{"id":721,"date":"2021-04-13T14:27:07","date_gmt":"2021-04-13T14:27:07","guid":{"rendered":"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/?p=721"},"modified":"2022-11-28T17:12:09","modified_gmt":"2022-11-28T17:12:09","slug":"why-is-hosting-data-in-relativity-so-expensive","status":"publish","type":"post","link":"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/","title":{"rendered":"Why Is Hosting Data in Relativity So Expensive?"},"content":{"rendered":"\n

The cost of doing business may surprise you<\/em><\/h2>\n\n\n\n

As the price for\ncloud-based storage plummets on platforms like AWS and Google, it\u2019s surprising\nthat hosting vendors specializing in eDiscovery\u2014and specifically those hosting\ndata in Relativity\u2014continue to charge so much. <\/p>\n\n\n\n

As it turns out, it\u2019s\nnot a racket. It\u2019s not just a bunch of greedy vendors soaking clients for all\nthey\u2019re worth. In fact, there are a lot of costs\u2014some of which aren\u2019t obvious\u2014 that\ncontribute to the hefty price tag. The following is a behind-the-scenes look at\nhosting in the world of eDiscovery: what it takes, what it costs, and why those\nper-GB fees are so high. <\/p>\n\n\n\n

Two quick notes <\/strong><\/h4>\n\n\n\n

Overhead.<\/em> Keep in mind that hosting vendors have more\ncosts than just those I\u2019m about to share. Sales, marketing, administration,\ncost of capital, taxes, and dozens more \u201coverhead\u201d costs all contribute to the\nprice clients pay for hosting (those Legal Week parties don\u2019t pay for themselves!).\nHowever, these are not factored into this article. I\u2019m focusing on the costs\n\u201cdirectly\u201d attributable to Relativity hosting. <\/p>\n\n\n\n

Percentages.<\/em> The specific dollar amounts associated with the\ncost of hosting fluctuate over time and vary widely based on several factors\u2014factors\nthat are outside the scope of this article. So, in order to avoid repeating the\nphrase, \u201cit depends,\u201d a million times, I chose not to attach specific dollar\nfigures to individual costs and instead expressed each as a fraction of the overall cost\nattributable to hosting.<\/p>\n\n\n\n

1. Software Licensing<\/strong><\/h4>\n\n\n\n

First and foremost,\nRelativity is expensive to license\u2014as it should be. It takes a lot to develop,\nmaintain, and support a very sophisticated platform like Relativity. The\npremium price tag can only be justified by a premium solution which, in my\nopinion, they deliver. <\/p>\n\n\n\n

That said, most vendors\n\u201cpass through\u201d the cost of licensing Relativity to their clients in the form of\na monthly user fee. This \u201cpass through\u201d gives clients the impression that the user\nfee covers the software licensing costs for the vendor, but that\u2019s not actually\nthe case because Relativity isn\u2019t the only software license required to\noperate a Relativity instance.<\/em> <\/p>\n\n\n\n

SQL, complementary\neDiscovery applications like Brainspace, Microsoft Office, and plenty more (processing\ntools, file transfer tools, antivirus programs, intrusion detection, the list\ngoes on) must be licensed to make Relativity work like it\u2019s supposed to. <\/p>\n\n\n\n

And\u2026each of these \u201csupporting\u201d\napplications has its own requirements for hardware, maintenance, and support\u2014all\nof which adds up. <\/p>\n\n\n\n

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15%. While Relativity makes most of its money from monthly user fees, hosting vendors recover the costs for all other supporting software in the monthly hosting fee.<\/strong><\/em><\/p>\n\n\n\n

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2. Data Centers<\/strong><\/h4>\n\n\n\n

The data center is a\nbig, physical building (think Costco on steroids) that\u2019s built specifically for\nhousing thousands of refrigerator-sized cages. Each cage is designed to hold a\nstack of high-powered servers connected to each other and to the outside world\nvia fiber-optic cables. <\/p>\n\n\n\n

