectural approach have made the mistake of pursuing a more low-market commoditized strategy without making the initial considerable investment in engineering expertise and resources to build such an architecture.

In contrast, single-tenancy is the optimal architecture choice for Widget. While single-tenancy cloud is slightly more challenging to support, Widgets’ premium enterprise offering requires portability for the channel and rigorous security minded clients as well as customization, and thus is a clear fit for single-tenancy. In the future, Widget may have closer to a thousand customers or be acquired by a much larger company that will want to deploy the solution to their extensive client base. It would be a good idea for Widget to architect their single-tenancy platform in a manner, such as employing microservices, that will allow it to readily port it to a multi-tenancy environment when warranted.

So, for legal tech executives, the question to ask is whether your strategy and product offering is more in line with Widget or Acme. But the bottom line is to make sure your strategy drives your choice of architecture and not the other way around.

Kunjan Zaveri is the Chief Technology Officer of X1. (www.x1.com)

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Filed under Best Practices, Cloud Data, eDiscovery, Enterprise eDiscovery, SaaS

Usage-Based Pricing Model Increasingly Driving eDiscovery Software Growth

by John Patzakis

Legal Tech software CEOs often grapple with two competing challenges: Growing revenue in a manner that supports how customers buy their products for their individual cases, while at the same time maximizing shareholder value by recording recurring revenue, which the investor community typically favors. Recurring revenue generally comes in the form of fixed annual or monthly subscription licenses.

However, eDiscovery software providers are increasingly aligning their SaaS pricing strategy with the amount of product usage their customers consume. Instead of paying a fixed rate, the pricing is based upon actual usage. The benefits of this approach include a shorter and simpler purchasing process and increased customer satisfaction and retention.

In the eDiscovery space, customers often prefer to pay by “matter”, i.e., per lawsuit or legal case. Law firms and service providers typically utilize eDiscovery SaaS software specific to an individual case on a pass-through cost basis, where their end-client ultimately pays for the services. In the case of corporate law departments, oftentimes the organization prefers to purchase annual subscriptions for eDiscovery and apply the license over multiple matters in the course of the year. However, such buying decisions vary by organization, with corporate counsel sometimes deferring eDiscovery workflow and tech decisions to their law firms, which favors a usage-based pricing model.

While tech companies with recurring annual term revenue will typically garner higher valuations, eDiscovery software firms with usage-based pricing models are now seeing similarly elevated valuations. Investors are recognizing the very unique economics and buying dynamics specific to the eDiscovery software space. But it is incumbent on eDiscovery software execs, their investment bankers, and board members to educate the broader market on this dynamic unique to the eDiscovery space. In some situations, investors new to this space attempt to apply a steep discount to usage-based SaaS revenue, as it doesn’t fit in with their “paint by the numbers” ARR models. Rick Weber, Managing Director of Legal Tech investment banking firm Arbor Ridge Partners notes, “while the usage model is not annual recurring, it is ‘monthly re-occurring,’ and thus projections and modeling can be made based on company history and industry norms and should be treated like ARR contracts.”

In fact, usage-based pricing is now gaining wider acceptance in the broader SaaS software market beyond legal tech. Cloud infrastructure providers AWS and Microsoft Azure are obvious examples of successful usage-based pricing strategies, but many startups and medium sized companies have successfully implemented the model as well. While usage-based revenue may seem less predictable compared to other pricing models, companies using this model are often growing faster, retaining more revenue, and valued at high revenue multiples. But again, this realization requires a closer look by investors and an intelligent education effort by the companies and their advisors.

One caveat for investors is to confirm that the value of the SaaS usage offering is mostly based upon proprietary software tech versus services that are dressed up as SaaS. Some eDiscovery service providers attempt to position their services as SaaS, without a true standalone propriety software component. An analysis of the cost of sales/gross margins and assessment of the actual proprietary nature of the software is determinative. Gross margins should be at least 80 percent. And while some services are often provided in conjunction with a SaaS usage-based offering, a qualifying factor is whether the software is also separately offered purely as a traditional license to end users without any services required, which is how many customers will opt to buy.

But for true usage-based SaaS offerings, the flexibility, simplicity and supporting of legal customers purchasing dynamics are key to rapid growth and customer satisfaction. As summarized by Weber, “many of the PE firms and investors that have made big bets on such companies in recent years seem to understand the nuance and opportunity while many still lag behind and simply need to think outside of their box.”

