As the quality and choice of software available online improves, your firm could see some marked benefits.

Of the themes I discussed last year in ‘Making the most of IT’,₁ one in particular, even at that time, seemed to me worthy of a deeper treatment, namely web services, also referred to as software as a service (SaaS). Why? Because of its potential to help smaller firms with their IT.

When concluding that article I reiterated the oft-repeated, undisputed, yet still unresolved observation that IT continues to be problematic for smaller firms (due to their lack of resources to manage and effectively deploy and use IT). What some refer to already as an IT crisis facing such firms is becoming ever more exigent, with the requirements of the legal services reforms and their consequences (eg entry of branded, household names into the legal services market). These will demand of all firms greater efficiency in practice and business.

My speculation in that earlier article, which I wish to investigate further here, is whether an emerging alternative to the traditional model of IT provision might better serve the needs of such firms. That alternative is SaaS and it might loosely (and not entirely flippantly) be described as ‘software or IT on tap’, ie the use of programs that are managed and provided for you by third parties in the same way as other utilities, such as water, gas, electricity and telephone networks.

Further reasons for discussing SaaS

Apart from what SaaS/web services might offer a small firm, there are additional justifications for revisiting the topic. First, the exact shape of this developing model of IT is still forming and 12 months ago many analysts were questioning its longevity. A year is a long time in IT, particularly when the area under focus is new, and therefore comment on what has been happening in this field during that period is useful. Secondly, the way lawyers themselves work is changing and virtual law firms (VLFs), in which the members do not necessarily share the same physical spaces but collaborate over the internet, are likely to play an increasing role in the provision of legal services. This is partly because of the attractions such arrangements offer to those seeking a better work/life balance, when compared with traditional office environments. It is also because as younger generations who have grown up with the internet study, train and enter the profession, they will expect a mode of working that makes full use of the online world they are used to; one that is analogous to how they are already studying and socialising. For them VLFs will be a natural way in which to work.

A recent series of articles in Delia Venables’ Internet Newsletter for Lawyers highlighted this trend towards VLFs (and the attractiveness of such set-ups for lawyers).₂ The series confirmed in my mind how suitable ‘apps on tap’ or ‘hosted apps’ (which are other terms for SaaS) are for this new type of lawyer, as well as for the traditional solo and niche practitioner working in conventional office space.

Thirdly, the arrival (finally) of Microsoft’s Office 2007 and the praise heaped on it (in certain quarters), not to mention the indispensability of it for lawyers that has been suggested by some. On reading such commentary, my immediate thoughts have been twofold: the difficulties (cost, resources, etc) for the smaller concerns in coping with this new product; and whether it really is so unavoidable, or if there is an alternative.

What are web services and SaaS?

Before commencing my discourse I offer a little further clarification on what is meant by ‘web services’ or ‘SaaS’, at least in the context of this article. Though, strictly speaking, not synonymous, many of the sources available tend to use these phrases in an interchangeable way, therefore both expressions will be used throughout this article to convey the idea that follows. (You may find definitions and explanations that differ slightly).₃ The concept intended here is that of using programs that are not stored and run locally on the machine you happen to be using at a particular time, but rather by a remote ‘host’ (internet company), ie a ‘service provider’, which also maintains them. It serves you with the software it hosts just as your electricity company serves you with power. Essential to this notion is the requirement that such applications over the web perform in a manner and speed that closely resembles that of traditional software running on your desktop PC. This level of immediacy and responsiveness is something that many find hard to believe possible, but if one thinks of the sort of ‘application’ that is now starting to be deployed over the internet (eg IPTV₄) and the bandwidth that will need, one can start to appreciate that broadband as it is now could just about be up to the slightly less demanding job of, for example, providing you with a decent online word processor.

I said in the introduction that smaller firms struggle to cope with IT. Without overloading you with references to exhaustive studies you have all heard cited umpteen times before, I give you one recent observation of this, and its allusion to the baleful consequences: ‘Many small law firms are waiting as long as six years between computer and software updates, and this may be putting them at risk...’₅ Although this comes from the predominantly US-focused TechnoLawyer community, it is hard to believe that the situation is better in the UK. The security implications for firms fitting the description, particularly once equipped with a broadband connection to the internet, are only too easy to appreciate. So how can SaaS help with this matter in particular, and the IT burden in general?

Maintenance and security

When the applications one is using are hosted by a third party, security and maintenance, which obviously embrace the matter of keeping software current, are predominantly handled by that service provider. For that hosting company, these tasks are part of its core business, to be done promptly; not something to be ‘fitted in when possible’, as is the case for many law firms.