Data centers (good ones at least) are protected 24\/7 by armed security personnel and have incredibly robust plans for power and climate control. Robust in terms of sophistication, but more importantly, in terms of redundancy. End users\u2014whether YouTube or Relativity users\u2014have very little tolerance for downtime and it\u2019s the data center\u2019s job to make sure that any real-world problems (like power outages) don\u2019t impact the user\u2019s virtual world. <\/p>\n\n\n\n

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2%. Companies pay up to $3,000 per square foot per month for top-tier data centers, making it some of the most expensive real estate in the world.<\/strong><\/em><\/p>\n<\/div><\/div>\n\n\n\n

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3. IT Infrastructure<\/strong><\/h4>\n\n\n\n

Next, the cost of servers,\nor more broadly, the IT infrastructure<\/em> that supports the end user\u2019s\nexperience. <\/p>\n\n\n\n

Every industry has different infrastructure requirements based on what it\u2019s trying to accomplish. In eDiscovery, we need high-performing storage arrays<\/em> capable of quickly reading and writing millions of small files (tiff, jpg, msg, txt).<\/p>\n\n\n\n

Because \u201cmillions of\nsmall files\u201d is somewhat unique to eDiscovery, the servers required to meet our\nneeds aren\u2019t standard, nor are they available \u201coff the shelf.\u201d Unfortunately, we\nsimply can\u2019t use generic storage solutions because our tasks (processing, data\nloading, and productions) put an extraordinary strain on typical file servers. Add\nto that, the requirements for instant scalability, real-time backup, and\nsupport for outdated software applications, and you have a recipe for expensive.<\/p>\n\n\n\n

Bottom line: hosting\ncosts for eDiscovery are extraordinary because we use special hardware,\nconfigured for a special purpose. And if there\u2019s one thing custom-built servers\nare not, it\u2019s cheap.<\/p>\n\n\n\n

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30%. eDiscovery equipment is purpose-built, high-end, and expensive. Plus, it needs to be replaced every 3-5 years.<\/strong><\/em><\/p>\n\n\n\n

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4. IT, Security, and Application Support Teams<\/strong><\/h4>\n\n\n\n

Front-line support (project\nmanagement or \u2018tech time\u2019) is just the tip of the iceberg when it comes to\nsupporting a Relativity instance. Although many vendors charge hourly rates for\ntheir PM services, those fees are tied to specific projects\u2014not the ongoing\nmaintenance and support that takes place behind the scenes.<\/p>\n\n\n\n

Consider just some of\nthe skills necessary to run a basic Relativity instance: SQL administration and\nscripting, Relativity infrastructure and administration, data load balancing, and\nsystem administration\n(the people who troubleshoot, perform maintenance and upgrades, and track down\nsolutions for bugs). Cybersecurity experts are also necessary. Ten years ago, a\nsecurity team was an afterthought, but due to an increase in hacking and thus,\ndaily defense management, they\u2019re now required. Experts like this come at a\nprice\u2014if you can find them. <\/p>\n\n\n\n

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35%. Keeping data safe and available is non-negotiable, which is why behind-the-scenes support makes up one of the largest costs associated with hosting. Although these people are usually out of sight, their salaries show up in the hosting fee.<\/strong><\/em><\/p>\n\n\n\n

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5. Backup & Disaster Recovery<\/strong><\/h4>\n\n\n\n

Clients have a low tolerance for sluggish performance and zero tolerance for downtime or data loss. Therefore, hosting vendors implement expensive \u201credundancy\u201d plans, so if anything goes wrong, the system will immediately<\/em> fail over to the backup. <\/p>\n\n\n\n

Most people are\nfamiliar with the need for backups and disaster recovery plans but many fail to\nconsider that it\u2019s not just client data getting copied\u2014it\u2019s the entire\nenvironment. Web servers, SQL servers, and dozens of other network resources have\nto be mirrored in a secondary geographic location. <\/p>\n\n\n\n

