Tony Korn, Head of the Professional Services practice at independent management and IT consultants Cornwell Affiliates plc, reviews Professional Services Automation (PSA) for law firms with dos and don’ts, and more TLAs than you can shake a stick at.
You are doubtless aware of the many areas in which IT can help improve the performance of a law firm. The most obvious are:
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contact management
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cost management
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people or resource management.
Contact management includes both customer relationship management and opportunity management. The former relates to developing and maintaining information on current and potential customers. Opportunity management is concerned with managing potential business opportunities (sales activities, proposals and contracts).
Cost management includes time and expense management, ie managing the costs associated with cases, including monitoring utilisation and cost control. It also covers business intelligence – providing reporting tools which improve the assessment of business operations.
People or resource management includes:
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Resource management: staffing planning, allocation and assessment
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Case management: managing a portfolio of projects and communications with customers and resources
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Project management: CPM, PERT and other tools for delivering projects on time and within budget
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Practice management: strategic insight on practice operations and planning as well as utilising existing work and new innovations to convert current project accomplishments into new products
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Partner relationship management: managing and scheduling subcontractors and other partners
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Collaboration management: real-time communications and sharing of information during engagements
- Knowledge management: capture, organisation, and reuse of unstructured and structured information.
Are you aware of PSA?
There seems, however, to be a rather well-kept secret regarding IT in the law sector. That is that, over the past few years, a goodly number of application package suites have been designed specifically to assist Professional Service Organisations (PSOs), most certainly including law firms, to address these opportunities in a comprehensive and integrated manner.
PSA packages have their origins in ERP software, ie Enterprise Resource Planning suites of integrated modules designed to improve the productivity of an organisation (originally manufacturing, then retail, then …) by an order of magnitude. PSA packages are designed to do for PSOs what ERP packages did for manufacturing, retail, logistics, etc. organisations in the 1990s.
We are talking about a suite of integrated applications designed for PSOs that enable them to become more productive and profitable by increasing their efficiency through achieving:
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increased utilisation and productive time
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improved planning
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improved budgetary and management control
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integrated knowledge management.
It should be said immediately that there is absolutely no necessity to go for a ‘big bang’ and implement all of the above modules simultaneously. The great majority of PSOs begin with Time & Expense Recording and Management, looking to improve utilisation. (One PSO with several hundred staff showed that a 1% point improvement in utilisation resulted in a £1 million improvement in the bottom line. That makes justifying such a project rather easy!) The point of PSA, however, is that all of the modules integrate – data in once and only once – and so it is easy to progress from one module to the next.
Benefits of PSA to a law firm
PSA application suites offer law firms the opportunity to increase utilisation and improve financial management. They also facilitate more effective collaboration with partners through improved communications and can be used for the integration of knowledge management. Properly used, they result in increased business operations, increased client/user satisfaction and, overall, increased profitability! Moreover, the use of PSA across the Internet enables ISPs to create solutions that can perform well across disparate geographies.
By implementing PSA in a law firm everyone wins. Management in the law firm gain – they have better tools by which to manage, increased staff utilisation, and see faster integration of new employees. They also have new services to deliver. The greatest attraction of PSA implementation for management is that they have a strategic tool to analyse and plan in ‘Real Time’ and can spend less time on operational issues.
Clients gain too. They get real-time data on assignment status and costs and a tool to improve the management of assignments. That should mean no, or at least fewer, surprises. For employees, the gains are consistent scheduling, insight into overall firm-wide activities and future cases, and reduced administrative duties.
The key outcomes are:
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reduced costs
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increased revenues
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stronger relationships
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more productive workers – higher utilisation, better planning and scheduling, more relaxed
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bureaucratic policies eliminated to increase efficiency and relieve stress.
Overall, the benefits will be both financial and non-financial. The financial benefits centre on utilisation, cash flow and cost management. The non-financial benefits arise from the improvement in communications and collaboration across the firm (and beyond it).
Moving to a PSA-supported environment can also be justified on the basis of the extra importance of flexibility in a constantly changing economic climate. Law firms need to be able to respond rapidly to changes in needed skill profiles, organisational change and technological advancements (or ‘whims’).
Making it happen cost-effectively
For PSA implementation to succeed, the following approach must be followed in sequence.
1. Business strategy must be assessed.
2. Awareness must be gained of potentially-relevant application package suites.
3. Executive sponsorship must be gained.
4. An organisation structure for the project must be developed and agreed.
5. Business processes must be re-evaluated. Future business processes must be clear and agreed before selection commences. Place the emphasis on the ‘Process’, understand, dissect, define and agree requirements, automate and optimise. Then it’s time to measure the benefits, and report the benefits! Continue to modify and enhance processes without complete disruption.
6. A business case must be created.
7. Measurable evaluation criteria must be developed and agreed.
8. Implementation time must be minimised. If you’re going to make major change, do it quickly. Where the ROI (Return on Investment) is going down, this typically correlates with the length of the deployment time.
9. The application package suite must be selected and implemented, taking account of the need for change management. Train, train, train. Measure, measure, measure.
10. Review results from operations (including multiple analysis) to determine what further needs to be done.
11. Even if not fully deployed, look for immediate benefits.
12. Report to executive body.
13. GOTO step 1.
Failure to undertake an adequate re-evaluation of business processes and inadequate subsequent change management are the key causes of unsuccessful PSA implementations. Getting these two right are definitely Critical Success Factors.
Alternative solutions
Why not just ‘integrate’ point solutions? (A point solution is one of the separate modules listed at the beginning of this article.) You may have time and expense recording from one organisation, CRM from another and resource management from a third. Couldn’t you implement some of these point solutions without upsetting the whole apple-cart?
The reasons for preferring PSA include the fact that an integrated application suite is strategic and long-term and relates to the overall business plan and reduces the total lifetime cost of ownership. Moreover PSA makes workforce preparation easier – including training and configuration. It introduces process improvements and better operational control, increases financial management and enhances collaboration and communication. Overall, it provides better decision-making capabilities.
Another question that we often hear from PSOs (though rarely from law firms) is: “Why not just outsource?” This question can be dealt with very quickly: because outsourcing a mess will always leave one with a mess.
Conclusion
PSA is here and here to stay. It is a potentially powerful tool for law firms. Progressing down such a route is obviously, however, a major strategic move. Wise counsel is strongly recommended.
