How big is the gap?
In May this year Optimize magazine featured research findings on this very subject. They portrayed IT managers and business managers as worlds apart, detailing that they:
- don’t share the same goals
- don’t have adequate IT budgets
- fail to make the best use of IT within the company.
In fact the statistics showed that only 40% of respondents viewed IT as part of the decision making team that sets overall strategy (see IT Gets the Business by John Eckhouse, Optimize Magazine, May 2002). Many more viewed it purely as a management function for key data, communications, hardware and software. In light of our own
However, 50% of the people surveyed admitted to some kind of a disconnect between IT and the business, with a variety of resulting symptoms and ramifications.
The symptoms of the gap
Half of the businesses surveyed testified to experiencing symptoms of a rift. But what were they?
Exclusion
In many instances, IT was excluded from the inner sanctum of commercial strategy formulation. But even in firms where IT felt included in business strategy, the function was viewed as a tool or enabler that played a critical role in making business strategy happen, but did not have a part to play in its inception.
‘IT comes in after the basic strategy work has been undertaken, it is there in a supportive role, not as a driving force! Our board is tasked with strategy development, then it is radiated out to the different departments.’
Poor Communication and Lack of Understanding
For all those respondents who recognised a gap within their own organisation, poor communication between corporate and IT decision-makers proved to be an issue. Closely linked to failings in communication was a lack of understanding.
‘Misunderstanding can occur in a lot of cases, mainly due to a lack of cohesion between the business and the IT areas not communicating.’
Problems with Power-Users
IT decision-makers complained that their input was misunderstood.
‘At a very serious level the directors seem to have little understanding of what IT can do. The older generation seem scared of computers or go too far the other way and assume they can do everything.’ Financial Director
This problem appeared to be exacerbated when ‘power-users’ or ‘techies’ were seen to drive IT forward out of personal passion, rather than from a full knowledge of the business need or user requirements.
‘Law firms are different from other companies as the boardroom is full of people who are the product. We have systems that really do what the users want them to do but that is changing rapidly. The areas of misunderstanding arise when there is a specification of a tool that is drawn up by a few people without regard for the interest of the majority. The problems arise when the IT department gets specification from 2-3 power users and then they build a product which is far too sophisticated for everybody else.’ Managing Partner
Systems Underperformance
Even in firms that claimed to have optimal technology installed, there was major dissatisfaction regarding user competence. Those responsible for using the systems day-to-day appeared to be the key to whether any particular system was seen to perform.
‘For us the main challenge is training. It is to ensure that people within the firm have the fullest possible comprehension of what the IT we have got can do.’
Failing to get the most out of technology in this way was an issue for both IT decision-makers and partners – for many the answer was seen to be training. But with so many different levels of interest and competence in technology and a mixed bag of attitudes as to the benefits technology can deliver, the problem seemed insurmountable for some.
‘Unfortunately it is possible to buy in IT kit and people and, in the main, most IT problems are solvable, but what you can’t do is get people off their backsides and change their working practices.’
Summary
For organisations exhibiting these symptoms, there is no doubt a gap exists. But the research evidence is split. Many commercial decision-makers are left pointing the finger at IT, whilst the IT decision-makers point it right back.
‘We actively don’t involve the partners, as if we do involve them in decision-making, they mess it up. Making partners responsible for IT does not work.’ IT Director
The technological journey
The technological development of any organisation can be viewed as a journey that becomes increasingly complex, the further you progress. In this analogy, businesses that are just setting out face fewer problems than those that are further down their chosen path. So, in relative terms, businesses that are recent technology adopters, like those in the legal sector, face fewer problems than those in (say) the manufacturing sector who adopted various technologies many years earlier.
For mature organisations, the pressure is to realise the benefits of technology against a backdrop of legacy systems, whilst continuing to reduce cost. Businesses with younger technology must make their choices wisely to enable them to adapt in the future whilst educating business users to the advantages effective systems use can bring.
