Using the Cloud to fill the void between the business and the IT Department David Bennett IT Consultant david.bennett@changeharbour.com
Agenda The legal services market Business demands on the IT Department The legal IT landscape Focus of the IT Department Does cloud computing have a place? Summary Questions
THE LEGAL SERVICES MARKET
The legal services market Since 2008/9, we have seen unprecedented change in the world s economic environment and the provision of legal services The financial crisis and the subsequent recession led to a major change in the way banks, corporates and private clients purchase legal services Increased importance of the BRICS (Brazil, Russia, India, China & South Africa) In 2014, the five BRICS countries consisted of 40% of the world population and represent approximately 18 percent of the worlds economy
The legal services market The introduction of the Legal Services Act in 2007 sought to liberalise and regulate the legal services sector. Encouraging competition, the act allows Alternative Business Structures (ABSs) to be created with nonlawyers filling professional, management or ownership roles The introduction of Legal Process Outsourcing (LPO) - the practice of a law firm or corporation obtaining legal support services from an outside law firm or services company Increasing competition within the legal market These changes are irreversible, and we will not return to the type of environment that characterised the years leading up to the collapse of the financial markets
BUSINESS DEMANDS ON THE IT DEPARTMENT
Business demands on the IT Department Law firms are attempting to differentiate themselves: getting closer to their existing and potential clients by building deeper relationships demonstrating an understanding of the industries in which their clients operate - building sector-based business and marketing plans focus on client service However, the clients demands are continuing to evolve and they expect more robust business relationships: demanding alternatives to the billable hour alternative fee arrangements using procurement teams to review proposals and cost estimates Clients will not pay for law firms inefficiencies and it is well known that firms need to improve
Business demands on the IT Department Clients are requesting a more sophisticated approach to the purchase of their legal services. This has lead to the an increased demand to: reduce price, increase transparency, improve security and increase quality. More for less..in a more volatile, regulated and global world
Business demands on the IT Department The legal sector is finally facing up to the commercial realities already experienced by most other businesses If other sectors have gone through these experiences why are we continuing to think we are unique! We need to broaden our thinking: learn from other industries, implement technologies and adopt best practice.
Business demands on the IT Department These initiatives create the commercial drivers for technology to drive change
Business demands on the IT Department Identify new points of differentiation which match client expectations Law firms cluster around traditional points of differentiation
THE LEGAL IT LANDSCAPE
The legal IT landscape In a typical law firm, the largest costs are typically incurred by Facilities (premises) and IT infrastructure servers, networks, data centres, security and the teams of people that manage them Typically between 4-5% of a firms turnover is spent on IT Once a firm has made an investment in these areas, it typically continues to invest in them - technology continues to change, just quicker than it used to!
The legal IT landscape 80-85% of an IT departments focus is on the day to day operations, leaving around 15% directed towards activities that exploit technology to generate business value IT Staff breakdown Do law firms want their IT department to do more than keep the lights on? 85% 15% Operations Development & Strategy
The legal IT landscape Law firm priorities over the next 18 months? Using technology to make your lawyers more effective Reducing the cost of supporting the business Making more use of your internal network for delivering advice Helping your lawyers to be more mobile Making more use of other firms to support the delivery of legal advice (including alliances and Legal Service Providers) Expanding to operate in more jurisdictions Integrating following a merger 0% 20% 40% 60% 80% 100% High importance Medium importance Low importance
The legal IT landscape Where do law firm leaders want to spend their IT investment? Help our lawyers execute work more effectively Help our business become more efficient Improve security and regulatory compliance Help our business work more closely with clients Improve the stability and performance of IT Make the service and cost of IT more flexible to match changing business needs Change the focus of the IT department from operations to strategic Reduce the cost of delivering IT Help the firm integrate with other firms and merger partners 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Critical importance Desirable Not important
The legal IT landscape IT accounts for a significant proportion of the firm s costs (4-5% of turnover) and is typically very fixed in nature Demand Premium Cost base Excess Capacity Current: fixed cost base Target: variable cost base 1
The legal IT landscape Who owns your IT infrastructure? In terms of ownership, the vast majority of firms tend to own their own infrastructure 100% 90% 80% 70% There appears to be a trend for the medium size law firm to adopt flexible sourcing in some way 60% 50% 40% 30% 20% 10% 0% Single Office Multi office International Global We do
The legal IT landscape Law firms generally own their own IT infrastructure. This ultimately means: significant Investments are made every 3-5 years unless something changes - the operational costs can only go up infrastructure costs are fixed little room to cater for the changing shape or usage patterns of the firm Leads to a high proportion of legal IT investment and resources being concentrated on operational activities keeping the lights on!
