Article by Rob Robinson
The Kinetics of Three eDiscovery Business Metrics
The eDiscovery Business Confidence Survey is a non-scientific quarterly survey designed to provide insight into the business confidence level of individuals working in the eDiscovery ecosystem. The survey consists of nine core multiple-choice questions focused on factors related to the creation, delivery, and consumption of eDiscovery products and services. Additionally, the survey includes the following three optional questions focused on the business operational metrics of days sales outstanding (DSO), monthly recurring revenue (MRR), and revenue distribution across customer bases.
- How would you characterize the trajectory of your organization’s Days Sales Outstanding (DSO) during the last quarter? DSO represents the average number of days it takes credit sales to be converted into cash, or when a company’s account receivables can be collected.
- How would you characterize the trajectory of your organization’s Monthly Recurring Revenue (MRR) during the last quarter? MRR is income that a company can reliably anticipate every 30 days. Revenue from one-time purchases billed at the time of purchase is not included in MRR.
- Which of the following statements best describes the distribution of your organization’s revenue across your customer base during the last quarter? Distribution is the reduction of revenue concentration across the customer base. The customer base is the group of customers who repeatedly purchase the products or services of a business.
Survey participants were presented with four potential answers to the optional business operational metric questions and asked to select one. The choices were as follows:
- Do Not Know
The three optional questions regarding business operational metrics were introduced into the quarterly eDiscovery Business Confidence Survey during the winter 2019 survey and to date, approximately 383 individual responses to these optional questions have been received over the course of three surveys.
The aggregate results of the answers to the business operational metric questions are shared in the following observations and charted overviews. They provide an interesting vector view of the trajectories of these important measurements and the results may also be helpful to business and legal professionals as they consider the current conditions and trends in the business of data and legal discovery.
Key Observations in the Summer of 2019
- In the summer of 2019, 156 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. This is approximately the same number of participants that answered the optional business metrics questions in the spring 2019 survey when 158 survey participants responded to at least one optional business operational metric survey question.
- In the summer of 2019, 90.2% of eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric questions in the quarterly survey. This is a slight increase in percentage from the 88.3% of participants answering the optional business operational metric questions in the spring of 2019 survey.
- In both the spring 2019 and summer 2019 surveys between 42% and 52% of the respondents (depending on the question) did not know whether DSO, MRR, or distribution of customer revenue-based measures were increasing, unfluctuating, or decreasing.
Days Sales Outstanding (Chart 1)
- Almost 19% (18.6%) of survey respondents reported DSO as increasing in the summer of 2019. This is a slight increase from approximately 18% (17.6%) reporting DSO as increasing in the spring of 2019.
- There was a slight increase (1.1%) in the summer 2019 percentage (23.7%) of respondents reporting DSO as unfluctuating when compared to spring 2019 reporting (22.6%).
- Only 5.8% of survey respondents reported DSO as decreasing in the summer of 2019. This is a slight drop from reporting in the spring of 2019 when 6.3% of respondents noted decreasing DSO.
Monthly Recurring Revenue (Chart 2)
- There was a solid increase (4.2%) in the summer 2019 percentage (32.7%) of respondents reporting increasing MRR when compared to spring 2019 reporting (28.5%).
- There was a decrease (3.0%) in the summer 2019 percentage (16.0%) of respondents reporting MRR as unfluctuating when compared to spring 2019 reporting (19.0%)
- Approximately 8% of survey respondents in the summer of 2019 (7.7%) reported decreasing MRR. This is the highest reported percentage of respondents reporting decreasing MRR to date (three surveys).
Distribution of Revenue Across Customer Base (Chart 3)
- The percentage of survey respondents reporting an increasing distribution of revenue across their customer base increased solidly (3%) between the spring of 2019 (27.8%) and the summer of 2019 (30.8%).
- There was an increase (3.4%) in the summer 2019 percentage (22.4%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to spring 2019 reporting (19.0%)
- The was also a noticeable decrease (1.8%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with only 4.5% reporting a decreasing distribution of revenue in the summer of 2019.
(Charts Can Be Expanded for Detailed Viewing)
Chart 1: An Aggregate Overview of Days Sales Outstanding (DSO) Trajectory
Chart 2: An Aggregate Overview of Monthly Recurring Revenue (MRR) Trajectory
Chart 3: An Aggregate Overview of Distribution of Revenue Across Customer Base
Running Listing of eDiscovery Business Confidence Survey Results
- Summer 2019 Survey ( 1 July – 17 July 2019) With Business Operational Metrics Questions
- Spring 2019 Survey (1 April – 18 April 2019) With Business Operational Metrics Questions
- Winter 2019 Survey (27 December 2018 – January 10, 2019) With Business Operational Metrics Questions
- Fall 2018 Survey (14 October – 26 October 2018)
- Summer 2018 Survey (4 July – 24 July 2018)
- Spring 2018 Survey (7 April – 20 April 2018)
- Winter 2018 Survey (24 December 17 – 15 January 2018)
- Fall 2017 Survey (5 October – 17 October 2017)
- Summer 2017 Survey (6 July – 31 July 2017)
- Spring 2017 Survey (14 April – 1 May 2017)
- Winter 2017 Survey (20 January – 6 February 2017)
- Fall 2016 Survey (11 October – 1 December 2016)
- Summer 2016 Survey (1 August – 31 August 2016)
- Spring 2016 Survey (1 May – 31 May 2016)
- Winter 2016 Survey (15 February – 29 February 2016)
- The Short List: An Abridged eDiscovery Directory
- From Alexa to iTunes: Audio Updates on eDiscovery
The post eDiscovery Business Kinetics: DSO, MRR, and Customer Revenue Distribution (Summer 2019) appeared first on ComplexDiscovery.