But whether their technologies are infant or mature, all organisations are acutely aware that technology is inextricably linked to organisational performance. For many of the businesses surveyed, this realisation arises simply from the chaos caused when systems go down. Others recognise that IT strategy must be an urgent organisational priority. But still few are truly fast to act.
Avoiding growing pains
All of our surveyed businesses were aware of the emergent challenges in the legal marketplace. With building societies now bundling legal work as part of their mortgage products and new innovations like conveyancing online, competition has never been fiercer. But, in IT terms, many of the businesses spoken to claimed to be coping reasonably well with the increasing pressures placed upon them.
This appeared to be because IT within legal firms has a well-defined and focused role – even if that role falls short of its full strategic potential. Regardless of the business size, most of the firms surveyed retained a relatively simple structure, divided between fee-earners and a network of services to support them. The majority of technology is employed by these firms to deliver this support when and where it is needed.
Most of the firms shared a priority in maximising free earner potential and, as such, the top-line IT agenda was subject to little conflict. However, placing IT in this support function has its own inherent problems. One firm even went so far as to describe IT as a ‘janitorial process’, in this role the value that IT can add to a business must be severely disabled.
Further problems appeared to arise where what has traditionally been a paper-driven profession is forced to embrace more modern forms of document management and information access. With a proliferation of web-based applications, a variety of channels for client contact are opening up and the legal profession really has to ‘grow up’ in the way it uses technology for business. With issues like these on the cards, organisations where IT is relegated to the second division of decision-making may be able to implement the requisite systems, but will certainly struggle to initiate and enforce the change that is essential to ensure their operational success.
‘My observation is that within my industry there is a gap and that IT strategies are not particularly well aligned to business strategies. To a large extent that is due to the culture of a legal partnership, the way the organisation is structured and the relationship between support and professional.’
A Key Strength
Some of the organisations surveyed strongly challenged the notion that any such gap existed within their organisation. For them, this was attributable to the IT teams sitting closer to the central partnership boards than in other, more traditional firms. In many instances this connection was supported by an IT sponsor or sponsors amongst the partners themselves.
‘We’re in the fortunate position that one senior partner we have is very clued up, very interested and very innovative when it comes to IT strategy. This helps greatly with communication issues and the development of IT within the business.’
It appears that businesses like these are instinctively doing something right and may even be able to set an example to other organisations experiencing more severe problems.
The Strategic Issues for the Legal Sector
Research has confirmed the importance of IT as a strategic issue for legal firms in a number of ways.
As an investment
For those businesses sampled, investment in IT was substantial. Typically our respondents cited investment at around 6% of turnover. With such a significant proportion of corporate wealth being pumped into technology, all eyes are on the IT function to perform.
Supporting complex management challenges
Stiff competition, pervasive technologies and a shift towards a more litigious society will lead to an increasingly complex and competitive market space. With so many challenges to address, legal firms face a real catharsis.
‘Competitive pressures remain the most important business driver. If somebody else is offering something to a client, why aren’t we?’ Partner
The key to future success is to put the customer at the forefront of every business and IT decision; this is the primary competitive pressure that will separate the winners from the also-rans. But for professional services organisations, many steeped in tradition, the leap from a ‘clients who need our services’ perspective to one that recognises: ‘we need our customers’ business’ may not be the easiest transition.
‘Competitive pressure will drive our firm – due to increased service standards and internationalisation, in terms of the need to deliver all services on a global basis to one client.’ ‘Chief Operations Officer
These challenges are compounded by the increasing choices now facing firms when it comes to IT. Whereas they historically had to make choices between a finite number of recognised systems, now, in the modern technology marketplace, choices have multiplied until they are almost infinite in number. More than ever before, firms need to be both focused and highly discriminating when it comes to specifying their technology.
Tackling current challenges and preparing for the future
With the pressure to become more client-centric, the legal firms surveyed cited numerous current challenges. Many of these centred around harnessing web-based applications to increase business efficiency. With it, this brought a host of security concerns. For other organisations, document and knowledge management was critical, as their practices expanded to occupy multiple sites, some times internationally.