The legal IT landscape 17% of the CIOs surveyed are satisfied that their technology allows them to communicate, execute work and run their business effectively. This suggests that the current model for delivering technology is not meeting the evolving needs of the law firm! Law firms seem to want more out of their IT Department!
FOCUS OF THE IT DEPARTMENT
Focus of the IT Department How do you make a fundamental shift in the focus of IT and align delivery with the needs and demands of the business? Can IT become an enabler of change and flexible enough to respond to changes in demand from the business? Can IT have a direct input into firm strategy?
Focus of the IT Department In order to influence the top table, we have to change the way that we interact with it: We have an interest in technology and as individuals we are more than likely to have specialised in one or two niche areas. We do not have to tell everybody that! We need to talk about business development, supporting the strategy of the firm and the groups that support it
Focus of the IT Department 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 the case but it will not change while the focus of those IT leaders is on infrastructure technology If you talk like a cost centre you are one! The top-table is not interested in hardware specifications or virtualisation techniques, but in business efficiency and profitability The legal CIOs responsibility is to pro-actively enable their law firm to exploit technology in order to meet their strategic objectives and drive competitive advantage
DOES CLOUD COMPUTING HAVE A PLACE? 25
Does cloud computing have a place? The traditional in-sourced model of delivering legal IT, with the majority of effort, investment and resources focussed on keeping the lights on, is not well aligned to the law firms development Cloud computing provides a utility view of IT, commoditising the delivery of technology into a service Applications and data are held and managed centrally by a specialist service provider, with access provided over the internet (or direct connection) and paid for on a subscription or demand basis This is very different from the traditional IT model where hardware and software are owned by the user organisation
Does cloud computing have a place? Software as a Service (SaaS) Software is licensed on a subscription basis and is centrally hosted by an independent software vendor or application service provider Eliminates the need to install and maintain applications on the relevant firms IT systems, removing the cost and complexity of hardware and software management This method of delivery allows a firm to quickly provide access to important features, and functionality to their lawyers, without needing to build and manage an infrastructure to support them
Does cloud computing have a place? Infrastructure as a Service (IaaS) Offers computing resources on a subscription or demand basis - servers and additional resources such as storage, databases, operating systems, firewalls, load balancers, virtual local area networks (VLANs), web servers and software bundles In this model, the cloud user patches and maintains the application software. Cloud providers typically bill their services on a utility computing basis with the costs reflecting the amount of resources allocated and consumed
Does cloud computing have a place? Desktop as a Service (DaaS) A service in which the back-end of a virtual desktop infrastructure (VDI), along with the applications needed to run the desktop, is hosted by a cloud service For users, this means they can access their desktop from any location, without having to use a fixed device The DaaS provider typically takes full responsibility for hosting and maintaining the computer, storage, and access infrastructure, as well as applications and application software licenses needed to provide the desktop service in return for a fixed monthly fee
Does cloud computing have a place? Platform as a Service (PaaS) PaaS is defined as a combination of IaaS, SaaS and DaaS to provide the consumers with a full enterprise computing solution. In PaaS all the components necessary to deploy, configure, run, manage and access the customers preferred application and management software is delivered on a subscription basis The delivery of an entire IT solution as a service i.e. a full combination of cloud services including desktop, applications and platform, is still very much in its infancy in the legal sector. A small number of firms, for example Thomson Snell and Passmore and DMH Stallard have moved entirely to the cloud, this approach is yet to gain real traction in the market
Does cloud computing have a place? Private A vendor supplies, builds and manages a cloud infrastructure specifically for the client Dedicated physical servers and storage Virtual private Multi-tenanted, shared hardware but defined and dedicated computing resources e.g. CPUs, RAM etc using virtualisation
