A number of cloud-based document management systems are labeling themselves “new,” “modern” or even “21st Century”to differentiate themselves from “old” DMS programs such as Worldox. Aside from meaningless hype, what does this really mean?
Equally important, what is behind the “drive to the cloud” – aside from fashion that is. It would be a mistake to dismiss the “fashion” aspect. Many firms explicitly say they want to avoid appearing “old-fashioned” irrespective of content or functionality. I have had firms call me and say they want “to go to the cloud,” but when asked what they understand this to be, they have no idea. Fashion.
Changes in work habits are the central element driving the push for the cloud. Attorneys are increasingly using iPads and smartphones to complement their work. They want to be able to access all the firm’s data with mobile devices anytime, anywhere. On the other hand, in any firm of more than a couple of attorneys, it seems to me extremely unlikely that more than, say, 20% or so of work is done on mobile devices. The one exception to this (admittedly, a critical one), is email, where processing email on phones or iPads is reasonably efficient, even though I wouldn’t want to write a long, substantive email on my iPad. The vast majority of document drafting and associated tasks is still one by the usual suspects at their desktops. “Going to the cloud” is of no benefit to them (and may even have drawbacks – see below). Of course, it’s the people who sign the paychecks who may benefit most from the extra productivity.
There are typically three substantive aspects to the claim of “modernity”:
1. The programs are cloud-based and not on-site or hosted;
2. They use advanced, googlesque, AI-enhanced, search techniques to access more data than traditional DMS programs; and
3. They claim to be cheaper, simpler, etc.
The most fundamental element of cloud-based services is internet access. You are a slave to your internet connection (and with the prospect of the demise of net neutrality you may find your services slowing down considerably – see the brilliant BurgerKing ad on net neutrality). While this may not be a problem in main urban areas, it can be an issue in many cases, especially when traveling (have you tried to access the internet on an airplane?). In addition there are serious security issues with public access – the “Starbucks issue.”
When people talk about “going to the cloud” they generally mean one of two very different things.
First: hosted cloud services. This amounts to taking your server and putting it in the cloud. Someone else is responsible for maintaining programs, etc. You log in to what is generally a terminal services server. However, once logged in you run your server based programs the same way you do now. In this case, the hosting company charges you for services, disk space, etc. but the software you run is the same as what you run now, just located in the cloud.
Second: “software as a service (SaaS).” These are “pure” cloud-based programs that connect your local PC to the software company’s server via the internet (usually with providers such as Microsoft Azure, Amazon, Google, Rackspace, etc.). Again, you are at the mercy of your internet connection.
Aside from the features of specific software, there are some intrinsic advantages and disadvantages to cloud-based SaaS programs.
The most obvious advantage is access anywhere (anywhere that has an internet connection, that is) and from any mobile device. Aside from the fashion issue, how important this is obviously depends on your work style, how much time you spend traveling or otherwise outside the office, etc.
A second important advantage is security. Cloud-based programs and vendors maintain systems that are significantly more secure than what most small firms can afford. In addition, they tend to have geographically widely dispersed redundant backups and frequently offer “reverse backups” to an on-site server at your firm. Note that these backups are not functional copies – in the event of an outage, they have to be restored, you can’t just “switch over” to them.
File sharing. Because SaaS programs reside within the internet, basic small-scale file sharing and client portals are much easier to establish that they would be for in-house programs which typically must use links to third-party portal programs such as Sharefile or Workshare to provide this functionality.
Search options. Programs such as NetDocuments offer computer-assisted searching to cover both proximity searching (search for “mice” will turn out “mouse” or Google’s familiar “do you mean...”) and the ability to search social media and other web services. However, you need to look at this closely. Programs that proclaim their ability to “go beyond” traditional DMS’s and offer broader “knowledge management” or social media searching sometimes do so at the expense of key attorney requirements. Thus one of the questions I get most often when explaining the power of Worldox search capabilities and the options available is “I just want to make sure I can see all the documents relating to the matter I am working on.” Make sure the “advanced” search capabilities of a given software also meet this need reliably. “AI” searches are not intrinsically reliable: how many times have you had to try multiple searches in Google to find what you want?
