Is It Time for a Technology Health Exam at Your Firm?

BRINGING FINANCIAL TRANSPARENCY TO YOUR TECHNOLOGY SERVICES

Law firms as well as companies across all industries will struggle to control tech costs until they get a handle on the total cost of ownership (TCO). In IT, TCO can include the acquisition of hardware and software, implementation, licenses, management, maintenance, support, training, end-user expenses, etc.

It’s my belief that technology leaders today don’t fully comprehend the TCO of all the different technology platforms they’re migrating or purchasing, especially when they go to a utility — or pay-for-what-you-use — model, which is how they pay for computing, or software, in the cloud. Conventional wisdom dictates, “You have to be in the cloud,” but then there is sticker shock once you get there because most applications were written 10 years ago and were not designed with efficiency in mind. This is like buying a new energy-efficient house but then putting in 1960s appliances.

“Technology performance impacts everything from attorney productivity to client service levels. Even minor degraded performance or intermittent slowdowns can negatively affect firm operations and bottom lines.”

The choices we make for our enterprise applications in terms of design, coding, processes and data modeling all have lasting impacts on the bottom line, both from a resource perspective, but more importantly on the financials and margins. For example, inefficient code created today will cost more in support and maintenance down the road, independent of the resource cost. Inefficiency has a price, and unfortunately, this price is often overlooked when calculating tech costs.

The challenge today in tech is the lack of transparency into cloud costs. Cloud bills provide only high-level data that lags actual usage by 30 days and often leverages made up cost units. This prevents detailed analysis of spending drivers and what is actually driving the costs. At best, cloud providers break down costs by resource or server, which is a great start but leaves organizations with more questions. This gap limits your firm’s chief financial officer’s (CFO) ability to optimize cloud investments.

For example, our analysis has shown that the top 1% of processes within a database consume on average over 50% of total cost. Without granular insights, firms cannot identify and address these biggest cost culprits. Instead, legal and most IT departments make changes based on guesswork, not data-driven insights. Firms overpay for unused capacities and underutilized tools and continue to support redundant systems and processes.

Having financial transparency into the cost of your technology systems means knowing three things: the cost of the technology, the value of the technology, and the cost “takeouts” or costs of efficiency improvements that could be reduced or eliminated. Companies need transparency into the true costs of applications, code and data to understand the true costs of their systems. That can only occur by forging and strengthening partnerships between technology and the CFO’s office.

And to optimize the costs of technology, you need to understand not only the costs you’re incurring today but also how these costs will compound over time. It’s not just making the technological changes but also proving and recognizing their business value that is missing from the way things are done today.

The truth is few organizations know for sure how healthy and what the capacity of their technology environment is today and how much it will be able to support tomorrow. All they know is what they see in the large quantities of data being collected as applications and databases process more and more business transactions and data every day.

Understanding workload analytics and identifying inefficiencies within your technology platforms can save enterprises millions of dollars. These savings can then be reallocated back to the business and used to find ways to deliver more value.