Nuix on hitting the export jackpot

Australian software developer Nuix has hit gold in the US market with its electronic search and discovery tools, designed to process the terabytes and terabytes of data that corporations generate.

Eddy Sheehy (Credit: Nuix)

Nuix, which currently employs just over 30 people, won a five-year contract with the US Securities and Exchange Commission in January. The SEC performs a similar role to the Australian Securities and Investment Commission, with a mission to protect investors and maintain orderly and efficient markets. It will now be using Nuix as a frontline tool in its investigations.

Nuix chief executive Eddie Sheehy says the software will process the terabytes of data collected by the SEC in its investigations, primarily in the form of email, to create data sets that can accelerate the discovery of evidence. The software can also be used to slice the raw data down into smaller sets that are relevant for specific investigations.

"Something we learned a long time ago is when it comes to regulators, they want to know whether they are going to have a case or not very quickly, and the evidence is always in the email," Sheehy says. "The SEC now has the ability to use all of Nuix's search functionality to very quickly get to the nub of the matter. If the evidence isn't in the email system, it is probably not there at all."

The software developer owes its success at the SEC in part to a change made two years ago in its strategy for breaking into the US market. Nuix originally went to the US with the goal of selling into forensic computing, where investigators strive to reconstruct what happened on a specific machine. This market was dominated by a handful of entrenched competitors, and difficult to crack.

But a new market was emerging in the form of electronic discovery, also called eDiscovery, where the aim is to determine what has happened across an entire organisation. According to the Socha-Gelbmann 7th Annual Electronic Discovery Survey, the total market size for eDiscovery in 2008 was estimated at US$2.6 billion, with expectations that the market will expand by about 30 per cent throughout 2009 and about 25 per cent in 2010.

Sheehy says the change in strategy was stemmed from insight gained through having executives on the ground to understand how the US market works, and the company was subsequently able to retool its software to meet this new opportunity.

"You really need to go there first, to understand the marketplace," he says. "The US marketplace is very different to anywhere else."

Sheehy also says it is important when going to the US to be certain that your technology is superior to anything else that is out there.

"We are being successful because we had six and a half years' worth of R&D before we started selling commercially, and another year before we started exporting — the product works," he says. "But if you are still trying to make the product work, and spending money overseas, you need very deep pockets."

The company had also benefited from successful implementations in Australia, the UK and Japan, with word spreading amongst other regulators.

"We've learned what regulatory organisations want," Sheehy says.

The SEC deal had its origins in a meeting between Sheehy and a representative from the SEC at the LegalTech trade conference in New York in February 2009. Sheehy was asked to demonstrate Nuix to SEC officials on more than six occasions, and Nuix's chief technology officer Stephen Stewart was subsequently invited to participate in an extensive on-site evaluation.

"We showed them what we could do, and they immediately saw how it could be applied to their own work," Sheehy says.

From a technical perspective, Nuix's success lies in its ability to process data at a binary level, alleviating the need to deal with additional layers of software. This enables the software to rapidly scale to ever larger volumes of data.

"Ten years ago our founder had a vision of the system scaling, and over the last few years we have been lucky to have the most amazing set of developers to make that happen," Sheehy says. "Our approach to indexing datacentres has not been repeated by anybody, because it is too difficult."

According to a statement from the SEC: "No software other than Nuix can process large collections fast enough to meet the SEC's desired time frames".

Sheehy says that whereas two years ago the average case size for large investigations was 1 terabyte, regulatory organisations are regularly coming across data volumes of 8 or 10 terabytes.

"And in the big cases it is 40, 50, 60 or even 100 terabytes," he says. "So the volume of information is enormous. And to deal with that volume you need scale and speed. Nuix is 40 times faster than anyone else. That means we can scale to huge cases."

The future is likely to be busy for Nuix. Sheehy says that case sizes will continue to grow, so Nuix will be doubling its processing speed in the next 12 months. Further, he says the financial crisis has also spurred regulators such as the SEC to step up their investigations.