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Filed under Best Practices, Cloud Data, Corporations, eDiscovery, Enterprise eDiscovery, Information Management, SaaS, Uncategorized

Dark Web Evidence Critical to all Cyber Investigations and Many eDiscovery matters

The dark web is a component of the World Wide Web that is only accessible through special software or configurations, allowing users and website operators to remain anonymous or untraceable. The dark web forms a small part of the deep web, which is the part of the Web not indexed by web search engines. The dark web has gained more notoriety over the past few years and several large criminal investigations have resulted in seizures of both cryptocurrencies and dark web pages and sites. Criminal enterprises involving counterfeiting, hacking, ID and IP theft, narcotics, child pornography, human trafficking, and even murder for hire seek a haven in the mist of encrypted communications and payment, such as Bitcoin, to facilitate their nefarious schemes. dark web

While mining the dark web is critical for many law enforcement investigations, we are also seeing increased focus on this important evidence in civil litigation. Fero v. Excellus Health Plan, Inc., (Jan. 19, 2018, US Dist Ct, NY), is one recent example. Fero arises out of a data breach involving healthcare provider Excellus Health Plan, Inc. According to the complaint, hackers breached Excellus’s network systems, gaining access to personal information millions of individuals, including their names, dates of birth, social security numbers, credit card numbers, and medical insurance claims information. The Plaintiffs brought a class action asserting claims under various federal and state laws.

Initially, the court dismissed the plaintiffs’ case, citing a failure to establish damages and actual misuse by the hackers who allegedly stole their information. However, after conducting a more diligent investigation, the plaintiffs submitted with their motion for reconsideration evidence that the plaintiffs’ PII was placed on the dark web.  This evidence was summarized in an expert report providing the following conclusion:  “it is my opinion to a reasonable degree of scientific certainty that PII and PHI maintained on the Excellus network was targeted, collected, exfiltrated, and put up for sale o[n] DarkNet by the attacker for the purpose of, among other things, allowing criminals to purchase the PII and PHI to commit identity theft.”  Fero, at 17.  Based on this information, the court granted the motion for reconsideration and denied the defendant’s motion to dismiss. In other words, the dark web evidence was game-changing in this high-profile class action suit.

Cases like Fero v. Excellus Health Plan illustrate that dark web evidence is essential for criminal and civil litigation matters alike. Dark Web investigations do require specialized knowledge and tools to execute. For instance, X1 Social Discovery can be easily configured to conduct such dark web investigation and collections.

Recently, Joe Church of Digital Shield led a very informative and instructive webinar on this topic. Joe is one of the most knowledgeable people that I’m aware of out there on dark web investigations, and his detailed presentation did not to disappoint. Joe’s presentation featured a concise overview of the dark web, how its used, and how to navigate it. He included a detailed lesson on tools and techniques needed to search for and investigate key sources of evidence on the dark web. This webinar is a must see for anyone who conducts or manages dark web investigations. Joe also featured a section on how to specifically utilize X1 Social Discovery to collect, search and authenticate dark web evidence. You can review this very informative 30 minute training session (no sign in required) by visiting here.

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Filed under Best Practices, Case Law, Case Study, Cloud Data, dark web, eDiscovery, Preservation & Collection, Social Media Investigations, Uncategorized

Microsoft Office 365 is Disrupting the eDiscovery Industry in a Major and Permanent Fashion

The adoption of cloud-based Microsoft Office 365 (“O365”) within enterprises is growing exponentially. According to a 2016 Gartner survey, 78 percent of enterprises use or plan to use Office 365, up from 64 percent in mid-2014. O365 includes built-in eDiscovery tools in the Security and Compliance Center at an additional cost. Many, but not all, O365 customers are utilizing the internal eDiscovery module, to which Microsoft is dedicating a lot of effort and resources in order to provide a go-to solution for the eDiscovery of all information located within O365. o365-logoBased upon my assessment through product demos and discussions with industry colleagues, I believe Microsoft will achieve this goal relatively soon for data housed within its O365 platform. The Equivio eDiscovery team that transitioned over to Microsoft in a 2015 acquisition is very dedicated to this effort and they know what they are doing.

But as I see it, the O365 revolution presents two major takeaways for the rest of the eDiscovery software and services industry. The first major point comes down to simple architecture. Most eDiscovery tools operate by making bulk copies of data associated with individual custodians, and then permanently migrate that data to their processing and/or review platform. This workflow applies to all non-Microsoft email archiving platforms, appliance-based processing platforms, and hosted review platforms. As far as email archiving, a third-party email archive solution requires the complete and redundant duplication, migration and storage of copies of all emails already located in O365. This is counter-productive to the very purpose of a cloud-based O365 investment. We have already seen non-Microsoft email archiving solutions on the decline in terms of market share, and with MS Exchange archiving becoming much more robust, we will only see that trend accelerate.

eDiscovery processing tools and review platforms are also fighting directly against the O365 tide.  This is especially true for processing appliances (whether physical or virtual), which address O365 collections through bulk copy and export of all of the target custodians’ data from O365 and into their appliance, where the data is then re-indexed. Such an effort is costly, time consuming, and inefficient. But the main problem is that clients who are investing in O365 do not want to see all their data routinely exported out of its native environment every time there is an eDiscovery or compliance investigation. Organizations are fine with a very narrow data set of relevant ESI leaving O365 after it has been reviewed and is ready to be produced in a litigation or regulatory matter. What they do not want is a mass export of terabytes of data because eDiscovery and processing tools need to broadly ingest that data in their platform in order to begin the indexing, culling and searching process. For these reasons, most eDiscovery software and compliance archiving tools do not play well with O365, and that will prove to be a significant problem for those developers and the service providers who utilize those tools for their processes.

