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Building the Business Case for Compliance and e-Discovery. James Watson, PhD, Doculabs. Introduction Challenges Clients Experience in Developing Business Cases Cost and Benefit Categories Interactive Examples. 2. About Doculabs. - PowerPoint PPT Presentation
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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
Slide
© 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
Slide
© Doculabs, Inc. 2014
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
4
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© Doculabs, Inc. 2014
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
5
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© Doculabs, Inc. 2014
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
6
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© Doculabs, Inc. 2014
Core Elements of a Business Case 7
Key Components of the Doculabs’ Business Case Modeling Framework
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© Doculabs, Inc. 2014
Storage Calculator 8
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© Doculabs, Inc. 2014
E-Discovery Calculator 9
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© Doculabs, Inc. 2014
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
10
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© Doculabs, Inc. 2014
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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© Doculabs, Inc. 2014
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
12
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© Doculabs, Inc. 2014
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
13
*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
Contact: James Watson, PhD312-881-1620