Cloud computing enables law firms to align IT costs and services more directly to the needs of the business. The effects of the financial crisis in 2008 on the legal industry have been well documented, and although the sector is now recovering there is strong evidence that the new competitive environment is here to stay.
Present market conditions are requiring law firms to be more creative and imaginative in the way they plan their investments. The impact of this can be seen in a number of ways – some segments of the market have seen contraction and consolidation, while others have seen geographical expansion as firms look to exploit new opportunities in new markets. On top of these changes across the board we have seen significant merger activity. A common theme arising in the sector is agility – firms that can adapt quickly are the ones that are best placed to cope with changes to their business model and exploit new opportunities.
For law firm CIOs this means there is an imperative to reduce costs quickly if the firm is contracting, or to expand capability if the firm is expanding into new jurisdictions. By following the traditional approach to delivering IT infrastructure this becomes extremely difficult – after paying lawyers and renting business premises, a firm’s IT infrastructure is typically its largest cost and this can amount to approximately 5% of a firm’s turnover. As this cost includes servers, networks, data centres, security, and teams of people to manage that infrastructure, the investment is essentially fixed. Similarly, if the firm contracts in size, they would still be paying for expensive infrastructure that they do not need.
Cloud computing provides CIOs with a radically different model; it allows the CIO to treat core IT infrastructure as a utility. With no requirement for capital expenditure on IT, the firm is able make use of the hardware, processing capacity and storage that it needs on a pay-for-use basis. As a result what was a significant fixed cost for the firm becomes an elastic, flexible cost.
This flexibility is one of the main advantages of cloud computing – capability can be scaled up and down on demand with virtually zero capital cost. This gives the CIO the ability to respond to the ever changing needs of the firm much more quickly, and therefore allows for an IT service that is more closely aligned to the business requirements of the firm.
Cloud based IT services that are tailored closely to the business requirements of a firm not only allow for more cost effective business, but smoother operations. Cutting out the capital expenditure benefits the company as a whole, and the utility approach to cloud services is a CIO’s flexible, cost-effective dream.