VM snapshots are performed once every hour for three days and once per\nday for three weeks (more if designated critical). Offering this level of data\nsupport would skyrocket the cost of AWS-type solutions.<\/p>\n\n\n\n

Even if these backups (and backups of backups) are never deployed, they\nstill need to be maintained just in case. And if you\u2019re thinking of cutting\ncorners, heavy-handed service level agreements (SLAs) carry financial penalties\nfor even brief service interruptions, forcing everyone to err on the safe side.\nThe ultra-safe <\/em>side. <\/p>\n\n\n\n

So, in order to meet client expectations for uptime and redundancy, petabytes\nof data are alive today, waiting in the wings to spring into action.<\/p>\n\n\n\n

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10%. The \u201chosted size\u201d that clients see on their invoice is only a fraction of the data that is actually stored on disk for them. Backup and disaster recovery plans are costly to maintain even though they remain largely unseen.<\/strong><\/em><\/p>\n\n\n\n

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6. Other Stuff <\/strong><\/h4>\n\n\n\n

Carrying Receivables.<\/em> <\/strong>For various reasons that I don\u2019t completely understand, very few law firms pay invoices quickly. Maybe it\u2019s because they work on a contingency basis, or they\u2019re waiting for insurance companies to come through, or maybe they\u2019re just stingy. As a result, being in the Relativity hosting business means that you\u2019re also in the finance business. <\/p>\n\n\n\n

The data center, Relativity licenses, hardware vendors, employees, and virtually every other cost else described in this article must be paid upfront<\/em>, months before payment is expected from the client. And considering most vendors don\u2019t charge interest on past-due invoices, it\u2019s safe to assume that the cost of carrying this much A\/R is factored into the hosting fee. <\/p>\n\n\n\n

Ultimately, slow-paying\nclients pay more than fast-paying ones. Think I\u2019m wrong? Ask your hosting\nvendor if they\u2019re willing to lower your rate in exchange for pre-payment and\nsee what happens.<\/p>\n\n\n\n

Security & Compliance Certifications.<\/em> <\/strong>Each of the 100 checkboxes on a security questionnaire has real costs associated with them. Third-party audits, penetration tests, ongoing training for employees, and fees paid to certifying bodies top the list of costs associated with achieving high-level security certifications. <\/p>\n\n\n\n

Although many of the certifications\nlike ISO27001 are \u201ctable stakes\u201d these days, there are very real costs with\nachieving\u2014and then working within\u2014these frameworks. <\/p>\n\n\n\n

For example, SOC 2 Type\nII is approximately $150,000 for a small organization with annual maintenance\nof up to $30,000. And FedRAMP? Don\u2019t get me started. <\/p>\n\n\n\n

Threat Detection. <\/em><\/strong>All day, every day, bad actors are trying to break into networks all over the world. There isn\u2019t anything specifically unique about eDiscovery in that regard, but the consequences of a data breach for an organization hosting the sensitive data caught up in litigation or investigations are particularly significant. In addition to internal systems that detect threats, most top-tier hosting providers have 24\/7 threat monitoring by a third party. This second pair of eyes can cost anywhere from $2,500 to $20,000 each month.<\/p>\n\n\n\n

Insurance.<\/em> <\/strong>If something goes wrong, there will be hell to pay. Or, you can just pay a little bit of hell every month in the form of insurance. Specifically, Errors and Omissions insurance with Cyber Liability that covers data breaches and cyberattacks. The greater your risk profile, the more you pay for insurance. As you can imagine, eDiscovery hosting vendors have high-risk profiles. <\/p>\n\n\n\n

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8%. Although these miscellaneous costs may not seem like much individually, they add up, and ultimately contribute to the price clients pay.<\/strong><\/em><\/p>\n\n\n\n

<\/div>\n\n\n\n

How It All Stacks Up<\/strong><\/h4>\n\n\n\n

In “The Fall 2022 eDiscovery Total Cost of Ownership Survey,”<\/a> 50 respondents (primarily in operational management and leadership positions) frequently reported that they did not know their spend for the components laid out in this article.<\/p>\n\n\n\n

