The IT departments of law firms are focused on ‘keeping the lights on’, yet lawyers are demanding more ways for IT to help them drive efficiency and differentiate their firm.
So how can cloud computing enable firms to fundamentally shift the focus of their IT departments?
Most commentators accept the legal industry will not return to the type of market that characterised the years leading up to the collapse of the financial markets. Over recent months my conversations with senior stakeholders in a number of law firms have confirmed change within the sector is being driven by a series of key influences. These include:
- A more sophisticated approach to the purchase of legal services, and subsequently increased demands from clients in relation to price, transparency, security and quality
- Emerging markets of increasing importance
- The general globalisation of legal services
- New entrants to the market including ABSs and LPOs.
Because of these influences we are seeing firms and in-house legal teams constantly seeking ways to be more efficient and innovative in order to satisfy their respective clients and remain profitable.
So how does all this relate to cloud-based IT services?
In brief, my experience strongly suggests that for a large number of law firms’ technology is simply failing to support the business change that these organisations are striving to achieve.
While there is common agreement amongst business leaders and IT directors that the key priority for their firms is to identify and implement ways in which IT can drive lawyer efficiency and deliver business value – the reality is, the majority of effort and investment is actually being applied to building and maintaining traditional on premise or co-located IT infrastructures. These infrastructures, made up of servers, storage, and networks are expensive and increasingly complex to manage.
Benchmarking figures show firms typically spend between 4-5% of their turnover on IT, and this often equates to the several thousand pounds per person per year. With this large fixed investment, IT departments subsequently spend their time maintaining this investment. Indeed, it is estimated law firms allocate approximately 80% of their spend and 85% of resources on operational activities. This means only 15-20% of the focus of an IT function is directed towards activities that will exploit technology to generate business value. In other words the needs of law firms and their approach to IT investment are fundamentally mis-aligned.
Cloud based IT services, if used effectively, offer the opportunity for IT departments to fundamentally change the above model. Shifting the focus of their teams to where their firms want and need it to be, that is, finding ways for IT to make lawyers more productive.
By adopting the cloud and accepting IT infrastructure is now just commodity, more IT resources can be assigned to roles and tasks that analyse business needs, align IT to legal requirements, and create business value. Instead of striving to be experts in servers, operating systems, storage and email, the IT department can become experts in finding ways for technology to be applied to enhance lawyers processes. This could include improved mobility, enhanced business process, knowledge re-use, business analytics, and legal transaction management.
One of the complaints often heard from IT directors and CIOs is that they are not given enough of a voice in the way their firms set and execute broader business strategy. This may be the case but it will not change while the focus of IT leaders is on infrastructure technology.
Managing partners and CEOs are not interested in hardware specifications, or virtualisation techniques, they are interested in business efficiency and profitability. Until IT leaders start to focus on how technology can support these ambitions, they will not be invited to the ‘top-table’.
The adoption of cloud based IT services can deliver a range of benefits including cost reduction, and improved quality, flexibility and security. Though in my view the ability to re-align the focus of the IT department, IT investment and the IT director is the most important benefit of cloud to any organisation.