It sourcing threat or opportunity by dave cunningham- feb 2004

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  • Outsourcing is a bad word. It carries the stigma of big projects with massive change that go bad as often as not. Additionally, in Baker Robbins, many people feel that IT outsourcing is a threat to some of our services. My objective today is not to convince you that outsourcing is good. I will address your perceptions head-on by providing information on the current statue of outsourcing in law firms and will address how Baker Robbins plans to do its best to use the strengths and shortcomings of outsourcing to the best advantage of our firm and our clients. I also want to make the concept of outsourcing relevant to those of you who may not have much interest in IT infrastructure. The projects I will discuss often start with changes driven outside IT, such as firm leadership, financial management or major firm changes.
  • Let me help clarify outsourcing. Nobody likes the term. Even the outsourcers struggle to find a better word. Within Baker Robbins, we use the term “sourcing” in reference to our assessments of law firm IT which look objectively at how the IT environment can be improved and what third parties or internal resources are best to help them. Our assessments work to define IT’s services, service levels, and the costs and risks associated with these services. A service can be the help desk or complete IT operations, but we’ll discuss these examples more. Our role is to identify the gap between what they are doing and what a professional IT group should be doing. A key point here is that we are not actually pushing firms to outsource. I expect that 60% of our clients in this area will not outsource at all. Whether or not they outsource, once firm management understands how they should be increasing service levels, reducing costs or reducing risks, this can create tremendous value to the law firm and great opportunity for Baker Robbins. Sourcing assessments we perform can be standalone projects, but may just as likely be a subset of a planning exercise, business continuity planning or just preparation for major technology changes. One of my last slides will leave you with the signs to look for.
  • Outsourcing in major corporations is mature. There is a company in Houston with over 300 consultants that does nothing more than assist corporations in outsourcing planning and transitions. Since outsourcing in law firms is in its early days, the services we consider for outsourcing are the first small steps. Primarily, we know that outsourcers can address help desk, IT operations and support, and business continuity services. In smaller and medium firms, they are capable of handling most IT responsibilities although we never aim to replace good IT leadership or deskside user support. Other areas are just as important, but are not as defined by the outsourcers today. They represent some of the greatest areas of potential value. For example, today we help firms design and migrate document management systems. Outsourcers are starting to approach this differently by saying “we can handle this nasty document/e-mail/records management problem for you. We’ll take it off your hands for the next two years if you pay us $2M a year”. That can be a very compelling proposition to law firm management. In over 50% of outsourcing situations, the aim is not to save money but to take problems away. With an understanding of how outsourcers approach issues, we solve broader problems with or without an outsourcer involved.
  • A few months ago, we conducted a phone survey of twelve law firm leaders. While our results are not statistically valid, we determined a couple things: First, the number one factor that determined if a law firm will take advantage of outsourcing is the CIO’s attitude toward it. No analysis to back up his or her feelings, but a strong distrust that outsiders could provide better service. Some are right, others are paranoid. Secondly, while many skeptics are vocal, over half the market is quietly open-minded about outsourcing. They admit to being ill-informed and inexperienced in making such decisions. Who better to help them than us?
  • Most of the IT companies we run into in the legal market have jumped on the outsourcing bandwagon. This creates a unique differentiator for Baker Robbins. Like product selections, we can provide firms an unbiased analysis of their situation. However, also like product selections, we have an interest in doing as much of the follow-up implementation work as possible. We’ll address this more in a few slides. Of the firms listed here, we have worked to establish relationships with most of them. Not partnerships, but we are informed of their capabilities and plans and likewise they know how we can help law firms. We need to further establish ourselves so they find ongoing value to referring opportunities to us so.
  • In sourcing situations (whether internal or external), we talk of “key performance indicators” as the primary measures of performance rather than focus on particular tasks or processes. Of course, these deal with system availability and support responsiveness. But they also deal with more subjective measures, such as satisfaction of the Executive Director, surveyed users and the supplier’s cooperation with other firm staff. The best practices of outsourcing are to establish an effective working team, not just manage the supplier at arms-length to some numbers. Most people have outdated perceptions in this area. Firms should understand their performance levels regardless of their interest in outsourcing.
