Building the Business Case for Compliance and e-Discovery James Watson, PhD, Doculabs.

Building the Business Case for Compliance and e-Discovery

James Watson, PhD, Doculabs

Agenda

1. Introduction2. Challenges Clients Experience in

Developing Business Cases3. Cost and Benefit Categories4. Interactive Examples

2

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© Doculabs, Inc. 2014

About Doculabs 3

Doculabs is a consulting firm that helps organizations develop sound technology strategies for content- and process-related applications.

Our engagements focus on helping clients leverage their existing ECM investments on a broader enterprise basis through objective analysis and in-depth market knowledge.

This approach is based on our fundamental belief that in order to protect a client’s long-term interest, technology advisors should not be implementers.

Quick Facts• Founded in 1993• Headquartered in Chicago• Privately held• Delivered more than 800 ECM engagements to

more than 450 customers

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How to Justify Investments?

One-Time Costs

Fines, Penalties, Judgments

• Frequency and magnitude difficult to measure

• Use of “scare tactics” – avoid the situation of competitor XYZ

Operating Costs

Internal Labor, System Costs (Storage Hardware), Services Vendors

• On-going and measurable

• Spread across many departments and budgets, so difficult to collect

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Operating Costs – Two Primary Benefit Streams

Storage Hardware

Retain fewer documents and email , use less storage

• Easy to identify hardware expenses via purchase history and/or depreciation expenses within budget

• Often considered “hard” savings by management

Discovery Labor

Reduced discovery effort as less ESI must be culled and reviewed

• 3rd party service providers: direct, controllable expense

• For internal labor: potentially less controllable

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Direct vs. Indirect Expenses

Direct Expenses

Monies tied to acquiring equipment, services, internal labor

If the equipment removed, services cancelled or labor terminated, the expense is reduced proportionately

• Little question about the purchase price or fees from a vendor

• Easy to quantify historic expenses and expects costs (via proposals)

• Typically reflects the “cash” leaving a firm

Indirect (or allocated) Expenses

Fully burdened cost, typically including allocations for items such as management overhead, labor benefits, infrastructure, facilities, etc.

• Can be as much as 200%-300% of direct costs

• Often these expenses cannot be eliminated, and are just re-allocated if the direct expense is reduced

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Core Elements of a Business Case 7

Key Components of the Doculabs’ Business Case Modeling Framework

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Storage Calculator 8

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E-Discovery Calculator 9

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Interactive Calculators

• The two interactive calculator samples shown by James at the conference can be downloaded from www.doculabs.com:– Both are embedded in whitepapers discussing the variables

used and how the calculations work

• To use the interactive capabilities:– When you open the PDF files, you must “trust” the source to

enable the interactivity– Click on the buttons to perform calculations, change the

sliders to adjust variables, etc.

• Set up a briefing with a Doculabs consultant for a more detailed discussion

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http://www.doculabs.com/

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Assumptions Description

Storage

• 500 terabytes of unstructured content contained in shared drives on Tier 1 storage

• 112.5 terabytes of email on Tier 1 storage• 62.5 terabytes of unstructured content in SharePoint on Tier 1 storage• Estimated 30% of email is duplicate content (7% of overall content)• Estimated over-retained content eligible for immediate purging is 20%

Growth • Shared drive volume growth at 35% per year• Email volume growth at 35% per year• SharePoint volume growth at 35% per year

Cost • Tier 1 storage costs of $4.00 per gigabyte per year • Tier 2 storage costs of $1.00 per gigabyte per year • Tier 3 storage costs of $0.25 per gigabyte per year • Storage costs decline by 10% per year over the next 3 years

Energy • Cost per kilowatt hour for storage power is $.09 (national average)• 1.55 lbs. of CO2 emissions per kilowatt hour

11Business Case Development – Storage

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Business Case Development – e-Discovery

Variable Description

Type of Event

• Standard Event – The most common type of litigation; e.g. small HR claims and/or other minor legal matters

• Rigorous Event – Less frequent than standard events; e.g. contractual, or intellectual property disputes

• Exhaustive Event – The least frequent yet the most costly type of litigation; e.g. class action lawsuits or U.S. Department of Justice actions

Categories and Numbers of Employees Involved

• Tier 1 – Employees involved in the matter and likely to possess unique and relevant information

• Tier 2 – Employees involved in the matter but likely to possess only redundant or non-relevant information

• Tier 3 – employees involved in some activities related to the matter, but highly unlikely to possess any relevant information

Data Storage per Employee

• Average email storage per employee (MB)• Average shared drive storage per employee (MB)• Average local storage per employee (MB)

Processing Costs – External Search Provider

• Processing cost per GB• Processing cost per email box

Costs of FTEs Involved in Discovery Effort

• Information Technology• Internal Legal Support• Internal Legal• External Legal• Third-party Review

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Summary Financial Metrics

Current Costs (3 yrs.)

Future Costs(3 yrs.)

Investment Savings(3 yrs.)

Storage via Archival

$11.5 $7.3 $2.1* $4.2

Discovery $19.5 $10.6 $2.1 * $4.7

Total $31.0 $17.9 $4.2 $8.9

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*The $4.2 million of investment shown in the e-Discovery calculator was split between the two benefit streams

Thank YouDoculabs, Inc.

(312) 433-7793

[email protected]

Contact: James Watson, PhD312-881-1620

[email protected]

Building the Business Case for Compliance and e-Discovery James Watson, PhD, Doculabs.

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