Does cloud computing have a place? Virtual public Multi-tenanted, shared hardware. Delivered as a service using shared computing resources Hybrid virtual public and virtual private cloud Combines virtual public and private cloud
Does cloud computing have a place? Cloud computing can offer significant and, in some instances, transformational benefits to business across all industry sectors While cloud services in the form of SaaS and IaaS have been around for a number of years, the PaaS service model is maturing quickly and is starting to gain significant traction in many sectors including high security sectors such as government and banking Suppliers in this space are offering high degrees of performance, reliability, scalability flexibility and security to their customers within a utility pricing model Cloud computing is a disruptive phenomenon, with the potential to make IT organizations more responsive than ever. Cloud computing promises economic advantages, speed, agility, flexibility, infinite elasticity and innovation. Gartner
Does cloud computing have a place? Improved infrastructure Reduced IT spend Common desktop Future proofed Cloud Benefits Better performance Cost flexibility and rapid scalability Focus of IT team Improved Security
Does cloud computing have a place? The potential benefits of cloud can be summarised as: Reduced and more flexible IT costs Improved quality of infrastructure including reliability, security and disaster recovery Enhanced business agility through the rapid deployment of IT solutions Provides the opportunity to shift the focus of the IT department away from operational support to business value-add i.e. new solutions/innovation
Does cloud computing have a place? Management Development & Configuration Operational Leveraging cloud could allow you to transform the IT focus
Does cloud computing have a place? Management Outsourced Development & Configuration Operational
Does cloud computing have a place? Management Cloud Development & Configuration Operational
Does cloud computing have a place? One major factor that has limited the strategic adoption of cloud has been a general lack of knowledge, and confusion about the key capabilities of cloud based market offerings However there are others: Security Client confidentiality, regulation and data protection Application integration and configuration Lack of quality in market Commercial risk Configuration and integration
Does cloud computing have a place? Legal IT sector needs to shift focus: Vendors need to display leadership and commitment to the market that demonstrates an understanding of the sector IT leaders within the legal sector need to embrace change and not resist it
SUMMARY
Summary Cloud is the direction that the technology industry is going The use of cloud computing is growing, and by 2016 this growth will increase to become the bulk of new IT spend. Nearly half of large enterprises polled have deployed a private cloud service, and only 11% have no plans to do so through 2014. Gartner By 2017, IDC expects public IT cloud services will drive 17% of the IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic services. IDC Public IT cloud services will reach $47.4 billion in 2013 and is expected to be more than $107 billion in 2017. Over the 2013 2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5%, five times that of the industry overall. IDC Cloud computing is a disruptive phenomenon, with the potential to make IT organizations more responsive than ever. Cloud computing promises economic advantages, speed, agility, flexibility, infinite elasticity and innovation. Gartner Organizations gaining competitive advantage through high cloud adoption are reporting almost double the revenue growth and nearly 2.5 times higher gross profit growth than peer companies that are more cautious about cloud computing. IBM The primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings. IDC
Summary Like its approach to traditional outsourcing, the legal industry has been slow to adopt cloud computing The introduction of new applications will not lead to significant advantages unless they are incorporated into the act of delivering legal services to the clients Effective operational IT management is not a differentiator for law firms. The innovative use of IT to support lawyers efficiency and enhance client relationships can be
Summary IT is disruptive it changes the norm. Some technologies have the ability to change the environment around them, others not so much! Technology is fast becoming a commodity The cloud offers the opportunity for legal IT departments to shift the focus of their teams to where their firms want and need it to be finding ways of using IT to make their lawyers more productive
Summary We have plans to move to the cloud. 8% We are investigating the options. 59% Not at this time. 33%
QUESTIONS? 46