The second major O365 consideration is that organizations, especially larger enterprises, rarely house all or even most of their data within O365, with hybrid cloud and on-premise environments being the norm. The O365 eDiscovery tools can only address what is contained within O365. Any on-premise data, including on-premise Microsoft sources (SharePoint, Exchange and Office docs on File Shares) cannot be readily consolidated by O365, and neither can data from other cloud sources such as Google Drive, Box, Dropbox and AWS. And of course, desktops, whether physical or virtual, are critical to eDiscovery collections and are also not supported by the O365 eDiscovery tools, with Microsoft indicating that they do not have any plans to soon address all these non-O365 data sources in a unified fashion.

So eDiscovery software providers need to have a good process to perform unified search and collection of non-O365 sources and to consolidate those results with responsive O365 data. This process should be efficient and not simply involve mass export of data out of O365 to achieve such data consolidation.

X1 Distributed Discovery (X1DD) is uniquely suited to complement and support O365 with an effective and defensible process and has distinct advantages over other eDiscovery tools that solely rely on permanently migrating ESI out of O365. X1DD enables organizations to perform targeted search and collection of the ESI of up to thousands of endpoints, as well as O365 and other sources, all in a unified fashion. The search results are returned in minutes, not weeks, and thus can be highly granular and iterative, based upon multiple keywords, date ranges, file types, or other parameters. Using X1DD, O365 data sources are searched in place in a very targeted and efficient manner, and all results can be consolidated into Microsoft’s Equivio review platform or another review platform such as Relativity. This approach typically reduces the eDiscovery collection and processing costs by at least one order of magnitude (90%). For a demonstration or briefing on X1 Distributed Discovery, please contact us.

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Filed under Cloud Data, compliance, eDiscovery, Uncategorized

A Series of Firsts: How X1 Sets the Standard for the New Enterprise Search Market

by Barry Murphy

The new world of IT demands that enterprise software support varying infrastructures – traditional managed data centers, the cloud, hybrid and virtual environments.  As a result, old-school approaches that once seemed logical no longer work in today’s reality.  For example, tightly-coupled search appliances that marry hardware and software together no longer meet the requirements of enterprises that need to make distributed workers more productive no matter what kind of device they are on.  It’s a new world for enterprise search and traditional solutions will have a very hard time adapting and scaling.

X1 is ready for the IT reality of always-on, virtual, cloud, and hybrid environments and business mobility.  This is evidenced by two “firsts” that X1 is proud to announce.  First, X1 is the first search application with an app publicly available in an Enterprise Mobility Management (EMM) app store.  X1 Search Mobile is available in the AirWatch marketplace.  Given the rapid move to mobile devices for work, this is no small news.  Google just announced on Friday that searching the web is now predominantly done from mobile phones.

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It’s clear, then, that enterprise search from the mobile device is now an essential requirement for business professionals.  The mobile search app is important, but what X1 is building out is much more than that.  In order to effectively deliver enterprise search from the mobile device requires having the back-end infrastructure to support full enterprise search in virtual environments.  It also requires supporting the next-generation desktop (VDI or DaaS) where the users live. X1 has uniquely mastered such back-end infrastructure with the only desktop search (VDI or otherwise) and enterprise search solution that are VMware Ready certified.

The second “first” that X1 is proud of is the listing of X1 Rapid Discovery in the Amazon AWS Marketplace.  Again, this is no small feat – this is the first enterprise-grade search and eDiscovery application to be available in the AWS Marketplace.

AWS marketplace

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Organizations storing content in AWS can now get full-featured enterprise search and eDiscovery deployed right next to their content.  And, if these organizations store other content locally, they can deploy Rapid Discovery in their own data center as well and have a single-pane-of-glass across all information no matter where it lives.

X1 will continue to provide solutions that work in the infrastructures that organizations utilize today.  The traditional approach to search will not work, but with X1, companies will have the flexibility to deploy into any environment and give users a powerful search experience on any device.  That is a powerful productivity tool – and businesses require worker productivity the same way humans require oxygen.  It is a new enterprise search market out there and X1 is uniquely positioned to lead the charge.

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Filed under Cloud Data, eDiscovery, Enterprise eDiscovery, Hybrid Search, Information Management