Financial costs

The cost aspect of IT has, of course, over the years, consistently been identified as an impediment to its full and effective adoption by small firms. The latest confirmation of this, conveyed as being particularly acute by reference to the arrival of alternative legal services providers that the reforms mentioned above herald, comes in the results of a survey from Central Law Training, entitled ‘The Future of Small-Medium Regional Law Firms in the UK’.₆ But even for firms that can afford regular IT expenditure, one must ask what advantages do all the usual servers, software and associated spending actually buy you? Gartner succinctly, if rather depressingly, sums this up: ‘… 65% of [traditional] IT spending is used just to “keep the lights on”, and delivers no competitive advantage._’7 Another analyst makes a similar observation: ‘In general, between 70% and 90% of their [IT managers’] existing budget is already committed to... “keeping the lights on”, in other words, running and maintaining existing systems.’₈ Under the SaaS model various instances of such conventional IT costs are avoided or reduced viz the cost of the Microsoft licences; the cost of purchasing, maintaining, running, etc the underlying server hardware; the cost of IT expertise (whether in-house staff or contracted) for installation, maintenance and security; the cost of the never-ending upgrade cycle; and the cost of the networking infrastructure. Furthermore, by using online programs hosted by a service provider, the firm not only reduces its own IT outlays but also benefits from the provider’s investment in hardware, infrastructure, security, backup, IT staff and expertise, etc.

Economy and budgeting

Additional financial benefits of SaaS can be nicely encapsulated with two phrases: ‘pay as you go’ and ‘pay (only) for what you need’. With traditional software you pay ‘up front’ and are unlikely to receive any financial recompense if (after a month or whatever) you decide you no longer need it. With SaaS you can stop using (and paying for) the service on a monthly or quarterly basis. Moreover, the price paid for a web service is often tiered, meaning that from all the features available you choose a particular set at a given price rather than paying for everything, half of which you will never use.₉ Just think how appealing it would be to many users of Microsoft’s Office products merely to pay for the bits needed.

As we all know, it has long been recognised that the vast majority of Microsoft’s customers use only a fraction of the features offered by the Office suites, but when you install a particular version you do not get the opportunity to say, ‘I will never use XYZ, can I get a discount?’ Pay as you go holds additional appeal for those (ie most) accountants who prefer smooth regular expenditures to large, infrequent, capital outlays. Budgeting for the former is usually easier to manage than the latter.

Are web services really viable?

The basic idea failed to flourish a few years ago – remember the hyperbole regarding application service providers (ASPs) – why should it succeed now? In a nutshell, because technological advances have made the business model viable in the eyes of the IT giants; they believe in it and are investing in it heavily; they will make sure it succeeds.  As recently as two years ago the technology did not exist to make an online application even remotely as responsive, intuitive and easy to use as a desktop product. That has changed. In this context you may have read or heard excited talk about something called ‘Web 2.0’ (see, for example, Charles Christian’s editorial in LTJ3, ‘Web 2.0 – too much hype?’).₁₀ If ‘Web 2.0’ means anything, it is that many uses for the web that have been attempted over recent years are now achievable because of the technological advances.

Examples of these advances include: the widespread availability of reliable, cheap broadband; and the development and use of programming languages and techniques that allow online programs to emulate the responsiveness of software installed on a local hard drive.₁₁ This progress makes the potential for a mode of working that uses applications over the internet (web services or SaaS) much more likely to succeed now than previously. Other factors also bode well for the longevity of web services. For example, the financial markets seem enthusiastic for the model, with investment pouring into SaaS start-ups.₁₂ They have obviously assured themselves that the above-noted technological progress will ensure that there is no repeat of the crash that brought an end to the dotcom euphoria. Meanwhile, Forrester notes that the uptake of SaaS in Europe and North America is already impressive.₁₃

And the caveats?

Of course, there are aspects of SaaS to be cautious about, but in this regard it is worth commenting that, although relatively new to many of us, SaaS is not an untried model of which you would be a vulnerable pioneer in uncharted waters. The potential deficiencies have already been identified. The two principal worries expressed by users of this model are security of data and reliability of service.

The security and confidentiality of data induce concern on account of their being held on a third party’s systems. However, dedicated service providers are probably better able to protect a firm’s own and client data against the menaces of the internet than could its own part-time, in-house efforts. Besides that, if not satisfied with what is offered in this regard one can always negotiate a more satisfactory level of service (which is just what one of the VLFs featured in The Internet Newsletter for Lawyers did),₁₄ or make selective use of web services (ie continue to use in house-IT for certain aspects of the business), or go to another provider.