Some Intrinsic Disadvantages
Speed. Even with high-speed internet, you will not get the response time you would get with an in-house server. If you are out and about, response time is likely to be excruciatingly slow. I see this all the time with my iPad and wireless connections. On the other hand, slow access is better than no access. You will, however, notice slower response times in the office – which is likely to account for the majority of work done by the firm as a whole. So the firm needs to decide whether mobile access is worth significant slowdowns for the great majority of work still done at desktops in the office.
Third-party integration. Internet-based programs have traditionally had greater difficulty in integrating across the web or between web-based and PC-based programs. So the integration with other programs (time & billing, anything except Microsoft Office and Acrobat) may be limited, although most programs are expanding them rapidly. Worldox, for example, integrates with over 50 different programs out of the box and additional integration “hooks” can generally be written in under half an hour. SaaS programs can’t match that.
Other Pros and Cons
Interface. “Look and feel” is a matter of opinion. One person’s Pro is another person’s Con. “Modern” SaaS programs are generally simpler and “cleaner.” They look more elegant. The downside is that they provide the user with less information about the documents. You’ll obviously see the name of the document, but if you want other information (date, owner, client/matter, other metadata) you may be out of luck. They also offer fewer options to customize how your screen looks and the information provided on it. This seems to be a general tendency of software programs: Office 365 for example, lacks many of the customization tools available in previous versions. After all, you don’t have many options to customize an app on your smartphone, why should software be different, right? You may increasingly be stuck with an “Out of the Box” configuration.
Cost. SaaS providers routinely claim that their software options are cheaper. This is debatable to say the least. Think of it in terms of leasing a car: leasing will always be more expensive that buying. By way of example, take a Worldox vs. NetDocuments comparison for, say, 20 users over a 3-5 year time period.
The initial cost of Worldox is $460/user plus $100 yearly maintenance. So your upfront cost is $560/user the first year or $11,200. After that, your cost is $2,000/year. So your three-year cost is $15,200, five years is $19,200. NetDocuments fully configured will run about $40/month/user or $9,600 per year, every year. Cheaper the first year, but three years will be $28,800 and five years will be $48,000, or close to $20,000 more than Worldox. In addition, check to make sure that storage is included in cloud-based programs. For high-volume firms, the “free” storage may not be adequate and the firm may wind up paying an additional monthly fee for the storage you need.
However, as SaaS software companies are quick to point out, this is not an Apples to Apples comparison, since you are saving on in-house hardware and IT costs that cloud software doesn’t have. But aside from the obvious convenience of having someone else deal with hardware and IT, how much does this really amount to? It is extremely unlikely that you are dispensing with in-house servers entirely, so your savings may be only a small fraction of your total in-house IT cost. If you still need a server for other reasons/programs your savings may only be the difference between a less powerful and more powerful server. It can be hard to put an exact number on this.
Renting software (otherwise known as “Software as a Service”) is the wave of the future. Microsoft has announced that starting with Office 2019 it will no longer be possible to buy Word, you can only rent it. For obvious reasons, software companies don’t like the word “rent,” but that is what it amounts to. Other companies have been going down this path and with Microsoft backing it, this tendency is bound to increase. Obviously this ensures both increased revenue and a much more reliable revenue stream for the companies involved. Software will become more expensive in the future.
So after all this, is the cloud for you? This depends on your answer to the following three questions.
1. What is your workflow? Will the hit in response time for the great majority of employees working in the office be an acceptable trade-off for smartphone/iPad access anywhere?
2. Is convenience worth the likely added expense over time?
3. Review features and functionality carefully. The computer commonplace that 80% of the users only use 20% of the features of Word neglects the fact that when advanced users need those extra features they are extremely important. Are you going to get the feature set and customization options that you may depend on or will the “Out of the Box” settings be adequate?