Document Management Software: A Few Pro-Cloud Points
Monday, November 30, 2009 at 1:02PM Let me say up front: I'm biased.
I'm pro-cloud (or SaaS or whatever the tech geeks are making us call this stuff these days). Cloud solutions -- in short, software that you access through your web browser and where your data lives on some other company's servers -- let lawyers be lawyers.
None of us went to law school because we wanted to spend our days messing around with software. Even those of us who went to law school because our dual degree in English and philosophy made us totally unemployable didn't want to spend our days messing around with software.
John Heckman, publisher of the legal technology blog Does It Compute?, put out an interesting follow up to a recent TechnoLawyer article comparing the costs of three document management software products: Interwoven, Worldox, or NetDocuments. The TechnoLawyer article -- actually an email from a practicing attorney who completed an excellent analysis for his firm -- compares the costs over a 5 year period for a 25 user firm; Heckman takes that data and adds a few variables to conclude that Worldox is the most cost-effective and NetDocuments the least.
(Sidebar: if you don't already subscribe to TechnoLawyer and Does It Compute? you need to stop reading now and go subscribe. The two publications consistently put out valuable information for any lawyer who wants to know more about legal technology.)
I'm not going to dive deep into a financial analysis of the numbers that the two articles employ -- mostly because I am afraid that if I try, my wife will come home to find me writing on the windows of our home with a marker like some out-take from A Beautiful Mind.
That said, I really like that both of these article authors started quantifying the analysis document management software options. In addition to the great points made in both pieces, there are a few addional pro-cloud issues that I think ought to be included in the analysis.
1. IT Overhead/Consulting
Lawyers of average technological skill and patience (not to mention average caseloads of billable legal work) generally possess neither the time nor inclination to install and set up server based software programs. This means the services of an IT person (either on staff or a consultant) will almost certainly be required. Heckman argues that the costs of the IT services (whether overhead or as purchased consulting services) will almost certainly be higher for Interwoven than Worldox. That may be so -- the phrase "SQL database" makes my eyes roll back in my head, so I can't say for sure. I can say for sure that as a lawyer of average technological skill and patience myself, I was able to set up NetDocuments with little difficulty.
Less IT overhead required.
2. Server Hardware
In cloud based solutions like NetDocuments, you pay not only for the use of the software but also for the use of the servers on which the data resides. The TechnoLawyer article was a case study of a 25 user firm that in all probability already owned the server capacity needed to run Worldox, if not Interwoven. Lawyers in small firms, though, have the opportunity to run a technologically leveraged practice without having to ever buy a server or pay an IT person to maintain it. Cloud based software puts this within easy financial reach and the value proposition is strongest in the smallest firms (where the cost of a server is spread among the fewest users).
Less hardware required.
3. Up Front Costs/Present Value
Cloud based solutions avoid most of the heavy up front costs (purchasing licenses, hardware, etc.) that locally installed software incurs. On day 1, you get to hold on to more of your money. Both Heckman's and the TechnoLawyer articles calculate the total costs over a 5 year time frame.
Since you get to do something (theoretically) productive with the money you don't spend on day 1, somebody smarter than me ought to run a present value analysis on the money you don't have to spend up front for a cloud solution (as well as the relative cost of financing the locally installed software) to really compare apples to apples.
Less up front cash required.
4. The Great IT Consultant Problem
I don't know John Heckman, but based on the stuff he writes I am willing to bet that he is a great IT consultant. I recently talked cloud based software with Ben Schorr on an upcoming edition of the podcast The Digital Edge. I know Ben well and I know he is a great IT consultant.
Here is the thing.
Great IT consultants take it for granted that it is easy to find and establish a trusting relationship with a great IT consultant. I don't think it is, particularly when you are talking about legal IT consultants. Most lawyers I speak with don't have a legal IT consultant at all, let alone a great one. It is a real frustration for many of them. Cloud based solutions reduce the anxiety and frustration for lawyers who do not have a John Heckman or Ben Schorr on speed dial.
Less anxiety over not having a great IT consultant.
That's my take -- that the cloud lets lawyers be lawyers.
Do yourself a favor and make an analysis for yourself. You might find some cloud solutions that are a good fit for your practice.
Cloud, Document Management in Technology 
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Reader Comments (6)
Erik,
Great post. I made these same points in my presentation at the Oregon Bar last week. I'd say that at least 10-15 % of the audience was comprised of experienced practitioners 25-40 years in practice, with systems already in place not to mention loads of archived material. My question is whether it makes sense for those already deeply vested in desktop systems to switch to the cloud.
