Skip to content

The Legal IT Outsourcing Sell Is Simple – Costs, Quality And Risk

I see a fair amount of debate around the merits of IT outsourcing in the legal sector. I also see regular updates detailing how this firm or that has outsourced part or all of its IT to a third party.

But for all of the writing and discussing I see full or partial IT outsourcing in the legal sector as pretty simple – and, as described in earlier posts, to a large extent inevitable.

Demand for IT skill is growing fast, supply is increasingly restricted and third parties can offer that skill more cost effectively, deliver much better IT services and take away the key man dependency risk that all but the very largest firms suffer from today.

Demand for IT

It used to be just back office financial systems. Then email, PMS and DMS became essential. Today legal services are offered through technology with mobile working and client collaboration part of the ‘product’ that a law firm sells. Technology is broader and deeper than ever.

Supply

I have worked with many law firms. They pretty much work along the Gartner guideline of 4.2% of revenue on IT with around 40% of that on staff costs.

A medium sized firm turning over c. £20M will spend c. £320K on staff – and will have a headcount of  around seven or eight.

Demand vs. Supply

So just quickly, that eight must do server management, network management, desktop, mobile working including laptop, tablet, smartphone, databases, spreadsheets, handle around 100 Help Desk calls each week as well as maintain email, PMS, CMS, DMS, financial dashboards, mobile time recording, dictation, social media, big data and then get to start on the growing list of projects that Partners want and need.

The eight just can’t do it.

The Sell

It should be cheaper for a managed service provider to do any of this than an in house team. Take server management. A £40M turnover firm may have three staff managing the server estate including the operating systems; databases and the key applications covering the 24*7 uptime through on call rotas. The staff costs may be £100-£120K p.a.   A third party who already has an established base of, say, 1000 servers under management can add the thirty or forty additional law firm servers at a marginal cost.

The quality of service from a third party is underwritten by service level agreements but more than that they have a greater technical depth, properly established support procedures and up to date tools – of course they can deliver better production service. Further, project work can be switched on and off with access to skills provided as and when required – flexibility and scalability is all part of a better IT service that a third party can offer and that an in-house team struggles with.

Stories of how the firm “just cant afford to lose Jimmy” abound. Where the skills are stretched thin across an increasingly broad technology estate there is inevitable a real key man dependency risk. Of course this risk is quickly removed with a third party managed service.

Summary

Of course you need to select third parties wisely ad establish an effective contractual and working relationship – see other posts for my views on this – but this is the sell.

Lower and predictable costs, better service and lower risk.

See more about me and the services I offer here.

Strategic Sourcing – The Number One IT Skill Set For Law Firms

In any strategy discussion with any manager, partner or IT professional in any law firm, the term “outsourcing” will be immediately met with a range of objections as well as examples and reasons why its not good for them.

Gently pointing out that their existing hardware is fixed for them by a third party or that their router estate is remotely managed stops the tirade for a while.

So let’s talk about strategic sourcing – which is just outsourcing, but lets use this new acceptable term.

Why Is Strategic Sourcing Number One? – The Rationale

So, you want to make your IT better than it is? Acknowledging that IT is now more important than ever in gaining new clients and delivering legal services to existing ones – if you don’t make your IT service better, you can bet that your competitors are looking to make theirs better than yours.

Let’s look at where you want your IT service to be in 12-18 months time – in other words how will it be better than it is now. Maybe you want better mobility for fee earners, maybe better collaboration with clients, maybe faster, more agile introduction of new systems – perhaps all of the above and more.

Planning that out, depending on where you are seeking improvements, then you need to consider some, most or all of the following: Read more…

Legal IT – Making Managed Service Sourcing Faster, Cheaper and More Effective.

Many folks have read Gartner’s “Taming the Digital Dragon” CIO briefing paper. It’s basically saying that the Social, Mobility, Analytics, Cloud (SMAC) nexus is driving a new era of IT.

Gartner argues that two key characteristics of this new era are effective sourcing/resourcing and speed. See some of my other posts to see the detail of why I think that legal firms and other mid market organisations are being squeezed and why outsourcing and managed services are becoming essential as IT struggles to keep up with business demand.

I don’t think anybody disagrees that speed is essential in today’s business world.

How to make procuring IT services faster, cheaper and better?

I have been buying, selling and operating outsourcing and managed services contracts for twenty years now. The process is well known;

Specification – long list – briefing – RFP – response – scoring – short list – beauty parade – iterate – BAFO – preferred bidder – final cost squeeze – heads of terms.

Read more…

Five Pragmatic Steps For Law Firms In The Digital World

The digital world is here. It impacts, positively or negatively, on all businesses. It affects law firms no more and no less than others.

I suggest that now is the time to consider what it means to your firm and what actions are appropriate today.

The “digital world” phrase is used often and has a myriad of different interpretations. Here I reference the four interactive forces – mobile, cloud, data analytics and social – that are commonly considered to characterise the new world.

Despite huge numbers of articles, white papers and briefing notes – the outcome, in terms of where law firms are going, is really not known. However, that is not a reason for delay, the truth is that these forces will change the operation of a law firm and it certainly a good idea to set a target for where you will be in, say, twelve months and to set a plan for achievement of your goals.

