The business of intelligence

Although business intelligence has been gaining in popularity among corporates, the legal profession is still fairly new to the concept. In a 2007 Ark Group business-intelligence survey, law firms were asked to describe their current understanding and implementation of business-intelligence solutions. The findings suggest significant future investment in what is becoming a key area for competitive advantage.

The problem with business intelligence (BI) is that its meaning can seem vague. Just as client-relationship management (CRM) has caused consternation for years – is it a behavioural or technological discipline? – BI appears the cause of furrowed brows and general confusion. Several BI solution providers in this space have successfully advertised their products to the corporate market, but the legal profession seems largely stuck in a debate as to what BI actually involves and what advantage could be gained from implementing any kind of formal BI solution.

But take away the acronyms and both business intelligence and client-relationship management make perfect sense. If a law firm fails to build and maintain client relationships, it effectively doesn’t have a business. If management fails to gather information from all internal sources on the state of the business – that is, gaining business intelligence – then neither can it usefully analyse the firm’s performance to implement change or to make long-term plans to grow profitability.

In this recent Ark Group survey, respondents were asked a range of questions to determine general understanding of BI and its use/effectiveness across the profession. A marked 74 per cent of respondents said their firms do not currently utilise a BI solution to track, manage and understand their company’s information. In addition, 53 per cent do not currently have plans to implement a BI solution/initiative in the future, suggesting that in many mid-tier firms, BI is still much of an unknown. Bruce Wilson, vice president of business intelligence solutions at Thomson Elite, agrees that it’s still a fairly new issue for law firms, both in the UK and US, although it is not a completely new concept. “Some firms already have aspects of business intelligence, but few have the ability to pull together and analyse various pieces of information from all across the firm,” he says.

Indeed, as part of a practice management system (PMS), firms might have an element of business intelligence, so perhaps few legal practices think the additional cost of a formal BI solution necessary? Wilson argues, however, that implementing a technology-based BI solution will provide firms with far more than they could get with the traditional reporting solution that is often part of the PMS. “Thomson Elite’s BI solution takes into account every part of the business and is specifically designed for the decision makers – providing them with the information they need to act upon,” he says. It can give senior management visual/dashboard information, provide daily updates and will drill into information to reveal the problems behind the business. It is an important tool for firms that need to analyse their performance history so that they can make informed decisions about their future business development.”

This message on formal BI solutions may also be hitting home with UK law firms. Among survey respondents, 47 per cent said they were considering implementing a BI solution in future with a significant 25 per cent of those aiming for the next six months to a year (a further 11 per cent are considering an implementation within the next one to two years). This links to a general appreciation among respondents as to the limitations of their current BI infrastructure. As figure one shows, no firms would describe their current BI infrastructure as ‘very sophisticated’, with the majority opting for ‘unsophisticated/informal’.

With BI largely aimed at the decision makers in a law firm, it is not surprising that the majority of repondents (34 per cent) named the managing partner or chief executive as the ones responsible for implementing BI. But with a heavy workload and onerous management responsibilities it may also be difficult for such senior managers to take control of such an implementation – as with other management functions, support divisions may once again be essential, with 19 per cent of firms giving the finance director responsibility, and 30 per cent passing control over BI to either the marketing director or KM team. The relevancy of such divisions to business intelligence is obvious – and both marketing and KM divisions, are likely to play key roles in ensuring the success of any long-term BI solution.

Responses were fairly mixed as to what BI tools might improve, but a significant 39 per cent of respondents pointed to ‘monitoring/guiding business performance’ as a key benefit, which links with Wilson’s explanation of BI, as stated above. However, there was far more of a spread of responses as to whether BI tools could reinforce/support long-term strategic decision making across the business, with 27 per cent of respondents saying they would probably not use BI tools in such a way, and 27 per cent of respondents saying they likely would. Perhaps this is purely because few firms have yet implemented a formal solution and do not yet know how it might impact such a senior level of decision making. But, if Wilson’s expectations of BI are anything to go by, BI’s relevancy to the strategic work of managing partners and chief executives will be its key selling point in years to come.