Like you, I am a huge cloud fan and believe that the security issues are way overrated. But it does seem that most cloud packages are geared towards newer solo and small firms (or very large companies) but not necessarily as well suited for the 20 year practitioner who has a system in place. Do you have any thoughts on this topic or advice to those considering a switch?
Carolyn
Erik,
Your arguments complement the reviews appearing in the Heckman and Technolawyer pieces. While cost is an important barometer for document management comparisons, I feel that the most important feature is how easy the tool is to use.
One might find a very low-cost document management system, but if it requires so much server overhead and IT administration to get it semi-functional, then the money is wasted. Spending more on a premium product that works for all users is a worthwhile investment.
Thanks for the tips to subscribe to the Heckman and Technolawyer feeds, too.
Bill @ FPPad.com
Carolyn,
Thanks for stopping by and for the comment.
When I looked at NetDocuments, part of why I was interested was to see how easy or hard it would be to move my organization from Worldox to NetDocuments. Not that I have the authority to make that change, but a guy can dream. Anyway, it seemed like the import from Worldox to NetDocs would be fairly easy to get done, even with a doc library as large as ours (1+ million docs).
We have not actually made the switch, so I couldn't say whether it would actually be as easy as it seemed.
E.
On another note, when people go paperless, it often makes more sense to do so prospectively and not go through the time and expense of retrospectively going back and scanning all documents for the past years. It might be that an approach like that could work for document management as well.
The statistics are pretty dramatic that if you have not accessed a document in the past 30 days, the percentage chance that you will access it again in the future are low.
Bill, thanks for stopping by and for the comment. I like your blog!
E.
Thank you for the great post. I always appreciate positive and negative comments about cloud computing and SaaS products. The goal for any cloud solution should include improving efficiency in the normal day to day routine while lowering costs. It's important to understand where technology and software development has been and where it plans on going in the future. With the advancement of Google Chrome OS and many other web based products working in the cloud, I believe there will continue to be a major shift in how software is developed and deployed. The cloud is looking bright.
Erik,
Nice response to the incomplete analysis at TechnoLawyer. Though I think you stop short in really highlighting the flaws. SaaS offers so much value beyond what the traditional WorldDox, Interwoven and Hummingbird models offer and to make a good decision one really needs to take a lot more into account.
Just a few additional bullet points I'd add to your post:
1. Redundancy, Business Continuity and Fault Tolerance: How much would it cost to set up and off-site replica of a traditional system, with complete redundancy and instantaneous fail-over? The NetDocuments SaaS model includes complete redundancy and enterprise level business continuity at no additional cost.
2. System availability: I could have included this in the previous point. But wanted to differentiate between the big things you hope will never happen and the small things that are certain to happen. Hardware failure, downtime to upgrade the software or roll-out updates, planned maintenance and unplanned outages can very quickly increase the cost of a system when one accounts for the billable hours that may be lost. Certainly, one can build an internal server structure with the redundancy to match NetDocument's availability, but at what cost? And one should also consider that a good, redundant SaaS design, like NetDocuments, allows for server and software upgrades and client updates to take place without any downtime. There is significant value there that is not accounted for in WorldDox or Interwoven base costs.
3. Accessibility features: The NetDocuments model includes the ability for users to access the DMS from their mobile device, or anywhere that they have internet access. It also allows them the unlimited ability to share documents with their clients and 3rd parties. Giving them secured extranet/collaboration access to appropriate documents. This can be done with WorldDox and Interwoven, but at significant cost in terms of licensing. It's included in the NetDocuments subscription.
4. Payroll cost to support the internal system: You touched on this, but I bring it up again because of the points I've brought up here. What kind of staff (or consultant) will you need to retain to implement a redundant failover site? How much will the annual cost increase when you have to update server software and install updates on every workstation? And what will it cost to maintain security when you start to grant clients and 3rd parties extranet type access to your internal data system?
Those are just a few of the big things that are completely missed in this simplistic cost comparison. Granted, not law firm wants an extranet or collaboration platform. Though with how easy SaaS makes it to implement, firm's that don't want it now are likely to find themselves at a competitive disadvantage as extranet access becomes one of those things that clients expect, just as consumers are growing to expect to be able to access their banking information, bills and bill pay options online from anyone they do business with.
And maybe firms aren't thinking about business continuity or disaster recovery. When the traditional models make real BC and DR so costly, it's easy to see why some firms just choose to bet their future on the probability that nothing serious will happen. But the cost to implement a robust DR and BC solution that rivals the solutions of a Fortune 500 company, makes that type of thinking border on irresponsible.
Thanks for highlighting the flawed analysis at TechnoLawyer and starting a discussion where others can gain a better perspective on the real costs of the competing options.