Ilta 2005 - Evaluating Managed Services - Benchmarks and Case Studies by Dave Cunningham - Aug 2005

August 2005 © 2005 Baker Robbins & Company

Evaluating Managed Services - Benchmarks and Case Studies

Presented by:

Dave Cunningham, Baker Robbins & [email protected]

August 24, 2005


Objectives

Establish a practical definition of managed services

Discuss case studies from the past year, some who decided to use managed services and some who did not

Help you understand how to determine if managed services are appropriate for you and your firm


Today’s Agenda

Background

Market Status

Case Studies– Case Study #1: Small Firm with Big Ambitions– Case Study #2: Big Firm IT with Practice Ambitions – Case Study #3: Litigation Powerhouse– Case Study #4: Business Process Outsourcing– Case Study #5: IT Scorecard

Points to Take Away


Defining IT Managed Services

“Transfer of day-to-day management of one or more IT infrastructure environments or functions to an external service provider.” Butler Group

While outsourcing is seen as all or nothing, “managed services” refers to discrete services or sets of services handled by an external resource

to allow a company to focus on its core competencies.


Defining Managed Services

Managed services involve:– Defined services– Service level agreements– Performance measures (objective and subjective)– Calendar or milestone timeframe (Term)– Legal terms and conditions


Defining Managed Services

APPROACH CONSIDERED

MANAGED SERVICE?

Contract Staffing No

Project-based Consulting or Integration Services

No

Commodity Contract Services No

Term-based Vendor Services - Onsite Yes

Term-based Vendor Services - Offsite Yes

Hosting Generally Yes


Most Common and Growing Services

WAN

Disaster Recovery

Net Hosting

Help Desk

Data Center and IT Operations

Application-Specific Hosting or Recovery


Influences on Firms

Pressure for higher-level service without higher costs

“One firm”, multi-office, international support needs

Technology better suited for centralization, consolidation

More IT involvement in the practices

Litigation storage explosion

Challenge in attracting and retaining specialized IT talent


Gartner Group on the CIO

The New CIO Leader's IS organization must be leaner and more focused on business results by appropriately using strategic sourcing of IT services, by adopting process based working, and by using all the financial resources available to it.


Market Status: Overview Management is more comfortable with internal,

on-site services

IT management can see outsourcing as a threat

Few services are outsourced to save money

Some firms are using service levels and ‘cost of services’ information to deliver services better internally

Market is immature; at a slow turning point– Firms are not experienced in engaging managed

service suppliers

– Suppliers historically provided poorly fit bids

– Vendors are more focused on specialty services

– Wide disparity in vendor services and costs


Market Status: Vendors IT operations, support and/or facilities:

– Intelliteach - Office Tiger / Hildebrandt– LexisNexis - Savvis– Markley Group - SunGard– MindShift (Aspire/Union Square)- Thomson– Network Alternatives

Niche players– Lex Solution, Steelpoint, Ringtail, CaseCentral, etc.– NetDocuments, Hubbard One, MessageOne

Business Process Outsourcing: – Williams Lea (Bowne), Perot Systems, IBM, Deloitte


Example Performance Indicators

Service Levels (objective)

System availability: 99.97+%

Help desk: 20 second response for phone calls; 85% first call resolution

Guaranteed problem resolution times (e.g., 2 hours for Severity 1 systems)

24x7x365 operations (optional off-site, centralized operations)


Example Performance Indicators

Key Performance Indicators (subjective)

User survey results

Management satisfaction

Adaptability

Collaboration with internal staff or other suppliers

Quality of information exchange

Service improvement programs


Instigators of Managed Services

Managed services are usually not considered in a static environment.

