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Top Ten Tips For Successful Legal IT Outsourcing

January 29, 2013

In my first post I set out what I believe to be the top five key trends for 2013.  As law firms seek to professionalise their support capabilities and continually push for ‘more from less’ they will inevitably consider outsourcing as an option.

I discussed this dynamic more fully in my outsourcing series and the trend was underlined further in recent announcements from Tikit who seem to be set upon a major push into this market – while they don’t have huge outsourcing experience, they are extremely well positioned to profit from their very wide established client base.

This post summarises my top ten tips for outsourcing in the legal IT sector.

  1.  Context 1.  IT outsourcing should only be considered as part of a full IT strategy. In simple terms you need to set out a vision of how the end to end IT capability (infrastructure, applications, services, processes, people, finances, third parties….) will be shaped so that the firm’s IT investment is maximised in pursuit of the firm’s goals.  It’s only with this big picture in mind that you can clearly articulate exactly what you might want an outsourcer to do.
  2. Context 2. Operating model. With a strategy established, you need to develop an operating model that shows the target org structure, functional responsibilities and operating processes in the proposed new world. This is essential if you are to specify clearly the role of any outsourcer and so select, contract and engage an appropriate partner.
  3. Capability 1. Unless you are working in some of the very largest law firms you are unlikely to be considering the major outsourcing players – IBM, Accenture etc. My experience of working with mid market outsourcing companies is that they are comparatively new to this type of work, often looking at outsourcing as a new market. These new entrants – whose backgrounds may be hardware maintenance, DC co-location, hardware or software reselling – are often somewhat lacking in the real heavyweight disciplines of system and service management. Most will point to ITIL accreditation – again, my experience is that you need to dig deep in this area to be sure.
  4. Capability 2.  When selecting a possible partner, its not just IT service delivery where they need to demonstrate expertise. Test their capability across the whole BTOM lifecycle – build the new world (that’s skills, processes and reporting as well as infrastructure and apps), transition to the new world (this is the highest risk part of the programme – make sure they think it is), operate the infrastructure and manage the systems and services.
  5. Selection. A bit of a cliché I know, but you are not giving away responsibility here, you are just re-shaping your IT capability – any new partner is essentially an extension of your IT organisation. You need to look at potential third parties in this light.
  6. Contract for outputs AND inputs. Most third parties will, in simple terms offer a defined service with service levels for a given price – output based pricing. You should definitely have this in the contract. I would advise that you would also have ‘inputs’ in your contract. In other words, contract the third party to do all of those management activities that will assure delivery of the service in line with the contractual SLAs. For example, contract that they will establish and maintain a config database and execute proper asset management processes.
  7. Contract terms in the RFP. Remember that you are in your strongest negotiating position when discussing the RFP. So have in mind some key elements of the contract when writing and publishing the RFP. You might want to specify, as a qualification, that any potential provider will take on the costs of exit in the case of non-performance; you should also (at this point) look to set the cost of any consultancy day rates that they might undertake for you outside of the scope of the service contract.
  8. Service integration is the key to success. While this may be an outsourcing exercise, as I’ve already said, you are actually re-shaping your end to end IT capability. There’s a big picture of infrastructure and applications that will be operated and managed by a range of in-house and third party teams and this new outsourcer needs to integrate into this picture. Consider some key service management processes to make sure the whole thing will work – a user has a problem, who do they call? Who does the help desk call next? Who owns the call to completion? How is any fix managed? What databases are updated by whom? Etc. etc.
  9. Manage the risk. Consider risk from the start. When drafting your RFP consider risk in all stages (BTOM). In scoring responses I always score each potential provider with respect to risk in each category (as well as competence and cost). Testing in the transformation phase is the key risk mitigation factor – push and push on this to make sure you are happy that the potential partner has it covered. Maintain a risk register throughout the whole project.
  10. Manage the transition as a formal project.  Obviously you need strong project management disciplines across this significant change to your capability – I won’t list those here. Some that in my experience are sometimes missed are change management (you have a contract that determines the inputs and outputs – formally manage change against this), structured skills transfer from in-house to third party and formal completion criteria to be signed off (agreed at the outset and again change managed if required).

Outsourcing is a valid business tool that can and will offer improved IT service at a cost no greater than an internally managed service. However this is a transition of capability that needs rigorous and disciplined management – I hope the tips above are useful to you.

As always, let me know what you think.


From → Outsourcing

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