The benefits of the cloud can be huge

This resource was also featured as a Industry Analysis in the July 2014 issue of LPM magazine. To read the issue in full, download LPM magazine.  

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Every element of a legal business’s profitability calculation impacts the bottom line, and client pressures are making legal management more discerning when deciding on the next generation of technology to drive forward their firms.

While there’s a lot of talk about moving IT into the cloud right now, law firms need to be as picky about their IT future as how they choose what work to do. For many, the next move in IT is indeed to cut overheads by outsourcing and moving to the cloud. But legal businesses thinking of cloud have a challenge – seizing opportunity from the unfamiliar. They also often have investment in on-premise systems and procedures, coupled with a resistance to change.

“There’s inertia, full stop,” says Paul Coote, founder and managing director of consultancy and implementation specialist Instant On IT. “And in legal services that inertia is possibly more prevalent than other industries.”

An all-in approach to the cloud isn’t appropriate for most companies, he says. “If firms have invested money in systems, they may need to continue to use what they’ve got and integrate onsite systems.” The trick lies in working out which systems are near amortisation or end of their ‘life’, and focus on moving those to the cloud (or new on-premise systems) first.

It’s crucial to think seriously and critically – in fact, highly selectively – about whether outsourcing IT will benefit a firm’s future, and how to achieve that if it might. “Firms need to think carefully about the right cloud partner and how it will work with their existing systems onsite. In terms of their current IT investment, there are very few firms that don’t need to worry about what has gone before. That means firms determining their needs on-premise, and how little or how much can be moved to the cloud.”

THE TWO SIDES OF THE CLOUD

Coote says firms need to be realistic about the promises cloud vendors sometimes make, because the cost reduction impacts of cloud IT can be easily overstated. They also can’t always be achieved in a reasonable time in SME law firms.

“There’s often a four-year lifecycle for IT, and in the SME market it tends to be even longer – five to seven years. That’s something many people overlook.” That longer IT return on investment period that SME firms operate tends to make investments look better than they are, years down the line.

But some cloud offerings can deliver rapid ROI benefits, mainly in areas where you get ‘cumulative scale’. “Delivering email is a prime example,” says Coote. “Microsoft’s Enterprise 365 licence is unbeatable compared to on-premise cost, and can come with backups.”

The ability to pay for your tech on an op-ex level and to execute new or changed service needs quickly – delivering agility and less partner grumping about long-term capital commitments – are major benefits in moving to the cloud.

“When you’re buying hardware in the traditional way, you’ve got to decide how many users you’re buying up front – a 50-user licence for a case management system, for example, has to be decided from day one. In the cloud, you’re paying per user, per month. That makes it much easier to add people. You don’t have to go through another buying cycle, the sign-off process, or any of that. It’s a much easier way of delivering services that you’re going to need to scale up.”

But Coote warns that firms also need to consider how easy it may be to scale back on an area they’ve moved to the cloud – many cloud services are less flexible when scaling down, he says, than up.

“There will be another downturn at some point, and legal services are under extreme pressure to manage costs now. Many firms are not growing. They’re under price pressure to do as much as they possibly can with the staff and the systems they’ve got. In the future it may be more realistic that a firm goes down in size, or has to reduce a department, or merges.”

Another challenge for firms switching out to the cloud lies in extracting the information in extant systems. Coote says that in practical terms the process is in fact not much different to any systems changeover. “If you’re migrating a case management system, a large portion of the consulting cost is getting the data out and into the new system – the prepping of the data, making sure it imports correctly, and so on. That’s no different than going to the cloud, and in some ways is no different if you’re coming out of the cloud, either.”

Issues may also arise in firms managing the costs of backup systems, says Coote. “If you had bought a backup solution that you were locating in your office, a data centre, or hosted on a server, for example, then you owned that system. If you continued using it, you wouldn’t be paying any extra for it. But in a cloud backup system you’re paying on a monthly basis for the ability to use the system. If you stop using it, or if you stop paying for it, you stop having it, so if you’ve got something like backups going back seven or eight years, then you’ve got to keep it.

“You could have stopped using it and still be paying for it five years later. The lock-in can be tricky – and something people don’t tend to pick up on.”

BUSINESS BENEFITS

But the benefits of moving legal IT into the cloud – in terms of mobility and flexibility at the right cost – can readily offset any pain, if a firm gives it careful consideration. The current generation of workers expect seamless technology at work as well as in the field or at home, and cloud goes a long way to delivering that.

“Now they can use it at home, on the train, on their phones, anywhere, transferring files and data and communicating – it’s very easy. We’re in the age of consumerised IT, and cloud fits more into the model of how users would expect to be able to use IT now. They can just consume it, and it works wherever they are.

“This is the utopian reality where you need to deliver services to staff in a different way to how it was 10 or even five years ago. If people come to work and everything’s a lot harder than it is in their personal life, there’s a clash. It’s an opportunity for organisations to attract staff, modernise and act in a way which ultimately grows success.”

Coote says one question firms need to ask themselves about their generic solutions is: Will your way of working hinder the ability to make life easier for your people?

“Most businesses would say IT is the most critical part of their organisation. We couldn’t name a business that doesn’t believe it needs to be working all the time.” How firms move forward with their strategy in a tough market may make IT a differentiator as well as an enabler, in the way they deliver services and improve internal processes for their own people. No one said that’s it’s going to be easy – but it may be worth it. 

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