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May 2002
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Outsourcing: Escaping Storms and Bumps

What advice would you give to a mid-sized firm that is considering outsourcing (some or all) of its technology?

Outsourcing: Escaping Storms and Bumps

JOE DIODATI Cisco Systems Inc.

OUTSOURCING can help meet the challenges of reducing capital expenditures and mitigating network risk by allowing firms to find new ways to save money, win the war for talent, keep clients happy, and find their own strategic focus. Many businesses see the wisdom in outsourcing their communications infrastructure as networking technologies become more complex and network infrastructures become more important. Costs are rising, and companies are realizing that installing and managing a network is not their core competency. Outsourcing networking to a service provider allows firms to focus more of its internal resources on the primary goals of the business.

The right service provider can manage the networking needs of mid-sized firms and provide scalable services, reliable performance, and network security. Choosing a service provider to manage your business applications and network services is a big step, but it can bring substantial benefits to companies who choose well. A well-constructed service level agreement can play a significant role in the success of outsourcing network resources to a service provider. By approaching a prospective service provider with a clear idea of your business needs, firms can avoid many of the pitfalls and enjoy the enormous benefits of outsourcing critical business applications and network services.

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STEPHEN GALLAGHER New York State Bar Association

I STRONGLY suggest that small to mid-sized firms outsource much of their technology. In order to survive in these turbulent times, firms have to focus on their core competencies, and most firms can not possibly keep up with the changes taking place with technology.

Top notch technical people want to keep current to these changes, and you will have a difficult time keeping key people.

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GUY WIGGINS Brown Raysman Millstein Felder & Steiner L.L.P.

CONSIDER outsourcing security, i.e., management of firewalls, VPNs etc. It's very technical and time consuming to do in-house and most law firms don't have the expertise or staff. Also, this is critical infrastructure that must be actively managed 24/7. We use Guardent to manage our firewalls, and we are going to be using Internap to manage site to site VPNs between our office.

Outsourcing raises many tricky legal issues re accountability, service level agreements, etc. Make sure that if you get involved in a major outsourcing deal, you use lawyers who have expertise in technology outsourcing contracts, who are familiar with the industry standards in this area.

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JOHN HOKKANEN Latham & Watkins

FIRMS should think about outsourcing on a piece meal basis.

To begin with, the different functions should be identified by groups, e.g., 1) help desk, training, and end user support; 2) network backbone and file server infrastructure; 3) major application implementation and maintenance projects such as Elite/CMS Docs/iManage, etc.; 4) knowledge management/content development; and 5) litigation support.

By separating these, one can outsource different pieces based on individual firm strengths, its ability to leverage internal personnel, and the degree to which any particular group works best by developing long-term relationships with the attorneys.

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JO HARAF Morrison & Foerster

HERE AT MoFo, we find great value in outsourcing targeted repetitive or time challenged events. For example, by out sourcing printer support, we gain a predicable monthly cost for toner and repairs as well as a third party support team who eats sleeps and breathes printers, a technology that would otherwise be a sideline for the technology jack-of-all-trades in most of our offices.

Although long hours are a fact of technology life, no one wants to wait up all night just in case the wide area network might have a problem. By outsourcing network monitoring to a firm who makes network management their core business, we rest well knowing that if a rare problem occurs, our third party experts will resolve it themselves or dispatch it to our carriers before they reach for us.

If they do call with an outage, the call is in the "We're on it, boss" form that all managers love: "We have a problem . . . here's what I'm doing about it . . . when you would like your next update?"

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DENA RAFTE Rafte & Company

PROBABLY the single most important factor in outsourcing one's I.T. function is that you have a clear contract regarding what the expectations and responsibilities of the vendor are. In all probability, the vendor will provide you with a mix of staff members depending on the nature of the job at a particular time.

That is acceptable provided that you are afforded the opportunity to (1) have a specified engagement manager (from the vendor) who will be your main point of contact, and (2) meet all of the vendor's staff who will be participating in the support of your firm prior to the start of the contract. From a management standpoint, goals and objectives should be set forth with the outsource team just as you would with your own staff. Monthly or quarterly status meeting should be established.

On the surface, outsourcing may appear as more expensive than the alternative of hiring in-house staff members. Managed appropriately, it is not.

Properly done, the vendor should be removing much of the management headaches, as well as, provide you with a depth of expertise which you could not normally afford. If all you are getting in your outsource arrangement is a "junior" level contractor -- run!

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FROM Juris' standpoint, we don't care. We can supply the firm directly or the firm's outsource vendor of choice. But, the firm has to answer the question, "Who are we?" Is technology how you practice law and how you deal with and serve your clients? If so, you can't outsource the main thing your success depends on without betting away the practice -- there is more to lose than to gain. If technology is preventing you from successfully practicing law and serving your clients, then you need to do something to survive. Outsourcing to a proven supplier has a better chance of succeeding than building internal competence from scratch.

What should the law firm consider? You need to have an exit plan. You need the right to switch vendors or return to in-house. The right is not enough, however. It has to be practical without undue risk to the survival of the firm.

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CRAIG D. BALL Law Offices of Craig D. Ball P.C.

BE SURE you factor all the costs and use a vendor whose reputation and resources guarantee recourse when you're unhappy.

Properly handled, outsourcing frees up capital -- the spending kind and the human kind. It can also mean affordable access to expertise that might not otherwise be within your orbit or budget. It should foster continuity, so that you're not always explaining a convoluted history to the geek du jour.

It should also guarantee top of the line products and service. Remember: You don't need to outsource obsolescence and incompetence -- there's plenty of that in house!

Is your practice well-matched to the vendor's approach to their service or product? An outsourced imaging center closed at 5 p.m. and on weekends may work for some, but not for most litigation firms. An outsourced network needs 24/7 on-site support.

Are there hidden costs and extras to get what you need? Does the contract fairly mirror the promises? Negotiate away surprises.

Finally, do the due diligence.

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JOHN TREDENNICK CaseShare Systems Inc./Holland & Hart

MOST mid-sized firms already have a network, time and billing software, and the basic Microsoft Office programs. Unless you don't, there is little reason to outsource here (although you might outsource management).

The Internet is a different story. Few mid-sized or even large firms have the people or resources to manage Web applications. Outsourcing your Web site and your client or litigation Extranets makes a lot of sense. You will get better technology, better performance, better security, and better support. And, if you are putting client documents and data up there, you need professionals minding the store. So, who to trust with your outsourcing? It is a combination of people and technology, in that order. Start by finding people you trust. Unless you are 100 percent confident in the people behind the system, don't bite. Check references. Are their customers happy with the service they are receiving.

Test the applications you are considering. Unless they are simple and straightforward, you are wasting your time. Demo the software extensively before moving forward. Have others inside and outside the organization do the same. Ultimately, try it on a test basis. You shouldn't have to jump in all at once. Remember the first rule of wing walking: "Don't let go of nuthin, 'til you got firm holt of something else!"

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BURTON "BUZZ' BRUGGEMAN ActiveWords Systems, Inc.

Don't outsource.

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