How ERP is Helping Transform Large Law Firms
Enterprise Resource Planning (ERP) software takes time and resources to implement properly, and a decade ago, this was one of the hot topics in the world’s largest law firms. ERP software from SAP was really evolving, and a lot of skeptics were concerned about the risks and benefits that firms would be able to achieve with ERP.
Past ERP Disasters Concern Firms and Managers
Rollout for a company that is trying to incorporate the latest ERP and customer relationship management (CRM) software is the key to success. Large-scale companies have had significant failures when rolling out complex and expensive software solutions.
History has shown there are many ways ERP implementations can be mismanaged or fail big. Even major public companies as varied as MillerCoors, HP, Revlon, Nike, Target, PG&E, and Vodafone have experienced epic ERP failures.
A failed rollout can lead to lawsuits, lost customers and clients, and a tarnished reputation.
Woolworth Australia had a catastrophic failure that further pushed the company out of public favor. The department store chain built their own in-house system that was built and designed over a period of 30 years.
The system grew with the company, but then the company wanted to transition to SAP.
It made sense. SAP handles all of the development, so it makes sense to be able to lower the overhead costs involved with development. The company could outsource some of its management tasks so that they could focus more heavily on sales.
But the transition to SAP was flawed.
A customized solution that was built to the needs of Woolworth included key profit-and-loss reports for each individual store. These reports were sent to managers weekly, but this wasn’t accounted for when switching to SAP. Store managers spent 18 months not knowing what each store’s profits-and-losses were.
Woolworth spent $200 million on their six-year implementation of SAP.
Where Woolworth Failed
Woolworth failed in their implementation because they did not include full-time workers who knew the business’ operations on all levels. Part-time people working on the implementation did not cut it.
The company failed to have proper documentation on day-to-day operations, so weekly manager reports were not a key part of the process to SAP until managers started to complain.
Law firms and companies of all sizes and types can learn from these key mistakes. Woolworth would have been able to transition to SAP for less and faster if the company chose to:
- Document all operations on a day-to-day basis
- Dedicated employees who knew the process to the transition
Woolworth is not alone. Target Canada, PG&E, Nike, HP and others have all had their fair share of issues with ERP rollout.
Law Firm Transitioning to ERP
Law firms present an easier challenge than many types of companies, as there are no manufacturing, supply chain or inventory complications. Law firms are professional service organizations that need to manage workflows while safeguarding highly sensitive data that needs to be accessible quickly and able to be accessed in a way that “makes sense.”
“ERP makes sense for law firms that need to tightly integrate key information with the right personnel to enhance productivity and communication,” claims law firm founder, Tsion Chudnovsky. “We implemented a cloud based ERP system primarily for data security, to monitor the flow of cases and manage our distributed work force.”
Law firms that are transitioning to solutions, especially cloud-based solutions, are able to benefit from:
Increased transparency internally allows partners and key members in the firm to be able to see who is responsible for a task. The system can help provide an overview of how far a case or task has progressed, and everyone in the organization will benefit from being able to see who is contributing what on a specific task.
The larger a firm grows, the more difficult it is for the firm to be able to ensure workflow efficiency. ERP allows a firm to be able to clarify their workflow so that they can ensure accurate information across the board.
Important tasks can have attorneys or paralegals assigned, information is streamlined, and it’s easy to see the workflow from an overhead viewpoint.
Real-Time Tracking for Greater Independence
Paralegals or attorneys can work on tasks independently and remotely with a cloud-based solution. Tasks can be outsourced and fully managed with ERP, and the results can be monitored in real-time to ensure deadlines are met.
Law firms that have complex systems in place will have to be undertaken responsibly. Embedded processes that are closely linked will need to be fully documented to ensure that they flow properly when transitioning to ERP.
Integration Across All Departments
When the ERP system is integrated properly across all departments, it helps the company operate off a common set of data across multiple departments, including:
This structure allows for errors and issues to be caught by multiple entities. The end result is a more efficient firm that is able to have a better grasp over their data and internal processes.
Increased Profits and Market Share
Law firms, especially when they continue to grow, want to find ways to increase profits and market share. It’s difficult to improve either without the right systems being in place. When an ERP system is in place, macro-level information is made available to lawyers.
This macro-level information is the key to market share and profits because it allows for optimized performance from lawyers.
When results are produced faster with better outcomes, it will help a firm continue to remain profitable with higher profit margins as a result.
Smarter decision making is allowed to take place when macro-level decisions are presented with an accurate collection of data and quick analysis. The data, when analyzed and displayed properly, allows for reliable information and advice to be given so that important decisions can be made more intelligently.
The data from an ERP system is actionable and reliable, and in a law firm, this means happier clients and a better chance of winning cases.
One issue that will always remain is the risk of implementing an ERP system into a large firm. When custom solutions have been in place for years, the implementation of a new system can be costly, time intensive and cause utter failure when the right key individuals are not part of the transition plan.
Document all parts of current systems, how they work and flow together, and use this documentation to help transition to an ERP system. When key individuals are brought into the process full-time, it allows for a system to be put in place that boosts efficiency, increases profits and secures market share.