E-discovery Vendor Revamps Pricing Model

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Kazeon Systems has rolled out a range of pricing plans for its e-discovery products, hoping to entice customers amid lean economic times.

E-discovery software is used in the course of collecting, organizing and storing information expected to be used in legal or regulatory proceedings.

Kazeon customers can now choose from subscription, per-gigabyte and per-case options, along with traditional perpetual licenses.

Users who want to avoid big up-front costs can start using Kazeon's software for about US$10,000, which provides a license to start a new case and some gigabytes to get started. Companies then pay between $100 and $150 for each additional gigabyte, a spokesman said.

Subscriptions are also available, with pricing varying depending on the length of the contract. The company is also offering licenses based on a specific case, since many companies begin e-discovery projects only as legal issues arise, the spokesman said.

Standard perpetual licenses cost $80,000.

While offering customers more flexibility, Kazeon's new pricing options could also help the Mountain View, California, company land more deals.

E-discovery companies face "several key challenges" in selling their wares, 451 Group analyst Brenon Daly noted in an October blog post.

"For starters, e-discovery products don't immediately appeal to departments that must budget to buy software, such as IT or finance. The end user of the e-discovery software, which in many cases is a company's general counsel, may not have the authority to write a check for an offering that can run $100,000 and up," Daly wrote.

Kazeon is one of many e-discovery vendors, such as Autonomy and AXS-One, who are toiling for share in a burgeoning market.

Some companies take other vendors' products and wrap services around them. Still others also provide data hosting. Forrester Research has predicted e-discovery spending will grow to more than $4.8 billion by 2011, up from $1.4 billion in 2006.

Forrester analyst Brian Hill is predicting that e-discovery adoption will increase this year as government bodies around the world enact new regulations and toughen up enforcement amid the economic downturn.

In an interview Wednesday, Hill said that pricing models such as Kazeon's are coming into vogue among other e-discovery vendors but are not yet mainstream.

That echoes the e-discovery market overall, which is "large but still in a fairly early stage, and it's fragmented," he said.

E-discovery projects are complicated as well, involving legal departments, IT staff and other stakeholders, and can take a while to get up and running, he said.

But at the same time, integration with existing systems is a key challenge for customers. "While it could be advantageous to get something up and running very quickly, there's the risk of having this not work well with what you've got installed," he said.

However, signs of maturity are beginning to appear, Hill added: "One thing I'm seeing is that organizations are starting to rationalize the e-discovery process, and looking at it like any other business process."

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