While IT heads would argue that they always make tough decisions when it comes to extracting the most value out of their suppliers and tech stack, the current economic climate means that proactively searching for cost savings is more of a priority than ever. And so is managing expectations when it comes to potential price hikes in the new world of Opex versus Capex spending.
At UK consumer champion Which?, managing counsel for major contracts and head of procurement Ben Weinberger, tells us that the onus should be on asking the right questions about tech spend. Weinberger, who is a qualified lawyer and has held roles at companies and firms including Phoenix Business Solutions, Prosperoware and Dentons, says of the economic uncertainty: “It makes reviewing what we’re spending and the business case more interesting. People aren’t just buying stuff, it’s being scrutinised, not from a negative ‘you have to cut that’ but ‘is it delivering what you expect it to deliver?’”
“I’m not getting squeezed but I’m finding savings throughout the business. I’m looking at places where we don’t need to spend, not because we’re trying to cut ourselves off at the kneecap, but because we’re getting value out of our suppliers.”
And he adds: “It’s about asking managers to occasionally say no to a tool or asking if they can do something in a different way. Or it’s about making sure you have the correct licensing: do you need E5 or will E3 do for what you’re using it for? It’s about understanding what you’re buying and not being silly about it.”
Law firm legal IT heads have to go through this exercise in any event as part of budget reviews. Janet Day, the former director of technology and infrastructure services at BCLP, turned independent consultant, points out that tough budget conversations are normal, commenting: “Most people will have a half year review and will be asked if there is anything they can take out – that’s normal. During a review, seven or eight times out of 10 the finance director will ask you if there is anything you can take out.”
She adds: “Most IT teams are strategic and if you push CIOs they will say ‘it will be damaging if we don’t do this.’ But they will also identify the thing that is unfortunate but not damaging.”
However, Weinberger’s perception is that there is a less disciplined approach to tech spend within private practice. He says: He says: “Professional services firms have historically been less focussed on ensuring that they get value for money. They seem to be in two modes: they want to spend money and do cool stuff that impresses the client, or cut budget and people.”
In our UK Economy Part 1 article, Legal IT heads told us that they are not being asked to cut budgets, and while cautious, there is a degree of optimism around the fact that technology investment is now a core part of law firm strategy following the pandemic.
But one current cause for concern among IT heads is how they manage their budget in a downturn, given that they now have more subscription-based services. Whereas previously, legal tech teams would squeeze another year out of their capital expenditure investment, in many cases that is no longer an option.
Andy Beech, IT director at Farrer & Co, who was made a partner at the UK top 60 firm in May, told us: “If you subscribe on a per user model your hands may be tied; you are likely to have to provide them with access to those systems so they can deliver their work, and there is not much you can do about that.”
Microsoft is in the spotlight in particular because it increased its Office and Microsoft 365 prices by up to 25% in March this year, albeit that it pointed out that this was the first price hike in a decade. One UK top 100 IT head who asked not to be quoted in this article said: “When you move from Capex to Opex you’re on the bus and you can’t get off and you can’t squeeze another year out of your investment. One issue is if large suppliers such as Microsoft put up their price, and that could be by 10%. Then you just have to go through the budget and work out what you can cut and hope for the best.”
Weinberger argues that it is now more key than ever to set expectations, commenting: “It’s more work for a CIO to work out how to manage expectations, but if the business is shocked by Microsoft raising its rates, then you haven’t prepared sufficiently for that eventuality.”
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