Five considerations for moving forward in the digital age:

  1. You need to enable lawyers to work whenever they want and from whichever location in the world they happen to be. What mobile infrastructure do you need to enable this to happen and what management processes and tools need to be in place to support that way of working?

Read more…

Balancing The IT Demand and Supply Equation In Law Firms

It seems to be just about every other week a report is published claiming that “IT is a barrier to success”. It’s easy to take these assertions with a pinch of salt as the reports frequently originate from providers who offer a product or service that will quickly and painlessly dismantle this barrier so opening the road to success and prosperity.

However, I spend much of my time speaking and listening to business leaders in the mid market sector and these “barrier to success” stories do appear to reflect the experiences of many.

Demand Versus Supply

If IT is proving to be an obstacle then it seems that this must stem largely from their inability to meet the demands placed on them – either as a result of too little capacity or a shortage of key skills.

 Supply

Let’s look at a typical mid-market organisation, a fictitious law firm that turns over £20M with around 300 staff and four locations.

What is their typical IT staffing headcount (the supply side of the equation)? A recent survey by Gartner suggested that a professional services organisation will typically spend 4.2% of turnover on IT – that gives an IT budget in this firm of £840K. A similar Gartner survey suggested that around 38% of IT spend is on salaries – that is c£320K on IT staff costs.

How many staff will £320K p.a. buy? Of course that is largely dependent on location. So using Edinburgh as an example, I suggest that a server administrator will cost in the region of £45K p.a. (incl. benefits, NI etc.), an IT Manager/Director may cost around £70/80K p.a. and a Help Desk analyst around £25K.

A rough estimate, perhaps 8 or 9 IT staff.

Demand

Now let’s look at what is expected of the 8 or 9 staff – the demand side.

Managing the ‘Run’ side gets more and more difficult every day. While managing the servers, storage and communications requires specialist skills, this challenge is well known and should be manageable with the application of strong service and system management process. Of course it still takes time and resource. Similarly managing the key applications – document management, practice management, email – takes time and effort to monitor capacity, performance etc. as well as maintaining versions and patch levels.

Adding to the traditional operations side, the reach of the technology continues to grow – remote access, access on platforms not owned by IT (BYOD), use of applications not provided by the firm, access to firm’s systems by partners and customers through advanced collaboration tools. Creating stable and secure systems outside of the traditional perimeter of IT control is a new skill that is just being learned.

The Run side of the demand equation is ever increasing as the breadth and complexity of deployed technology grows.

Service Desk takes up effort of course – but how much? Looking across various reports its reasonable to assume our fictitious law firm receives 2.2 calls per month for each user, 660 calls per month – maybe 30 each working day.

What about the ‘Grow’ side of the demand? This is the project work that aims to build new systems and services to meet the new needs of the firm and the market. Well if ‘Run’ is experiencing an increase then ‘Grow’ is feeling the strain to an even greater degree.

The ‘Grow’ portfolio has an unchanging need to upgrade and extend existing key systems. However, ‘the digital world’ is piling expectation upon expectation on the IT department. This pressure is even greater because, seemingly overnight, lawyers have woken up to the fact that IT systems in the digital age will go a long way to decide the winners and losers – and probably within the next three years.

Lawyers now need Martini computing. They need systems and infrastructures that allow them to access any system, at any time, from anywhere in the world and using whatever device they have to hand. Oh and they need data analytics, CRM and social media while you are at it!

Further, when a lawyer sells a service to a corporate customer, collaborative IT systems are part of the service they offer – so it better work!

And speed is king – the opportunities are there for all to see, firms are willing to invest because they can see the prize – but they need this new world now.

Balancing Demand and Supply 

In our example, I would suggest that eight or nine staff just can’t do it! However, IT asking for more cash and/or more staff is not the answer either.

Better, look at the total £840K spend and be more effective at deploying that.

How to get the skills when you need them, handle a growing (and maybe variable) project portfolio, meet an ever-widening skill requirement and do it all faster than ever before?

A modern and effective sourcing strategy is key. At the simplest end – if a third party can manage the server/storage estate for £35K and you need two staff to do it in house then outsource this. If you really only need three days a month of specialist DBA, then using a third party is a no brainer. How to manage the volatile remote environment – again third party niche players can do this for you.

This is not a call for wholesale outsourcing – but a sophisticated and flexible sourcing strategy deploying a range of traditional and niche players is absolutely required.

Next. Cloud computing isn’t an “if” it’s a “when”. For new systems – look at the cloud first. It absolutely has to be faster and cheaper, and it should be more secure with a better quality of service too.

Finally – really hard for lawyers – contracting and governance also has to be fit for purpose rather than overbearing. Balance speed with risk – speed is king after all.

 

 

 

 

 

 

 

 

Access to skills, flexibility and risk mitigation are driving mid market companies towards IT outsourcing.

