E-Discovery: making law firms earn their fees

A Wall Street Journal article (subscription required) points out an interesting side benefit of the latest e-discovery tools: reduction of low-value work for law firms. That is, not a benefit to the law firms, but to their clients.

First, some background. E-Discovery refers to the production of electronic documents during the discovery phase of litigation. As more and more corporate records are managed in electronic format, it becomes increasingly important to be able to search and produce these records in a timely fashion. Recent amendments to the Federal Rules for Civil Procedure (FRCP) made major changes regarding how companies must produce such information.

To serve these needs, software providers, such as Autonomy, as well as major vendors such as H-P, Xerox, IBM, and EMC, have been pushing e-discovery solutions that centralize information about an organization's electronic documents and facilitate search and retrieval of information when needed to support litigation.

The WSJ article points out that some law firms aren't happy about the new tools. Why? Because they allow clients to cut back on the amount of low-level billable hours that law firms assign to junior attorneys--tasks such as reading through boxes of paper documents looking for relevant information. The WSJ quotes Michael Lynch, CEO of Autonomy:

"The old-fashioned way of doing this was having a lot of lawyers doing a lot of simple things," he says. "You would literally have lawyers reading through things saying 'there was chicken for lunch.' You don't need lawyers to know it's a lunch menu."

Recent experience at Comcast is similar:

When outside lawyers working for the cable company recently requested thousands of archived documents for a court case, Genny Garrett, who is in charge of managing Comcast's records, found them by doing a search from her desktop computer.

The lawyers "were surprised," she says, that "they didn't have to wander around a warehouse" looking for records, a task that once generated big legal fees.

My view. Sound legal advice in a time of need is worth every penny. Nevertheless, a law firm's value is not in running up billable hours for clerical work that is better automated. Clients should welcome e-discovery tools as a way of focusing law firms on rendering legal advice instead of paper pushing.

On a side note, the Oracle v. SAP lawsuit has generated document requests from both sides for many thousands of documents and terabytes of data. It's a good example of the challenge of discovery in the information age. From my reading of court documents it appears that both sides are making good use of the type of e-discovery tools discussed in the WSJ article.

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More layoffs at Epicor

Spectator readers have been reporting more layoffs at Epicor:

• Five in early August from Epicor's CRS Retail Systems unit in Newburgh N.Y.
• An unknown number of Epicor employees in the firm's Montreal office
• In mid-July, 40 employees including "quite a few" management and consultants from the Vantage side

I've not yet gotten a response from Epicor's analyst relations office for verification. If other readers have additional information, please let me know.

Separately, a discussion with a local sales rep for an Epicor competitor indicates that Epicor is doing a good job getting their sales team into new deals. According to this Tier II ERP competitor, they see Epicor in nearly every deal.

The reported layoff of Vantage consultants concerns me. If the previously reported increase in consultant utilization is in part due to cutting the number of consultants, Epicor may have trouble delivering services to back up the good efforts of its sales force.

Update, Nov. 13: Fresh round of layoffs at Epicor.

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Court ruling strengthens legal basis for open source

A ruling by a federal appeals court yesterday in a copyright case (Jacobsen v. Katzer) sets an important precedent for the enforceability of open source licenses.

The Wall Street Journal reports:

The case centers around free software used in model trains that Robert Jacobsen, a model-train enthusiast, made available online. Mr. Jacobsen alleged that Matthew Katzer, and Mr. Katzer's company, used the software to develop commercial software products for model trains without following the terms of the software's license. Mr. Jacobsen alleged that Mr. Katzer had infringed copyright.

A lower court had ruled that the license in question was "intentionally broad" and therefore could not be used as the basis for copyright infringement. The U.S. Court of Appeals, however, overruled the lower court and "determined that the terms of the Artistic License are enforceable copyright conditions" (quoting the court's opinion).

Jeff Neuburger in the New Media and Technology Law Blog comments (hat tip: Dan Slater, WSJ):

There are so few judicial opinions dealing with open source licenses that any single one is of great interest, but the pro-open source ruling of the Court of Appeals for the Federal Circuit in Jacobsen v. Katzer, No. 2008-1001 (Fed. Cir. Aug. 13, 2008) easily goes to the top of the charts of this small category. This is a highly significant opinion that will greatly bolster the efforts of the open source community to control the use of open source software according to the terms set out in open source licenses.

Open source software continues to be an exciting front for innovation in IT infrastructure and business applications. But some corporate executives have been reluctant to embrace open source software because of a perceived threats of legal liability. Although Jacobsen v. Katzer does not address the sorts of legal issues that most corporate executives are concerned about (e.g. misappropriation of intellectual property), this ruling does begin to build a legal foundation for open source. Open source developers have a right to limit how their work is used to ensure that it remains "open."

The court's full ruling is online.

Update, Oct. 4, 2008: Bruce Perens, creator of the Open Source Definition, has a long article in Datamation, analyzing the case. In addition, the voluminous set of court documents is posted on Sourceforge.

