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Thought Leaders In Cloud Computing: Michael Aginsky, CTO Of Gibbons P.C. (Part 4)

Posted on Thursday, Aug 26th 2010

By guest author Shaloo Shalini and Bhavana Sharma

The legal industry is not immune to “resistance to change” when it comes to shaking up IT infrastructure and deploying newer, cheaper, and more efficient technologies such as cloud computing. In addition to the conservative mindset, there is no real business reason for established law firms to change their on-premise applications for cloud-based offerings. Another inhibitor is reliable access to business-critical information which firms need to have on-premise instead of virtually in the cloud. Compared to technology firms, there aren’t as many law firms that just getting started. Also, unlike in new technology startups, competition is not yet prompting law firms to jump onto the SaaS capex to opex bandwagon to get started more quickly or scale up sudden lawsuit load surges – those are not at all common. Well, it may just be a matter of time.

SM: Are there any vendors that have cloud-based offerings specific to the legal industry and handle integration well?

MA: Right now, there are one or two such vendors. These vendors are not really new. They have been running with the cloud model and hosting their applications on the Web from the days when we still called it as SaaS. One of them is in the area of document management systems.

SM Which vendor is this?

MA: The name of this vendor is Netdocuments. At Gibbons, we do not use them, but they have been around for a while. They have a solid client base from what I understand. Their clients do love them. I don’t know much about their integration and how it works. We in the legal industry are still not of the mentality of having our document management in cloud.

SM: So, there is a vendor that may have the kind of solution you are looking for, but you are not yet of the mentality to put your documents in the cloud. What is the barrier to adoption?

MA: There are a few across the spectrum. We have an existing investment in our current solutions, which work well for us. So, there is a need to extend the value on money the firm has already paid for. We are trying to keep things stable for as long as possible here. On the culture side, there is just the resistance to change.

Also, there is really no strong business driver for us to change what we already have. Why disrupt the users, right? Another aspect we initially talked about is performance. Right now, we can control the performance, the user’s expectations of performance, and the application functioning in the event of a system or network outage. For our document management, something that is critical, we are not quite ready to be dependent on an Internet connection for access to such information.

SM: You said that Netdocuments already has a happy clients in the legal industry. What do you think is driving this vendor’s success? What prompted those other firms to are causing them to adopt Netdocuments? Are you suggesting that these firms did not have the same kind of investment that Gibbons does?

MA: They could have been a different points in their refresh cycles when Netdocuments became a stable viable offering. When we did our most recent refresh for our document management system, this company was not around. They were a relatively a new company, and we were not ready to take the leap of faith just then. This is not to say that’s the case for all of them, but a lot of their clients are smaller clients that have much smaller capital budgets, and maybe they can’t afford the multiple services it takes to run their document management or record management process in-house. Maybe they just choose not to have multiple servers and IT infrastructure to run solution like this in-house.

SM:  Got it. Interesting!

MA: If we were half our size, we would be in a different position from where we are now.

SM: Well, I think you are absolutely right. We have seen that in SaaS adoption, vendors have come in through small companies and those companies that did not have large IT outlays to begin with. The barriers to entry were low, so that is where cloud computing adoption has come from in general. Do you foresee the lack of standards as a barrier to adoption in addition to integration, security, and governance challenges? Are there opportunities for standardization in the cloud from the legal industry standpoint?

MA: There are always opportunities for things to be standardized. The more standardized they become, the easier it will be for people to adopt things and the faster they will understand what they are getting and how is it going to work. I do not know how standards change the game for us because as long as the vendor brings a solution that works and integrates with what we are trying to do, standards are not as important.

SM: There is a lot of movement in the cloud world about various pricing models ranging from six-month fees, fees for user licenses, usage-based fees, fees on percentage of revenue, and fees as a function of the number of clients. There are a variety of permutations and combinations of pricing models for cloud-based offerings. Do you have any thought about your preferred pricing models?

MA: For us it is monthly. We have deployed some-cloud based offerings where we do monthly per user payments. We have also done monthly per matter or per project types of things. We have also entertained monthly by volume, for example,  x amount of data is stored, and this that what it is going to cost you. Anything beyond those pricing models gets difficult for us to justify when we start talking about ROI. Once we get used to having these things into monthly payable type of pricing models, we can control the costs. It becomes an operational expense as opposed to a capital expense, and this is much more attractive to us.

This segment is part 4 in the series : Thought Leaders In Cloud Computing: Michael Aginsky, CTO Of Gibbons P.C.
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Good discussion on cloud computing. As the VP at NetDocuments, it is interesting to witness the acceptance of NetDocuments from both small and large firms… Consider Lewis Brisbois (1,500 users), Kutak Rock (800 users), Milbank Tweed (800 users), Dorsey & Whitney (1,500 users), Jackson Lewis (1,500 users), Nelson Mullins (800 users), with more coming near term…why? universal access, business continuity built-in, collaboration built-in, eliminate the cost and admin of 60+ servers just for DM, small desktop footprint, etc. Its reliable and the performance is high…Internet is accessible everywhere now…and the data is encrypted and stored in two redundant data centers, primary at LexisNexis data center…

Leonard Johnson Monday, August 30, 2010 at 8:48 AM PT