Peer to Peer Magazine

8 PEER TO PEER: THE QUARTERLY MAGAZINE OF ILTA | SPRING 2017 BEST PRACTICES Don't Let Tech Choices from the Past Limit Opportunities Today Don't Let Tech Choices from the Past Limit Opportunities Today Yet, relative to industries like consumer-packaged goods, retail or technology (to name a few), legal services are slower to adopt and adapt to newer, more efficient technology models like soware as a service (SaaS), agile project management or DevOps (a clipped compound of "soware DEVelopment" and "information technology OPerationS"). While there are more opportunities to invest in new platforms and ways of working, there is less opportunity to invest due to technological debt acquired from decisions made five or more years ago. Zero-based budgeting (ZBB) has grown in use in recent years and provides a way to get at and minimize that debt. ZBB allows teams of any size to look critically at existing investments and consider options for driving efficiencies. Properly used, it is very effective at optimizing the run costs of your existing business and allowing teams to reinvest these gains into newer SaaS technology and other offerings where your firm or department will stack up beer against the competition. Savings can also be taken to the boom line to improve client outcomes, enhance margins or improve client prospecting or lawyer productivity. The Problem Law firms and legal departments spend the majority of their technology-related costs on maintaining and running their existing operations. The average firm spends relatively lile to grow or transform its business relative to its run costs. Unmanaged, these costs grow over time and can crowd out a firm's opportunity to invest in newer technologies. For professional services firms, run costs of technology were roughly 66 percent of total technology costs in 2012, according to Gartner's 2012 article "IT Metrics: Align IT Investment Levels with Strategy Using Run, Grow, Transform and Beyond." In December 2016, the Gartner report "IT Key Metrics Data 2017: Key Industry Measures: Professional Services Analysis" showed the professional services industry figure has grown to around 72 percent of total technology costs spent on running the business. Traditional approaches to budgeting and prioritizing opportunities will not be enough and haven't been enough to keep this growing threat contained. Unchecked, it will continue to cannibalize the growth and transformation agenda. A new way of allocating resources and prioritizing opportunities is needed to get at the legacy decisions and investments in place. A Solution: ZBB Zero-based budgeting is an approach to budgeting and cost management that has gained more widespread acceptance in recent years. It's not new. It was developed in the '70s and used more broadly for a Technology is more important in the legal profession than it was a decade ago. It will continue to grow in importance, requiring a larger share of investment. New opportunities in artificial intelligence (AI), data analytics and cloud-based applications are available to firms that are ready to capitalize on them. by Richard S. Mackey

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