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JDA to acquire i2, creating major SCM player

i2's quest for a buyer has ended, with the announcement of an acquisition by competitor JDA. In 2005, JDA acquired one of the other major supply chain management vendors, Manugistics. Now with it's pick up of i2, it is poised to be the dominant best-of-breed developers of supply chain management (SCM) systems worldwide, with revenues exceeding $600 million and over 6,000 customers.

Even with the combination of i2 and JDA, however, the supply chain management marketplace is still highly fragmented, with dozens, maybe hundreds of niche players. Custom software also plays an important role. Still, JDA will now have a strong array of product offerings for both discrete and process manufacturers and distributors.

But JDA faces more formidible competition. Over the past five years, Oracle and SAP have greatly enhanced their SCM offerings. Though in some ways they still lag functionality now in JDA's portfolio, their promise of ready integration with their own ERP systems is quite attractive to customers of these Tier I ERP vendors.

i2 has been languishing over the past five years. The acquisition by JDA should be a welcome development for i2's customers.

The parties expect the deal to close in the fourth quarter of 2008. JDA's press release it on its website.

Word of the deal may have slipped out early. About a week ago I started to get web hits from Google from individuals searching on various combinations of the words "JDA," "i2," and "acquisition."

Update, Aug. 12. Sarah Lacy has a post that is downright mean in its assessment of i2, though pretty realistic: i2: The Software Company Even Oracle Didn't Want. She points out that JDA's purchase price of $346 million barely exceeds i2's $300 million a year in annual subscription and maintenance revenues.

Update, Aug. 13. Dennis Howlett reflects on the lengths to which i2 fell from its days in the dot-com boom:

I well recall the heady days when i2 boasted of its then record breaking $9.3 billion acquisition of Aspect Development at a time when i2 was attempting to become the dominant demand planning and B2B internet business trading platform provider. Its 2000 customer conference was an exercise in corporate arrogance with the then president Greg Brady lambasting journalists like myself who could not see the sustainability of i2’s business strategy. That was the same year i2 offered a bounty of $500 to anyone who went and got the company’s logo tattooed on themselves. Some weeks later, i2 re-designed the logo.

Howlett is not optimistic about JDA's plans for the combined company:

Less palatable is the combined company expects to ramp up EBITDA to 23.9%, in part based upon $20 million near terms savings but also combined maintenance revenues of 46.9% total revenue. I’d prefer to see JDA invest more heavily in innovation for the vertical markets in which it has successfully focused. Yet it seems that generally, we have entered a period where the financial markets are more interested in recurring revenues than what the vendor can do for customers.

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Oracle's secrecy on Fusion specifics

Oracle apparently is making progress in its Fusion program, to develop best-of-breed applications based on its myriad acquisitions, but it is publicly disclosing very few details of its efforts or its plans for Fusion.

Bill Kutik in HR Executive Online writes:

...there is the continued secrecy around Fusion, the long-awaited next generation of applications built on a single architecture, with the best features and functions of everything Oracle owns. When Oracle executives' only comments on Fusion change from "available in 2008" to "early adaptors by the end of 2008," that's actually significant! And isn't that ridiculous?

He also provides this humorous account of Oracle's secrecy at the Oracle HCM User Group (OHUG) this year:

...at OHUG this year, Oracle held a secret briefing for its customer Strategy Council on Fusion HCM. That and earlier private client meetings resulted in five glowing (but unattributed) quotes for the PowerPoint presentation, including ones from Alcoa and 3M.

After signing a nondisclosure agreement with penalties bordering on giving up her first born or a major limb, analyst Christa Degnan Manning of AMR was asked into the meeting to give an outsider's reaction. Despite an intensive waterboarding session from other analysts afterward, she would say nothing.

Lately, I'd been thinking that, from a marketing point of view, Oracle has been foolish to maintain such secrecy, instead of leaking out details and building widespread enthusiasm. The five blind quotes are headlined "Customers are Engaged and Excited." Sure, maybe some of those who have been briefed are.

But the rest, judging from the OHUG audience, went from intense curiosity last year to utter indifference this year. Remember, with Applications Unlimited, everybody is getting upgrades of every major application.

What does this mean for new and existing customers of Oracle? Kutik references a recent Gartner report that claims Oracle plans to only sell Fusion to new customers and that "migrating the installed base to Fusion is no longer a near-term goal." Furthermore, the 2008 Fusion applications will not include any core ERP products but will be focused on so-called "Fusion Edge" applications, which I take as meaning functionality generally considered as complementary products.

Although such an incremental approach to Fusion does not make for exciting analyst briefings, it does mean stability for new and existing Oracle customers. Nothing is more disruptive to the installed base as a forced march toward a major new product. Oracle ERP prospects can buy Oracle's E-Business Suite, J.D. Edwards, or PeopleSoft applications without much concern that these products will become orphaned in favor of some next generation Fusion applications. This is contrary to what many, including I, feared when Oracle started its acquisition program with PeopleSoft and JDE.

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