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Comment: The Managed Services Boom – Past, Present and Future

By Jeff Catanzaro, Executive Vice President at Integreon

In 2020, delivery of managed services for corporate legal experienced a tremendous boom. Even the most traditional corporate legal departments confronted their own limitations as everyone began full-time work from home.  In many cases, companies also faced staff reductions and had to address other real business impacts that had consequences for legal departments.  These factors led to many more organizations acknowledging that they needed external help – not just for resourcing, but for a variety of other needs. 

Managed services providers like Integreon, the Big 4, and outside counsel law firms who were able to “keep business as usual” and provide secure remote support staffed up to meet increased demand. With the impact of 2020 still being felt, organizations are seeing the long-term benefits and innovation opportunities derived by having embedding ALSP capabilities into their “business as usual”.  The needs of these service providers’ clients have evolved, now requiring solutions that often bring these “competitors” together to serve a mutual client. 

However, the COVID pandemic was not the sole cause for increased appetite for managed services. While COVID certainly accelerated adoption of this outsourcing model, the beginning of the boom started well before 2020, propelled by catalysts emerging on many fronts.

The age-old challenge for corporate legal departments stems from using a thin staff to conquer a large workload – the ever present, “do more with less”. This scenario continues to be a driver for managed services adoption, especially true as organizations’ needs are more complex requiring access to technology and other subject matter expertise, in addition to the continuation of work from home, increased regulatory requirements, and digital transformation mandates. 

If the GC’s office is continually stretched and cannot add full-time headcount due to budget constraints, their department’s work production slows down and bottlenecks.  This delays completion of daily activities such as contract drafting, negotiation and signing/execution which then negatively impacts time-sensitive business functions such as sales, procurement and hiring. 

Another factor is that regulatory and compliance issues continue to grow exponentially, further outpacing corporate counsel’s ability to maintain compliance and complete contract repapering projects with their own limited resources.  For such systemic and ongoing needs, simply dropping in and taking out “bodies” to address an influx or backlog of work is not an effective long-term, nor a near-term, solution. Through a managed services engagement, best-fit technology and processes can be applied and supported by experienced resources.

For these reasons, corporate legal departments and their outside counsel law firms have leaned on 3rd-party resources such as ALSPs for many years, though historically as a temporary means to augment their staff or handle a spike in workload.  However, in recent years, service providers are now functioning as long-term strategic partners to their corporate clients bringing depth of experience and best practices to the table. 

Today’s managed services providers employ lawyers, legal operations, Six Sigma process, design specialists, and other subject matter experts equipped with process engineering techniques and technology solutions.  These resources render them highly capable of becoming a seamless, invaluable, and permanent part of the corporate client’s team.  Managed services professionals work shoulder to shoulder with in-house counsel, outside counsel law firms, and Big 4 consulting firms, whatever combination is needed to get the job done.

Legal technology and process reengineering initiatives have taken center stage recently as a wave of innovation has lifted legal operations to new levels of efficiency and automation.  The pandemic has definitely put immediate pressure on organizations to embrace technology as everyone, everywhere worked from home – overnight.  Major events like COVID gave companies the opportunity to revisit how legal work was assigned, managed, and completed. 

In addition to the pandemic/work from home digital transformation, the growing influence of corporate legal operations professionals within corporations has accelerated the move toward tech- and process-driven innovation.  Organizations that have embraced operational excellence through technology, process reengineering, and automation have not only survived, but thrived despite COVID. 

As an example, from the perspective of contracts, compliance, and commercial services, three key technologies have emerged as game-changers in recent years:  Contract lifecycle management (CLM) solutions, artificial intelligence (AI) and robotic process automation (RPA). 

Contract management, once a challenge, has become a well-oiled machine for those that invested in CLM technology and resources.  CLM platforms are an essential part of the corporate IT stack and no longer considered discretionary. Technology implementation alone is not enough, though – it must be accompanied by process design, workflow strategies, and a robust change management program to truly optimize its value.  Managed services firms have applied their process expertise to help corporations properly leverage CLM systems for huge-scale contracts projects.  With the help of managed services teams, companies have successfully digitized their legacy contracts, automated their ongoing contract generation, and completed massive repapering projects such as the transition away from LIBOR.

Corporations and managed services firms alike have benefited from the increasing variety of artificial intelligence (AI) solutions.  AI tools provide faster access to actionable data to make informed decisions.  Pandemic factors have led to greater adoption of AI technology, and to more creative application of solutions to speed up work and increase accuracy.

Managed services providers have been evaluating the problem-solving capabilities and vast potential of robotic process automation (RPA), one of the fastest-growing technology sectors.  According to a recent Forrester report, there was “a huge uptick in opportunities around robotic process automation (RPA) and no-code/low-code SaaS environments headed into the pandemic, and these were accelerated significantly in the latter half of 2020.  In fact, RPA vendors are now valued at $17 billion, and 45% of global data and analytics decision-makers have implemented or are implementing RPA in a project, according to our research.”

RPA platforms are especially useful because they can automate various workflow tasks, capture metrics and reporting, and identify specified contract template sections.  They can also provide a dynamic intake portal for contract-related and other requests to the legal department, and function as a repository for all relevant communications. Leveraging the power of automation with solutions like RPAs allows companies to free up their time to focus on more complex challenges.  This is how companies grow.

Whether the solution is CLM, AI, RPA or other innovative tools, managed services professionals provide valuable consulting as workflow architects and process engineers.  The technology itself will not fulfill its objectives without the right workflow, process, and metrics.  Managed services firms, having always presented metrics to verify their performance, have an inherent understanding of success measurement.  They are accustomed to setting and meeting metrics such as KPIs (key performance indicators).  Large corporations, especially those with a robust corporate legal operations element, can look to managed services partners to verify that their human and technology resources are performing as expected.  Measurement is one of the best allies managed services can offer for gauging success.

There is still much more opportunity on the horizon for managed services.  The world continues to adjust to changing conditions.  Uncertainty abounds as companies wonder if/when they will be returning to the office, or what will happen if there is another shutdown. 

The UK is a major region to watch, feeling the recent impacts of Brexit.  From a regulatory standpoint, there is much speculation about how Brexit will impact EU data privacy regulations such as GDPR.  There is already a UK version of GDPR which is prompting some contract repapering, but many more regulations will need to be reconsidered now that the UK stands alone as a “third country.”  Brexit is already impacting the contracting function, as some UK companies are already moving their back offices to Continental Europe. 

Due to work from home and financial considerations, clients are reducing their physical footprints, closing offices, and shrinking other bricks and mortar locations. Managed services will have the secured facilities corporate clients need, complete with ISO certification, biometric scanning, and other cutting-edge innovations.

It is safe to predict that the rise of managed services will continue, ever evolving to meet new challenges or to find better ways to efficiently address the work at hand.    As long as managed services providers stay flexible and relevant, performing as promised, they will continue to be an essential resource to corporate legal.

About the Author
Jeffrey Catanzaro is Executive Vice President at Integreon and leads the company’s Contracts, Compliance and Commercial Services practice group and LIBOR Task Force.  Email him at: jeffrey.catanzaro@integreon.com.