But for all, internal and external communications and the need to improve organisational capabilities for customer relationship management proved to be real hot spots, now and for the future.
Successful Implementation and Project Management
With so many potential projects in any one firm’s sights, successful implementation and project management is also a priority if projects are to be driven through to successful and timely completion. But how do organisations measure their success in this area? This question was one that held strong resonance, not only for legal firms, but also for all the organisations surveyed. This is also a question that has proven incredibly difficult to answer.
ROI
Measuring Return on Investment from technology projects has at best been described as difficult and in most cases, downright illusive. The legal profession is no exception. Now, more than ever before, the pressure is on for firms to be accountable for their technology spend. But with few formal measures in place, many practices struggle to evidence their technological success.
‘In my experience of having worked with IT consultants and law firms, I’ve very rarely seen any kind of system that adequately measures ROI!! Not here and not anywhere else. We haven’t come up with a measure that could work for us.’ IT Director
Less than 1 in 4 of the businesses questioned claimed to have any measure of ROI for technology. Many respondents recognised the benefits that such measures would have in building support and trust for technology projects.
However, the reality of implementing such metrics seemed somehow out of reach:
‘As a company we are not mature enough to have a ROI measure. It’s something for the future. We might look at that later.’ IT Director
It appears that some organisations simply don’t have the time or the methodologies available to implement sensible measures. But with so many pressures, so much to do and budgets continuing to increase, the failure to measure could become a burning issue as firms realise that they must measure in order to manage more effectively.
The clear benefits of change
The current climate
There are a number of areas where adoption of current developments in IT is having a significant impact on businesses in the legal sector:
- better customer relationships and new revenue streams facilitated by e-business solutions
- better access to information for a dispersed workforce, as people on the move and in the field experience seamless information distribution via IP platforms
- savings on travel, as expensive journeys and time-consuming team forums are replaced by virtual meetings.
Addressing fundamental challenges
But these changes represent little more than quick wins to be enjoyed by those who are fast to act. Looking across sectors, from manufacturing, to professional services, the research highlights a host of fundamental challenges currently shared by
- Communication The research suggests that
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- Customer Centricity The timely and judicious use of information is a clear differentiator in a firm’s dealings with its customers. As such the legal profession is under increasing pressure to put its customers first in every aspect of business.
- Flexibility and Responsiveness In the majority of sectors, change rather than stasis will continue to be the norm. Organisations understand that in order to survive and thrive in the future, they must be able to adapt to changing market conditions. The ability to adapt to changing customer needs through improved process and use of technology will continue to be a key success factor in this competitive market.
- Controlling Costs But above all, companies must look to control escalating costs, not just in terms of containment, but of reaping and realising the true value of the investments they make.
Who Should Drive Change?
Many of the firms spoken to as part of the research, appeared to be close-knit businesses, despite the large size of many. Some had a fully developed IT function, others had a partner driving IT through the business. So if this person is also to drive change, the challenge has to be managing this change process well, regardless of job title.
Pressure in managing IT
Regardless of who takes responsibility for IT, they rarely have an easy time of it. Typically, our respondents complained of competition between day-to-day pressures and longer-term goals. On a daily basis, IT functions face fire-fighting issues including:
- completing current projects
- dealing with user problems
- effectively staffing the help desk.
The IT function’s problems are compounded by over-ambitious project demands, tight timeframes imposed for completion, budgetary restrictions and skills shortage.
‘I would like as IT Manager to spend much more time looking at what’s going on in the marketplace, looking into the strategy I wish to aim for in the next 6 months. Unfortunately I am bogged down with delivering stuff today, or sorting out problems, or attending meetings.’ IT Manager
With numerous competing priorities, it may be difficult for the IT Director or partner responsible for IT to take time out to contribute to policy setting for the broader organisation. And even then, who is to say that the individual tasked with IT delivery at the highest level, has the skills to transform organisational ignorance into wholesale understanding of and optimum use of the systems that are in place.
