IT: is it a cost or a profit centre in your firm?
Today the vast majority of firms accept that technology is changing the way legal services are delivered and that the efficient use of IT systems can help drive growth, profitability and a positive client experience. Really innovative firms are not just driving value from the availability and use of IT systems but also from their IT teams.
Historically IT teams focussed on infrastructure (the server experts), then a segregation of infrastructure and developers (the software experts). Each team would spend time working on its own activities to deliver a stable server platform and an effectively tailored software environment. However, it’s questionable whether either team was actually delivering real and added value. In many ways IT teams were kept in the dark about the driving forces in the business, such as increasing billing and gross profit, managing working capital and lock up, delivering compliance and improving client expectations. I mean, what could IT possibly add? Yet an early enlightened few managing partners and heads of IT realised that you can increase profits without the need for additional investment, i.e. work smarter rather than harder.
Most heads of IT I speak to want to add more value and be seen to do so, as it raises their profile and worth in the firm and potentially their salary. Most see the shift to a more analytical/consultative position as a step up into a more interesting role. Managing partners will always want to do what they can to drive profits and cash flow so why is it that those firms unlocking the value in their IT teams are in the minority? The answer is the age old problem…this is how we have always done it…no one has explained it to me…comfort.
Where can the value be added, quickly and pragmatically? The low hanging fruit comes from better utilisation of your core software systems, such as case management and the provision of agile working for all fee earners. Not all internal IT heads will have the ability to deliver the value add you are looking for but those that can will embrace the opportunity and strive to meet the goals and objectives. Consider the statistics: if your head of IT could spend 75% of his time analysing and improving fee earner use of IT systems resulting in a 5% increase in billable time, how much revenue would that deliver? For a firm with 50 fee earners based on £200 per hour over 5 hours a day, that would equate to £2.5k per day or circa £50k per month. Hopefully that’s caught your attention. So can real and added value be achieved for a quarter of the cost? Yes. For a fraction of the £50k per month the firm could benefit from a fully hosted IT infrastructure which frees up the IT team to concentrate on value added activities. IT infrastructure becomes less of an operational burden and converts into an added value opportunity.
Such a move brings even further benefits – the latest Microsoft software, business continuity, disaster recovery, compliance, confidentiality and security of data and the management of risk. This is way beyond what a law firm could manage to achieve by itself. Cost management and innovation potential is available with the infrastructure paid for on a per user per month basis (no capital needed for extra servers) and costs are also flexible and predictable –i.e. costs scale up and down immediately with your business need and if the firm shrinks it doesn’t have to throw away licences that it has bought. Another sum – if those same fee earners cannot bill for just three days with a systems failure – usually an underestimate – lost billing will be £150,000, not to mention the cost of the loss of disgruntled clients later on.
Changing what you have always done to what the new entrants and innovators are now embracing will help your firm to compete, perhaps it is time to have a look.