It’s difficult to determine actual spend for managing eDiscovery in-house as it varies based on size, priorities, location. But one thing that’s easy to say, is that many people aren’t sure what they’re spending OR, as we’ve seen, will misattribute the category of their spending.<\/p>\n\n\n\n

In this chart, you can see how it all adds up. As you would imagine, the cost of servers and other network architecture counts for a lot, and there are a variety of costs involved that are mostly unseen by the folks footing the bill.  <\/p>\n\n\n\n

<\/div>\n\n\n
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Although I\u2019ve run hosting businesses for a while and have quite a bit of insight into the economics of it all, I can\u2019t speak for everyone. It\u2019s likely that every vendor\u2019s division of hosting costs will look a bit different; some may have costs not mentioned here, while others may have outsized costs based on their business model. <\/p>\n\n\n\n

In other words, quite a\nbit of this \u201cdepends,\u201d so take the percentages listed here with a grain of salt.\nThis isn\u2019t a research paper, it\u2019s simply a response to every LSP\u2019s favorite\nquestion, \u201cWhy is this hosting fee so high?\u201d <\/p>\n\n\n\n

Well, now you know.<\/p>\n\n\n\n

<\/div>\n\n\n
\n
\"Brandon<\/figure><\/div>\n\n\n

<\/p>\n\n\n\n

Brandon Law<\/p>\n\n\n\n

Chief Executive Officer<\/p>\n\n\n\n

LinkedIn<\/a><\/p>\n\n\n\n

<\/div>\n\n\n\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

As the price for cloud-based storage plummets on platforms like AWS and Google, it\u2019s surprising that hosting vendors specializing in eDiscovery\u2014and specifically those hosting data in Relativity\u2014continue to charge so much. As it turns out, it’s not a racket.<\/p>\n","protected":false},"author":2,"featured_media":746,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":""},"categories":[5],"tags":[64,7,20,27,9,8,47],"yoast_head":"\nWhy Is Hosting Data in Relativity So Expensive? | Oasis Blog eDiscovery<\/title>\n<meta name=\"description\" content=\"It\u2019s surprising that hosting vendors specializing in eDiscovery\u2014and specifically those hosting data in Relativity\u2014continue to charge so much.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Is Hosting Data in Relativity So Expensive? | Oasis Blog eDiscovery\" \/>\n<meta property=\"og:description\" content=\"It\u2019s surprising that hosting vendors specializing in eDiscovery\u2014and specifically those hosting data in Relativity\u2014continue to charge so much.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\" \/>\n<meta property=\"og:site_name\" content=\"Oasis Blog\" \/>\n<meta property=\"article:published_time\" content=\"2021-04-13T14:27:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-11-28T17:12:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/wp-content\/uploads\/2021\/04\/why-is-hosting-data-in-relativity-so-expensive.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"576\" \/>\n\t<meta property=\"og:image:height\" content=\"471\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Oasis Discovery\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Oasis Discovery\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\"},\"author\":{\"name\":\"Oasis Discovery\",\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/#\/schema\/person\/6ad672109da7d89fea903f4266ca8346\"},\"headline\":\"Why Is Hosting Data in Relativity So Expensive?\",\"datePublished\":\"2021-04-13T14:27:07+00:00\",\"dateModified\":\"2022-11-28T17:12:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\"},\"wordCount\":1856,\"publisher\":{\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/#organization\"},\"keywords\":[\"Data Centers\",\"eDiscovery\",\"IaaS\",\"Legal Industry\",\"Legal Technology\",\"Relativity\",\"SaaS\"],\"articleSection\":[\"eDiscovery\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\",\"url\":\"https:\/\/www.oasisdiscovery.com\/ediscovery-unredacted\/ediscovery\/why-is-hosting-data-in-relativity-so-expensive\/\",\"name\":\"Why Is Hosting Data in Relativity So Expensive? 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