Tuesday, August 02, 2005

Extranet - Build vs. Buy (continued)

Should one build or buy an extranet system?

Estimate Volumes and Usage

Obviously, building a law firm extranet or legal extranet system internally requires a considerable investment. Some of the many costs are project management, programming, software licenses, hardware, the creation of an internet zone if one does not exist at your firm, and resources to test and support the system once it is finished. One would hope and assume that a project team charged with such a project would have a defined project budget against which actual expenses are tracked, thus making the cost of such a project easy to understand.

Offsetting these costs is the value and revenue a successful implementation of a system to a client delivers to a law firm. The more implementations, the more value. And, the more uses (or vertical markets) a legal extranet (litigation support, project management, client portal, etc.) targets, the more usage potential exists.

So, those facts being stated, a simple estimation of the benefits a law firm extranet system will deliver to a law firm requires one to follow a formula somewhat like the following:

(Average number of implementations per client) x (Number of clients a firm expects to deploy a collaboration system to) x (estimated value per implementation) = Total project value.

Of course, one could make this more sophisticated by including other factors (factors such as the time value of money, estimating the amount of new legal business this capability might bring to the firm, estimating increased client retention rates this new capability will bring to your firm)