IT Directors can do more than just manage systems, writes John Kay. If they step out of the shadows they can help firms manage the direction of the business and achieve their objectives.
The recent survey by PA Consulting Group, in conjunction with Legal IT, into the use of IT in law firms has highlighted the fact that many firms are considering updating their administrative systems, continuing to try to deliver benefit from knowledge management and enhancing their collaboration capabilities to help their people operate more effectively inside and outside the firm.
This opens up the opportunity for a step change in achieving full benefits from IT - by focusing on external and value-adding opportunities, which can build on the internal facilities already provided.
Some firms, particularly the larger ones, are achieving success with major technological steps forward. For the majority, however, translating these added-value ideas into action and benefit is proving more elusive. While firms are generally happy with their IT systems, more than 8 out of 10 believe that they are not getting the full value from their IT spend. Consequently, these firms are holding back on strategic investment decisions. In turn, this is frustrating the IT community within the firm who know that they and IT can do much more to improve the way the firm works.
We could summarise the results of our survey by saying: "Managing Partner, you think that IT in your firm is good, adding value and doing enough. Your IT directors disagree. They want a mandate to engage with you even more closely to improve and drive the key processes of the firm - rather than just acting reactively".
So how should IT directors make sure that this happens?
If IT is to leap beyond supporting routine administrative tasks and become an integral part of the effectiveness of lawyers and the firm, the benefits will need to be made crystal clear and they will have to be delivered. IT directors will need to show how IT investments can be directly linked to specific performance improvements and cost reductions in the firm. To do this they must:
- Explicitly link IT capability to achievement of the firm's objectives
- Implement systems that make it easy for staff to follow the required business principles
- Change processes to take advantage of IT capabilities.
Explicitly link IT capability to achievement of the firm's objectives
Showing exactly where and how IT can contribute to the achievement of the firm's objectives is the only way to demonstrate how IT can deliver value in terms that the management committee will understand and believe in. It enables an investment case to be couched in terms of the specific business outcomes that will be achieved, for example a percentage increase in fee income per partner, rather than a projection of general efficiencies that should result from, say, knowledge management and better sharing of information.
To achieve this, however, the communication gap between the leaders of the firm and the rest of the company will have to be bridged. As our survey showed, whilst 100% of managing partners believe that their firm has a clear business vision, only 46% of IT directors believe it has been clearly communicated to staff (down from last year's survey) and only 33% believe that business issues are clearly communicated down the firm. To bridge this communication gap and make the investment case, IT directors will need to take the lead and engage with managing partners in a way that they have never done before and identify the strategic context.
The most effective way to do this is to construct a one-page strategy for the firm that translates the high-level vision into specific goals and targets, for example market position, commercial performance management, the owners of the firm, employees, customers and other stakeholders. Against the targets, the firm's processes can be viewed in terms of how and in what way they contribute towards delivery of the targets. Individual process improvement objectives can then be set to support achievement of the high level targets. Aligned with each process improvement objective, specific investment initiatives, for example technology to support collaborative working, can then be viewed in terms of contribution to the attainment of each improvement sought.
In this way, the investment case can be made more compelling as it spells out exactly how the projected benefits will be realised. Just as importantly, it highlights how the benefits will be measured and enables these to be tracked through to delivery.
Firms that have used the one-page strategy approach have found that it does indeed bridge the communication gap - and generates involvement, commitment and ownership from all areas of the firm to their part of the initiative. This in turn starts what will become a much more effective implementation.
Implement systems that make it easy for staff to follow the required business principles
The business landscape for law firms is changing, with profitability coming under increasing pressure from clients. The vast majority of firms expect the volume of fixed fee work to increase beyond today's level of around 18% of total fees. Multi-office work is set to grow by 30% in the next three years and there are growing demands for external partnerships and alliances with other professionals.
These trends will mean that commercial management practices and business operating principles will have to change. Firms will no longer be able to get by without knowing the profitability of matters (only 68% do currently), or the value delivered to the client (only 33% do currently), or without managing the success of each matter (only 33% do currently). They will also need to improve dramatically their ability to retain, manage and exploit their intellectual knowledge base and manage risk.
To tackle these changes, firms will need to identify the required business principles that will underpin their success in the future, develop processes that support those principles and then motivate staff to actually follow the processes. IT can play a real role here by demonstrating value through the implementation of systems that automate the routine and make it easy for staff to do the right thing - making more time available for client facing work.
Change processes to take advantage of IT capabilities
New ways of working are on the increase. For example, almost all firms have, or are intending to have, digital dictation, the use of laptops is now on the increase and PDAs are being experimented with. Some firms, especially the smaller ones, are beginning to adopt hot-desking and limited forms of home working. Larger firms are all now using virtual deal rooms and extranets, with more than 40% also using internet enabled meetings.
Despite this, real changes to business processes have been minimal. The operating processes of most firms have not changed much since the time when PCs were first introduced, nor have the roles and responsibilities of staff and the ratios of secretarial/support staff to fee earners. It is clear from the survey that support staff may not be adding the value they could and the value they do add is seen to be internal rather than external. While 78% of managing partners believe that support staff are used in the most effective way, the staff themselves do not agree. External benchmarks of legal firms against other professional firms supports this view. Unlocking the value of existing IT investments and delivering value from greater investment in collaboration, document, case and knowledge management systems will require a major shift in attitudes to how things are done and who (lawyer/support staff) does what.
Furthermore, changing processes to take advantage of everything that IT can do is much more than just seeking to reduce support costs. The biggest prizes are not to be gained from standardising administrative processes, but from areas such as client relationships, business development and professional development - which the one page strategy will highlight.
A case in point is knowledge management (KM) systems, where 68% of firms say that their implementations are still failing to provide a good return on investment. However, most KM initiatives focus almost exclusively on the input side, for example the collection of information such as case records, rather than the output side and how the information will be used in changed processes to deliver value. As such they are often seen as an overhead rather than an enabler to greater profitability.
It is processes, not information repositories, that deliver value and there are key points of action where the delivery / availability of information and knowledge will make a material difference to the outcome. These need to be identified, prioritised and targeted. Effective knowledge management implementations are not isolated IT solutions: they are made up of IT components that often already exist, for example precedents, previous work with clients. The challenge is to find how these can be connected and delivered to the point of action and used in an enhanced process. KM is a competence, not an IT system, and it is the whole solution of information, people, process, know how, IT and leadership that delivers the value. While IT can act as the catalyst, changing how the firm works releases the value.
The speed at which IT emerges from the back office of legal firms will depend on IT directors being able to engage with the management committee and clearly make the link between world class systems and fantastic firm performance - and then having the backing of the firm to implement the range and scale of changes required to deliver the value from IT. While our quote at the start of the article is a challenge to managing partners, we have suggested here how IT directors can start to lead them to the challenge.