As expected, however, when asked about the main challenges to selecting and implementing a successful BI solution, the main problem was stark. A staggering 76 per cent of the survey respondents pointed to a lack of understanding of what a BI solution should involve, while 40 per cent are worried about the complexity of the tools. Such problems are surely compounded by the fact that firms still struggle to decide who should ‘own’ BI; as we have seen, the firm’s decision maker is the obvious choice but there are inevitable time restrictions – give responsibility to another support division and how does the firm ensure the tools are used by the decision makers? And how can firms prevent internal conflict as to who should take responsiblities and, indeed, the rewards for successful implementation? The answer perhaps lies in giving implementation responsibilities to finance, marketing or KM functions, but ensuring the managing partner or chief executive fully buys into the concept and the tools, and will actually use the solution once it’s in place.

Just as law firms are coming round to the idea of business intelligence, so are Thomson Elite’s BI products evolving. Wilson agrees, for example, that for many firms, the additional cost of a BI solution may be prohibitive. “That is why we provide three different solutions for firms – the first is a consulting engagement to help firms develop a solution, the second is to include data warehousing as part of the firm’s BI solution, which is more relevant to larger firms and is more costly. We are also preparing to deliver a third option –a solution-oriented product which will be an out-of-the-box product for those firms that need a quick and cost-effective solution,” he says.

In terms of future developments in the business-intelligence space, it is likely that firms will be spending at least the next few years deciding whether to invest in formal solutions and, if so, getting the best out of those implementations. At present, 95 per cent of survey respondents have not attempted to measure the return on their BI investment, but considering many firms are either very new to BI or are still considering an implementation, that is hardly surprising. However, this is likely to become an important issue in future years as firms look to see the value of their time and investment. Already, however, there are some signs that BI solutions have had a positive non-financial impact on legal businesses, with firms generally agreeing that BI has helped them achieve:

1.Better dissemination of information (54 per cent);

2.More timely information access (60 per cent);

3.The ability to take action sooner on up-to-date (not month end) data;

4.The ability to anticipate and take action based on trends.

In the long-term, if BI really takes hold in the legal profession, firms may work with their solution providers to compare their BI metrics with those at other firms. It is too early at present to assess how this will take off (54 per cent of respondents say they have no plans for external comparisons as they are concentrating on internal BI first). A quite significant 33 per cent of respondents, however, said that they would like to compare metrics with other firms – but would not know how to go about achieving this. Perhaps this is early indication of where the solution providers in this space will look next?

As a concept, business intelligence makes sense. In bringing together and analysing data from across firms, it provides an insight into business performance that decision makers currently struggle to attain. With expanding firms that often have offices spread across the globe, such data analysis will also become ever-more crucial for senior management that needs to know what is happening in all corners of the business. The time for BI solutions may only just be kicking off in the legal profession, but from the evidence so far, it has a potentially bright future. And for firms that are quick off the mark in using BI solutions effectively, there may be serious potential to gain that highly craved but often elusive competetive advantage.

What is a business-intelligence solution?
One of the latest technologies to hit the UK legal market is business intelligence (BI), with solutions being offered by numerous suppliers of finance and enterprise-reporting systems. While there may be a number of available systems to choose from, however, many firms are still confused about the capabilities of BI and how it can be used. The following points should help clarify both the purpose and potential value of BI:

1. BI solutions aim to enable firms to better manage their performance and improve profitability by combining software applictions and business analysis content. It is aimed at senior decision makers, providing a tool for effective strategic decision making;

2.Many firms may already have some kind of reporting tool, but BI solutions go further to also provide performance analysis capabilities. Even the most sophisticated reporting tools can only generate reports on business activities and transactions – BI solutions combine reporting and analysis capabilities, helping decision makers understand real business issues, backed up by real-time data;

3.When choosing a BI solution provider, there will be those that provide no ‘content’ and those, generally PMS solution providers, that include content as part of the implementation. Content is more than just raw data – it is the information that is gained from distilling the raw data, that will enable firms to measure performance. For example, firms may have time records, but it is the BI models or the BI content that will enable firms to calculate, say, speeds of collection and margin. Solution providers may offer standard content, based upon law-firm-management best practices, and will then adjust those to meet individual firm needs.