Developing an IT Roadmap with an Effective Budget Strategy

The fast pace in which the technology landscape is changing is forcing firms into having more fluid IT budgets. It is critical to know how to define your budget and drive your IT roadmap with that budget. Learn what your firm can do to take control of the budgeting process and avoid falling behind.

budgetIt’s that time of year again. The holidays are upon us, Q4 is here, and firms will report on their budget requests for next year, including initiatives ranging from those aimed at improving efficiency to others that will help promote strategic growth. Many firms find the budget planning process incredibly daunting when it comes to IT specifically given all the moving parts, including: software and hardware upgrades and support renewals, ongoing IT security protections, and Microsoft Windows and Office migrations (just to name a few!). This apprehension can lead to second-guessing about how much to budget, where to allocate the dollars within the budget, and if your firm is in line with or falling behind the competition.



The first step in preparing your firm’s budget is to determine if you are investing in the correct areas of IT. It is critical to understand if you are budgeting for the proper amount. Fortunately, the Legal IT industry is proudly unique in that information sharing across firms is unprecedented, allowing for a closer look into the budget and spending trends across firms.

Per the 2016 ILTA/Inside Legal Technology Purchasing Survey (“tech survey”), an annual survey administered among ILTA member law firms, 44% of small-sized firms (1‐49 attorneys) and 39% of medium firms (50‐199 attorneys) reported spending within 1‐3.99% of firm revenue on technology, excluding IT staff salaries, benefits and training. Medium-sized firms specifically are highly concentrated in the middle of this range, with 56% of firms spending 2‐2.99% of firm revenue. Another metric worth calling attention to is the IT spend per attorney as reported in the tech survey. Almost three quarters (70%) of small firms spend up to $8,000 per attorney, while over half (60%) of medium firms spend $11,001‐$17,000 per attorney.

What does this mean for you? As a point of reference, if you are with a firm that has 30 attorneys and an annual revenue of $6M, almost half of your peers are spending between $60,000‐$240,000 on technology per year. For a firm with 100 attorneys and $20M in annual revenue, most of your peers are spending between $400,000‐$600,000 (based on total revenue metric) or $1.1M‐$1.7M (based on attorney count metric) on technology per year.

To keep up with the cadence of constant change impacting legal technology, law firms are also recognizing that IT spend cannot be limited to a single year investment. Technology investment is the foundation of a firm's livelihood. The tech survey reported that more than half (53%) of the firms increased their IT budget year‐over‐year—a 12% growth rate from the previous year's survey. With this in mind, it is not surprising that firms are relying on their trusted IT vendors more so now than ever to help them develop an IT roadmap that fits the budget set by the firm.



The very best businesses are built on a solid foundation. This should be no different for IT. A primary area of focus for a firm should be to ensure that all the firm’s production hardware and software are covered under vendor support contracts. This means having an accurate inventory system to be able to track warranty expirations and version information. It also involves being aware of when hardware/software is approaching end‐of-life, which can lend a hand in your budget forecasting and planning for upgrades. As Microsoft ended support of its Server 2003 in July 2015, and is currently slated to end support of its Server 2008 in January 2020, it is imperative to begin the planning and execution of upgrading these platforms as soon as possible.

The rapid pace of technology has a habit of throwing the old models out the window in favor of the new sexy technologies. Think about how data center technologies have evolved from systems that were once tiered into a converged model (combining the two tiers into one), and then hyper‐converged arrived combining three tiers into one package. Software is making leaps even faster, with the introduction of the cloud's rapid workload adoption and the diminished need to host certain infrastructure on‐premise. These developments in technology allow you to realize efficiencies (from licensing and hardware cost reduction and technology consolidation, to ease of business continuity) that were previously out of reach for a majority of small and mid‐sized businesses.

Once your technology foundation is solid, the next area to focus on is business continuity and disaster recovery. While IT disaster recovery (DR) is a subset of an overall business continuity (BC) plan, it is also important to position the production workload in a capable location with sufficient capacity, power and cooling. Many firms realized the benefits of having a strong DR/BC plan in place because of the destructive 2017 hurricane season where many firms who were not utilizing a colocation facility experienced full outages for days to several weeks, or are still working to recover. These outages could have been avoided by using colocation facilities which are backed up with multiple connectivity and power sources with fully redundant generators, and generally staffed with IT experts 24x7.

If you are currently utilizing a colocation facility, the next evolution is to layer on backup and replication in accordance with your firm’s recovery point and recovery time objectives. A new trend in this space is leveraging Disaster Recovery as a Service (DRaaS) through a public cloud, such as Microsoft Azure or Amazon AWS, which makes a lot of sense for some firms to investigate further. The platform allows you to convert CapEx to OpEx while still retaining the same (or greater) level of system protections.

As additional budget dollars allow, a renewed focus on IT security should become a priority. While there are dozens of security products and suites, several fundamental security practices should be implemented, including: endpoint security, mobile device management, two‐factor authentication, and a routine (quarterly or yearly) penetration test performed by an independent third party. The legal industry is becoming a hot target for malicious attackers who are looking to gain access to the highly privileged information that is stored within a firm’s network. The good news is, new preventative tactics and techniques are coming to market and gaining traction, such as DMS threat analytics, log aggregation and correlation, and Managed Security Services Providers.

Education and training should be a staple line item in the annual IT budget. Allocation of funds not only to raise employee awareness of security threats such as phishing attacks, and software training, but also to offset expenses for IT staff to attend industry conferences/seminars where they will be educated on the latest and greatest legal technologies. These events can pay for themselves if your legal technology professionals takeaway valuable lessons learned from their peers or develop relationships with vendors that are able to accelerate the firm's growth or reduce its expenses.

Legal applications are the elephant in the room, and an area where your firm can easily allocate a large portion of your annual budget. There is no shortage of reasons to focus on this area; from the upcoming end-of-life of Thomson Reuters Elite’s Enterprise platform, to the allure of artificial intelligence. It is important to stay grounded and to develop a long‐term vision as to how an application set will mature at a firm. Some core business applications such as accounting suites are sunsetting, while others are new spinoffs that may be worthy of consideration. Are you contemplating a desktop operating system refresh into Microsoft Windows 10 with Office 2016? This timeframe is likely the best window of opportunity for you to consider changing core legal applications that plug in to the Office suite, including templating and numbering. As Document Management System (DMS) platforms become more millennial friendly, they are beginning to include features for expanded mobility along with integrated security and analytical features which could warrant an upgrade at your firm. Does your firm use a practice management application, where it may make sense to break apart and instead use focused applications that are best-of‐breed due to the firm's growth or renewed focus on technology?

There is no blanket "yes" or "no" answer for these questions, as every firm is unique in both culture and technology requirements. For firms in the small to mid‐sized space, it often makes sense to partner with and involve proven third-party vendors to do the heavy lifting and provide guidance for the many paths of success that a firm can follow with its IT budget.

In closing, the fast pace in which the technology landscape is changing is forcing firms into having more fluid IT budgets. It is critical to know how to define your budget and drive your IT roadmap with that budget. If you have reliable IT vendor relationships, lean on those partners to help you define your IT roadmap and to develop a three-year plan that addresses: the health of your foundation; the core side of your network; a disaster recovery and business continuance model; must‐have IT security solutions; ongoing education; and, legal applications (Microsoft Office, DMS, practice management, docketing, templating and numbering). Your firm can not afford to fall behind, now is the time to take control of the process.