Looking for help
Firms look for help with their technology for a number of different reasons, from a quick fix to long-term strategic support. They may be looking for objective advice from a highly qualified third party, or they may simply be looking to buy in skills for a fixed period to compensate for an organisational or market shortfall.
When outlining their issues relating to consultants and contractors, three major issues came to light:
· Cost For many, the concern was one of expense. Both commercial and IT decision-makers saw consultants as yet another drain on already scarce financial resources. The value of the services offered by consultants and the experience they were able to bring was subject to some doubt:
‘The results you get depend on the training they have and the amount you are willing to spend. They don’t come into the legal world as they are too expensive for us.’ (Finance Director)
· Mistrust But that’s not all. On occasion, the mistrust felt for IT people within a firm often extended to encompass contractors, with all of the associated communication issues:
‘Consultants are too expensive – they are rip offs. They bring in a lot of inexperienced resources and charge a lot of money. They overstate their capabilities.’ IT Director
- Understanding For many of the firms surveyed, a key criteria in choosing their third-party IT suppliers was understanding of and empathy with the issues and culture of legal organisations, the challenges they faced and the specific IT problems they experienced.
‘[A consultant’s] greatest value and input is to keep us informed on what other law firms are doing and problems other law firms have encountered. An outside consultant having connections with a number of other firms can bring important knowledge into a discussion about where we are going.’
Bridging the gap
What it seems the market is crying out for is a type of consultant that can engage with the business at this strategic level to initially act as translator between the board and those responsible for IT. One that can help the IT department think and communicate clearly about their future direction and lay the foundations of trust that will bridge the cultural gap.
But after this initial intervention, the ideal consultant would demonstrate another key point of difference – they would not leave, or duck out at implementation. Instead, they would have a hand in project management responsibilities and take the lead in realising the benefits and delivering value to the business.
In addition, consultants would create the kind of mentorship that gives an IT function the scope to develop into a new, strategic positioning.
What happens next?
Naturally this will vary from practice to practice, but will very much depend on each legal firm’s ability to rise to the plethora of challenges they face. For those with few problems, the challenge is to stay on course, keep pace with technology and continue to add value to their client relationships, without adding to their cost bases.
For those experiencing a divide between IT and commercial decision-making, the challenges are more complex. But all practices could benefit from paying particular attention to the following areas:
- Get IT talking the language of business
- Build trust by delivering value
- Enlist the right kind of support
- Encourage the board to listen and learn
Get IT talking the language of business
The priority for businesses looking to bridge the gap is to get their IT and commercial decision makers talking the same language. It is imperative that the IT spokesperson starts to think big and act bigger if he or she is to win the trust of their more ‘commercial’ partners. But this is not to say that they can neglect their operational responsibilities. Exactly the opposite in fact – they must look to foster an organisation-wide realisation of the importance of technology in a similar way that partner/sponsors gain support and success for IT projects.
Build trust by delivering value
When rising to the challenge of building trust, answering a major commercial concern – Return on Investment in technology – could prove to be the answer to unlocking a new and more fruitful relationship between IT and the business, one that is characterised by accountability and action. In order to achieve this, a balanced programme of technology for business must be created, one that includes the necessary metrics to track progress and ensure the realisation of benefits along the lifespan of any project.
Enlist the right kind of support
With the onus on the IT Director and his people to bridge this gap, many organisations will need to enlist the right kind of help – help that can deliver on a personal level, on a systems level and on a cultural level. The challenge is finding the right kind of help and support to move forward. The answer is to be clear on exactly the kind of help your business requires and not to settle for second best or a quick fix when it comes to choosing a partner for change.
Encourage the board to listen and learn
Finally, none of the steps above will reap the required rewards if partners fail to play their part in an active way. For them, responsibilities must lie in increasing their own understanding, being realistic in their project expectations and conditioning the environment to create a culture where IT projects can flourish.
But the first stage in this mission critical transformation must be for Boards to open their eyes, ears and minds to the true commercial opportunities of IT if they are to best position their businesses for the future.
Boxwood Technology can be contacted via www.boxwoodgroup.com.