  • There are concerns within Baker Robbins that outsourcing is in direct competition to our infrastructure services. The truth is that it is direct competition with all of our services. Perot Services, for example, is trying to expand its services in law firms. They will do infrastructure outsourcing but it’s only their back door to providing business process outsourcing (called BPO) in law firms. Any IT-enabled function is fair game to them and this includes HR, CRM, content management, knowledge management, accounting/finance/payroll, etc. They are a long ways from knowing how to do this in law firms, but a few firms are giving them the chance to bid on this type of work. They will learn quickly or get out of the market. Our fundamental attitude is that firms will increasingly be exposed to outsourcing pressure so we are jumping in early to create opportunities for ourselves and our clients rather than sit back and let it erode our services.
  • So, that’s an overview of the market, but what are Baker Robbins’ plans? I expect most of our work this year to be in assessments. Let’s explore the services we can provide for sourcing. They are very similar to our traditional approaches. We start with an assessment. In this situation, we answer these questions: What are the services provided by IT? How well do they provide these services (to address this question, we look at the levels of service, the professionalism of the support processes, and the skills of the IT team) At what cost levels are these services provided? What risks does the firm sustain due to IT’s services? We just completed such an assessment for Proskauer. They didn’t care about the costs but they wanted to know the quality of IT processes. Second is to design solutions based upon the assessment. Based on the solution, we select suppliers if appropriate and also
  • Since sourcing assessments help show firm leadership how it can benefit from improvements, they should lead to many types of follow-on projects. Centralization, for example, is a natural outcome for many firms. When a firm does outsource, we should still ensure we are positioned to lead projects during the tenure of the deal. Big projects are almost always out of the outsourcer’s scope. An outsourcer is, in a way, no different than an internal IT department. We compete against internal departments and must show our value as a complement to them to win projects.
  • As promised, I want to leave you with the signs that a firm can receive good value from a sourcing assessment. At least half our target firms can fit these descriptions. Those of you who work with Executive Directors of law firms who are frustrated with IT or IT planning – these are especially good opportunities to provide an assessment. Valerie Guarino and Don Gibson have each already identified some great opportunities.
  • In conclusion, I want to embed in your brain some key points about sourcing: A sourcing assessment shows where the firm can get the best value – it doesn’t assume outsourcing is the best option Use the term “outsourcing” only where appropriate. Considerations of outsourcing are generally very private matters. It’s best to talk to people about how we can benchmark their IT services and performance against those of other firms and professional outsourcers. Good IT management benefits from outsourcing – they aren’t replaced by it. Even if firms feel they have no interest in outsourcing, they should know how to define, measure and benchmark their internal services.
  • It sourcing threat or opportunity by dave cunningham- feb 2004

    1. 1. IT Outsourcing in Law Firms: Threat or Opportunity? An Overview of Market Issues and Baker Robbins’ Sourcing Services
    2. 2. IT “Sourcing” Defined <ul><li>Sourcing assessments are an aspect of IT planning. </li></ul><ul><li>Sourcing is about improving IT effectiveness and value and making informed decisions. </li></ul><ul><li>Sourcing assessments don’t push a firm to out source. </li></ul><ul><li>Sourcing involves defining services, service level agreements and performance measures. </li></ul>
    3. 3. Market Expectations <ul><li>Service expectations are increasing </li></ul><ul><li>Few firms have outsourced to save money </li></ul><ul><li>Some firms are using service levels and ‘cost of services’ information to deliver services better internally </li></ul><ul><li>Market is immature </li></ul><ul><ul><li>Firms are not experienced in engaging suppliers </li></ul></ul><ul><ul><li>Suppliers provide poorly fit bids </li></ul></ul>
