Should you Build or should you Buy – Extranet Special

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The question many Law firm heads of IT ask themselves when purchasing software is “Do we buy it, or do we build it?”. On the face of it the dilemma is a difficult one and, depending on the problem you are trying to solve, the question can have mixed answers within a law firm. That said many will answer in-house built technology is no longer a differentiator, especially with cloud technology and firms are wanting to focus on delivering a better client experience, which is where firms can and should differentiate themselves in today’s tech driven world.

In this article we focus on extranet/deal room solutions, where the answer tends to be quite clear. You may have some talented in-house developers, but I bet they aren’t currently sitting around twiddling their thumbs. Reducing technology costs and freeing up time to focus on delivering the best client service you can, is the main focus for most law firms in retaining and winning new clients.

So, the question “Do we build it?” really needs to be “Should we build it?”.

To help firms answer this themselves, here are some key areas to consider when answering this question;

Cost – We find the main area firms get fixated on, are all around cost. You need to weigh up the costs of building versus buying and which one is cheaper, not only at the outset but also long term.

If it’s ‘buy’, what is the upfront cost & what is the ongoing maintenance cost, or the yearly subscription costs, depending on the model you choose or is offered by the vendor. Also factor in implementation & training costs. When ‘buying’ it should be easy to predict the cost of the solution over a number of years using these figures. Be aware if the hidden costs with some solutions however. Look into what the expanding costs are as it might look to be a cost-effective solution day 1, but as you grow in data, users or functions these costs can spiral.

If it’s ‘build’ it is much harder to predict the costs. This is backed up by a McKinsey study that found over 45% of in-house projects run over budget. As previously mentioned to build an effective extranet platform you will need a dedicated development team. You may have a project coming to an end and deem this as a way to keep developers on staff, but this is still a cost to the project whether you move developers from another project or hire new developers. Also factor in recruitment and staff turnover costs. This may sound strange, but usually talented developers want to work on the latest technology and be in an innovative development team. Typically, IT departments in law firms are there to support the business not develop solutions, so be wary of developers getting bored and losing interest. If this happens and your developers leave, most of the time the knowledge goes with them so where does this leave your solution?

As the project gets underway, firms often realise it is going to cost them more than they budgeted for, and therefore try and cut costs or cut back on resources, again extending the deadline of the project and increasing the load on the team of developers, which will hit morale and staff turnover. Also, you need to think about maintaining the system going forward and the costs associated to this. Finally, you have the cost of the software, be that Sharepoint or like.

Timeline – When do you need the solution in place and do you have time to build it? Are questions to ask yourself. Many law firms, when they decide they want a solution to solve a problem, they want it yesterday. So out the gate an inhouse project might not be viable due to the time it will take to ‘build’.

Most extranet and deal room solutions these days are cloud based, making the implementation of a solution you ‘buy’ quick and easy to get up and running, in some cases almost instantly. They will have integrations into the common legal solutions and an API that allows further integrations.

As previously stated ‘building’ will take longer and in-house projects often over run. Do you have the time to wait? The answer is usually no.

Functions & Features – Often it is thought when ‘building’ your own extranet platform you will get 100% of the features and functions you want. No way ‘buying’ can compete, right? Sure, there are advantages to building, like the overall flexibility on how it is designed and functions, but research however shows most projects fall short of the original specification. Also as time progresses using the chosen solution, some of what you thought you wanted or needed at the outset, never actually gets used.

When ‘buying’ an extranet solution you may have to give in a little to your expectations, but you are getting a solution that has been built for many like minded firms and will continue to be developed in this way, far exceeding the features and functions you could build yourself. Also, many of these solutions can be customised and integrated to take advantage of other internal systems you have that can aid client engagement, so focus your efforts in this area. This is where you can differentiate yourself.

IT Strategy/Core Business – What is the IT strategy of the firm going forward. You have to assume whatever you do, ‘build’ or ‘buy’ you are in for the long haul. Let’s assume 5 years for arguments sake. Will the firm’s IT strategy change in that time?

Most extranet solutions are cloud based, albeit some solutions are offered on premises also. If you ‘build’ where will you put this solution. Do you have the ability to put it in the cloud, if not in 4 or 5 years you may be starting this project all over again?

Conclusion – When making your decision, you need to really answer the question “should we build it?” Only you can make that decision. Weigh up the costs, the time it will take, the risk factors and the business strategy. And most importantly, how are you as a business going to differentiate your selves in delivering the best client service.


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