Positive Influencers Negative Influencers

- Management changes

- IT strategic planning

- IT project planning

- Merger considerations

- Office or data center move

- Disaster preparedness planning

- Firm management dissatisfaction

- IT failure

- Concern over IT costs


Case Studies


Case Study One: Smaller Firm, Bigger Ambitions

Profiles– Firms 50-250 lawyers– 2-8 offices

Objectives– Large firm IT capabilities– Growth on tap– Consistency across offices– Make up for lack of IT availability


Services– IT operations, upgrades and fault tolerance– Includes hosting of accounting and telephone– Help desk (except desk-side support) – IT staff development

Issues– Limited number of capable vendors– Separate help desk– Vendor personalities were important– Firm’s role in transition




Service Features Before After

Help Desk Ad-Hoc Immediate

Third Level Support None Immediate

Upgraded, consistent systems Ad-Hoc Yes

Centralized, professional facilities

None Yes

Fault Tolerance Little Considerable

Approximate Costs $2200 / user $4000 / user



Benefits– Less time to ramp up to improved levels– Lack of firm management distraction– IT better supported and focused– Service levels incomparable to previous situation

Drawbacks– Costs were almost doubled


Case Study Two: Big Firm, Practice Ambitions

Profiles– 400-2400 attorneys– IT is mature

Objectives:– IT aims to be closer to the practices– Firm seeks operational efficiency– Consolidate and perhaps centralize operations– Ambivalence for operations responsibility

(best performance and value for the least distraction)



Services– Facilities and WAN– Facilities and Operations Management– Monitoring and Fault Tolerance– Third Level Support– Possible Systems and Content Management

Issues– Centralization drawbacks– Leadership buy-in to off-site facilities– Systems management associated with big vendors



Value– Costs comparable for NY-based internal data center

and professional third party data center– Vendor costs at higher service levels are a premium

over internal costs for lower service levels– Vendors are pushing to lower costs 30%


Case Study Three: Litigation Powerhouse

Profiles– Large or specialty firms with significant litigation

support storage needs

Survey of Leading Litigation Firms– 6-7 TBs of data internally, growing at 60% per year– Already managed centrally– No service levels defined– Do have failover plans– Use co-location facility for disaster recovery;

vendors hosting 5-6 TBs of data



Objectives– Handle massive storage growth– Address security and availability requirements– Need multi-office access to litigation cases

Services– Storage, backup and mirroring– Fault tolerant facilities; monitoring and capacity

management– Possible data loading and processing



Issues- Costs and chargeback - Local printing

- Sensitivity to off-site data - Proprietary vendor software

- IT infrastructure availability - Costs for productions

Service Capabilities Lit Vendor Co-Location

Data Processing $7.2M n/a

Data Loading $63M $20K

Hosting $500K/mo $50-100K/mo

Comparison of recent bid for 18 terabytes of litigation data:


Case Study Four: Business Process Outsourcing

Profiles– Focus on larger firms for now:

(top 100 in US and top 10 in UK)

Objectives– Reduce costs and increase efficiencies in firm

processes across departments– Manage service levels rather than people



Services– Incoming Correspondence Management– Electronic Content Management– Document Production– HR and Accounting Management

Potential Value– Transaction costs and time reduced through vendor’s

high capacity environment– Can distinguish between commodity and value-added

business processes



Issues– Internal

• Changes to departments may not be subtle

• Existing processes may be un-managed, dissimilar or poor practices

• Cost- rather than benefit-based decisions

– Vendors • Big corporate vendors have little flexibility across lawyers and

practices

• Managing information requires understanding and adaptability of business processes


Case Study Five: IT Internal Scorecard

Profiles– Primarily medium and large firms preparing to plan– Merger situations– New law firm management

Objectives– Understand how scope and levels of service compare– Gauge or justify costs– Identify gaps in IT processes– Provide benchmark for managed services




Case Study Five: IT Internal Scorecard

Services– Joint effort to evaluate IT processes, service levels and

costs and levels of risk– Benchmarked against managed service providers and

other firms

Issues– Lack of internal performance data requires

extrapolation– Many firm IT processes offer a poor benchmark


Points to Take Away


Your Role

Managed Service Preparedness– Determine how IT best adds value– Consider your own role - better to be stretched thin,

build internal expertise or manage a portfolio of staff and vendors?

Be careful about getting to the point where firm management is driving the push


Sourcing Strategy

Firms should know their own services, service levels, costs and risks even if not considering managed services

Smart to include build vs. buy decisions into IT and project planning

Firm should drive the service level expectations with vendors


Discussion and Questions