    4. 4. IT Services Subject to Sourcing <ul><li>Primary Areas Today </li></ul><ul><ul><li>Help Desk Level 1 – offsite or onsite </li></ul></ul><ul><ul><li>IT Operations and Support </li></ul></ul><ul><ul><li>(Almost) Full IT Department </li></ul></ul><ul><ul><li>Business Continuity </li></ul></ul><ul><ul><li>WAN Management </li></ul></ul><ul><li>Additional Areas of Opportunity </li></ul><ul><ul><li>Storage Management </li></ul></ul><ul><ul><li>E-Mail and Document Management </li></ul></ul><ul><ul><li>Phone and Voice Systems </li></ul></ul><ul><ul><li>Business Processes </li></ul></ul>
    5. 5. <ul><li>Top 250 U.S. firms </li></ul>Market Overview: Current Status <ul><ul><li>50% - Open minded; generally need to be facing changes to make an outsourcing decision </li></ul></ul><ul><ul><li>10% - Already partially outsourcing </li></ul></ul><ul><ul><li>40% - Will not consider outsourcing </li></ul></ul>
    6. 6. Market Overview: Suppliers <ul><li>Legal-specific: </li></ul><ul><ul><li>Aspire.net (Union Square) </li></ul></ul><ul><ul><li>Thomson </li></ul></ul><ul><ul><li>Intelliteach </li></ul></ul><ul><ul><li>Bowne </li></ul></ul><ul><ul><li>KKL/LexisNexis </li></ul></ul><ul><ul><li>Office Tiger / Hildebrandt </li></ul></ul><ul><ul><li>Steelpoint and Ringtail </li></ul></ul><ul><li>Niche players </li></ul><ul><ul><li>Savvis, NetDocuments, HubbardOne </li></ul></ul><ul><li>Big players and BPO: </li></ul><ul><ul><li>Perot, IBM, Deloitte </li></ul></ul>
    7. 7. Sourced Performance Indicators <ul><li>Service Levels </li></ul><ul><li>System availability: 99.97+% </li></ul><ul><li>Help desk response time: 20 seconds for phone calls; 15 minutes for e-mails </li></ul><ul><li>Guaranteed problem resolution times (2 hours for Severity 1 systems) </li></ul><ul><li>24x7x365 operations </li></ul><ul><li>Optional off-site, centralized operations </li></ul><ul><li>Standardized PC and server builds for centralized operations </li></ul><ul><li>Business Performance Indicators </li></ul><ul><li>User and management satisfaction </li></ul><ul><li>Adaptability </li></ul><ul><li>Collaboration with internal staff or other suppliers </li></ul>
    8. 8. <ul><li>Opportunities </li></ul><ul><ul><li>We can control how outsourcing is used </li></ul></ul><ul><ul><li>We design and manage the solution </li></ul></ul><ul><ul><li>60% of our sourcing clients will turn to us rather than an outsourcer </li></ul></ul><ul><ul><li>Creates projects in smaller firms where little opportunities previous existed </li></ul></ul>Outsourcing can cannibalize our services. We decided to get ahead of the curve rather than wait for it to happen to us.
    9. 9. Baker Robbins Services
    10. 10. Resulting Projects <ul><li>Network Design ( e.g., centralization, capacities) </li></ul><ul><li>Continuing IT Planning </li></ul><ul><li>Business Continuity Planning </li></ul><ul><li>Transition Project Management </li></ul><ul><li>System Migrations </li></ul><ul><li>IT Organizational Improvement Projects </li></ul><ul><li>Business Impact Risk </li></ul><ul><li>Projects during the outsourcing term </li></ul>
    11. 11. Spotting IT Sourcing Opportunities Signs to Look For Firm Examples Poor service levels, lack of IT processes, inconsistent service across offices Proskauer Rose Aggressive firm growth or mergers; office moves or expansions Piper Rudnick Major new technology changes (storage, Server 2003, disaster recovery) Andrews & Kurth, Norton Rose Small or medium firms who want professional IT like a big firm LeClair Ryan, Frommer IT moving away from infrastructure focus; management doesn’t want the hassle Hunton & Williams, Linklaters
    12. 12. Long Term <ul><li>Can BRCo make projects out of closing gaps in IT performance we do not focus on today? </li></ul><ul><li>Can BRCo complete a full IT transition and hand over only support to an outsourcer? </li></ul><ul><li>Should BRCo outsource IT services? </li></ul><ul><li>Can BRCo outsource business processes? </li></ul><ul><ul><li>Business analysis capabilities </li></ul></ul><ul><ul><li>Financial processes </li></ul></ul><ul><ul><li>Litigation processes </li></ul></ul><ul><ul><li>Enterprise content management (DMS + RMS + E-Mail) </li></ul></ul>
    13. 13. Points to Take Away <ul><li>Sourcing Assessments = IT performance and value </li></ul><ul><li>Use term “outsourcing” sparingly </li></ul><ul><li>Good IT management benefits from sourcing </li></ul><ul><li>Even firms with no interest in outsourcing should know services, service levels, costs and risks </li></ul>

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