Following my blog post  Why IT Outsourcing is increasingly inevitable in the legal sector I did a little research to see if others had similar opinions to myself. I found an OVUM white paper published earlier this year on the BT Engage IT website entitled:

Managing Business and IT Complexities In Mid-Market Organisations         Link Here

The summary text is below:

“Mid-market organisations have similar complexities to large enterprises, yet they often only have limited resources to address their business challenges. Their procurement decisions consequently tend to be more tactical in nature. Standard products and packaged applications are one approach to mitigating these constraints, but they don’t necessarily enable business agility themselves.

Fundamentally, mid-market businesses need the capability to scale people, processes and technology without the capital investments that large enterprises can access. Innovations such as cloud services, mobility and analytics provide flexible service components for mid-market organisations to accelerate their journey towards industrialised services while offering innovative ways of funding projects.

Finding a partner that is able to address the specific needs of mid-market organisations is critical. It necessitates finding a balance between the customer centricity of smaller service providers and the broad technical capabilities of large system integrators. Fundamentally the move towards highly standardized and industrialised ICT services should be seen as a journey whereby new building blocks such as social, mobile, analytics and cloud services can provide greater agility. But these service components should not be misunderstood as being the panacea for overcoming the business constraints inherent in mid-market businesses.

Service providers can play a pivotal role on this journey in helping mid-market enterprises mitigate risk by helping them integrate new technologies into existing architectures, by providing flexible staffing solutions and by advising on technology roadmaps.”

While the report clearly doesn’t say that outsourcing is inevitable – it’s pretty much in line with my previous blog post, which is to say that access to skills and flexibility in the IT arena are growing inhibitors to mid market organisations and that managed services providers are increasingly being sought to meet these key business challenges.

Towards the end of the white paper there are some very useful tips relating to choosing the right outsourcer for you and how to go about procuring these services. I have blogged previously on this and will probably return to this subject soon.

Why is IT outsourcing becoming increasingly inevitable in the Legal Sector?

I have been involved in seven IT outsourcing exercises in the past two years or so. Four of those in the Legal Sector. Five of the seven were directly aimed at securing access to required technology skills – or looking at it another way, mitigating the risk associated with attracting and retaining key technology staff.

My hypothesis is that there just isn’t enough skill to go around and that (in a simple example) an outsourcer with a SOC (Service Operations Centre) staffed with good people, strong process and best tools can manage the server estate of ten average size law firms with a staff of eight or ten (say) when each of the ten law firms may need three each.   This is a simplistic example to make the point that when resource is scarce then shared and optimised resourcing is obvious, inevitable and unavoidable.

But why now?

Because the importance of IT and the complexity of the deployed technologies have grown very rapidly in just three years. Look at the advent of IT in law firms. A while ago it was back office functions, then came DMS and PMS and integration with email and office etc. That was manageable. Then there is a need for lawyers to work from home – Citrix, VPN etc. Then Martini computing – anytime, anyplace any device. The breadth of technologies and the ability to control the infrastructure is really starting to stretch out. Add social media and BYOD and it’s stretching even further.

Once you add in the need for customer portals where clients access firms systems to review WIP etc then you have further dimensions. This completes the journey – back office, front office and now it’s (part of) the product we sell.

Almost overnight, IT doesn’t just support the delivery of legal services  – IT is actually part of the service itself!

So IT is critical to the ability to sell and deliver service– to the success of the firm.

The breadth and complexity of the technologies deployed are now light years away from where they were ten years ago.

Gartner reckons that a law firm with a £20M turnover may have an IT budget of £800K. It may spend £300K on staff and so may employ 8 or 9 heads. Managing an infrastructure with server operating systems, virtualisation, database systems, networking components, desktops, laptops, tablets, handhelds, core DMS, PMS and email applications. Handling security, remote working, system performance and capacity, linkedin/facebook/twitter, Big Data as well as 400 Help Desk tickets a month, 7*24 and a growing and urgent project portfolio!!

Well no wonder they are stressed.

How can an outsourcer help?

Law firms struggle to offer good IT people progression. When good people leave they are difficult to replace. Good IT people are scarce and the mid market in particular is suffering as large corporates are similarly growing their IT functions.

Further, in many cases law firms just don’t have strong enough IT management discipline – project management, system management, service management, task management – to handle the rapidly escalating complexity and hugely increasing demand for service and projects

A good outsourcer should be able to offer a far better (SLA based) service, with vastly reduced people/skill related risk at a price no greater than an in house solution. On that basis it’s a case of why not?

Two last points:

If everybody outsources will IT become a commodity? Well no, because managing the outsourcer is a skill and doing that well will put you ahead in quality of service. More importantly always retain control of the Portfolio – the discretionary spend which is aimed at building the firm – optimise this i line with the firms objectives and you will really win against your competitors. And of course there are a myriad of outsourcing options – just server estate, just apps dev, overnight Service Desk and so on and so on…

Finding a good outsourcer is not easy. There are many new entrants into this world of outsourcing. They may have backgrounds in hardware sales, data centres, hardware maintenance, technology consulting and others… There are however very few who have the maturity of process and management and who really have the breadth and depth to go across the growing technology landscape.

 

Anyway – the requirement for skill is continuing to increase and the availability is decreasing. Outsourcing is looking increasingly the answer.