As regards security, in the sense of destruction or corruption of data (rather than theft) and disaster recovery, once again few law firms could hope to match, through their own efforts, the level of business continuity and uptime that online providers such as Google can offer. Its very survival depends on its services always being available and therefore it implements replication and mirroring across vast amounts of physically separate, constantly online, storage.₁₅ If it is the vulnerability of data as it is transmitted between the provider and your machine that troubles you, remember that secure, encrypted links are now a standard part of everyday internet business. (Think of ‘secure http’ and the closed padlock symbol that reassure you when you submit your credit card details online.)

The other frequently raised fear in relation to web services pertains to their reliability and availability; even to the extent of whether a particular provider will still be in existence for the foreseeable future. In this context, consider how much you already rely on services provided over/by the internet. Ask yourself, when was the last time you were not able to connect to a Google server to conduct a search? How often has your Microsoft Hotmail been unavailable? These are the companies that are now competing against each other and developing online services. They will set the availability (and other) standards. Even if they allow other companies to use their products to provide hosted services, they will expect the highest standards to be maintained.

Additionally, if a particular provider’s accessibility proves unsatisfactory, customers can always ‘vote with their feet’, ie easily (and relatively quickly) change provider. The ease with which one can switch hosting company (just end one subscription, take out another, point the browser at a different URL and start using the new product) is another advantage that SaaS has over the long-term commitment one makes when purchasing, installing and running a software product oneself. The awareness, whatever the company itself says,18 many see in Google’s sweeping up of start-ups and merging of products over the past year the gradual construction of an online Office suite providing a low-cost, basic alternative to locally installed suites.₁₉ Thus currently we have free bundles such as Google Apps for Your Domain,₂₀ which provides webmail, calendar, chat and web page publishing; plus there is Google Docs & Spreadsheets,₂₁ which combines its online word-processing and spreadsheet programs into one free piece of software.

All this has happened within the short space of the past 12 months. Doubtless all these (or similar) products will be further refined and embellished in the future. It is worth making reference also to another (mainstream press headline-grabbing) purchase by Google that you are unlikely to have missed: that of YouTube. Why? Because it illustrates the wealth and power of the company, not to mention the breadth of its activities and ambition. It should emphasise to you that this company undoubtedly has the potential to make online business tools a successful mainstream sector of IT.

SaaS developments over the past 12 months

Google

Writely, the widely praised online word processor, was bought by Google and became Google Docs. Google also bought JotSpot, a company that has developed a platform for building (collaborative) wiki-based applications. One interesting aspect of this is that, as some of you will be aware, wikis16 are catching on within businesses as lightweight alternatives to large-scale document management systems. JotSpot also has an online spreadsheet and calendar that multiple people can edit. Google has its own online spreadsheet, Google Spreadsheets. So now the company can merge the best of both spreadsheet products.

The significance of all these developments is best illustrated by reference to Microsoft. Although Google’s proclaimed intentions do not indicate a desire for an outright confrontation with Microsoft, analysts see in its activities a cunning plan that, nonetheless, threatens to cut into Microsoft’s highly lucrative Office ‘productivity tools’ business. The Burton Group sums this situation up nicely:

‘People have been expecting Google to make a frontal assault on Microsoft Office… But why pick a fight with where Office is today when you can look at where the web is going tomorrow?… Rather than try to replicate Microsoft Office, Google appears to be trying to beat the software king to a point in perhaps the not-so-distant future when a good chunk of applications used by businesses and consumers alike are webbased services rather than PC software.’₁₇

Whatever the company itself says,₁₈ many see in Google’s sweeping up of start-ups and merging of products over the past year the gradual construction of an online Office suite providing a low-cost, basic alternative to locally installed suites.₁₉ Thus currently we have free bundles such as Google Apps for Your Domain,₂₀ which provides webmail, calendar, chat and web page publishing; plus there is Google Docs & Spreadsheets,₂₁ which combines its online word-processing and spreadsheet programs into one free piece of software.

All this has happened within the short space of the past 12 months. Doubtless all these (or similar) products will be further refined and embellished in the future. It is worth making reference also to another (mainstream press headline-grabbing) purchase by Google that you are unlikely to have missed: that of YouTube. Why? Because it illustrates the wealth and power of the company, not to mention the breadth of its activities and ambition. It should emphasise to you that this company undoubtedly has the potential to make online business tools a successful mainstream sector of IT.

Microsoft

At the time of writing ‘Making the most of IT’, Microsoft’s own web services response to Google’s actions might have seemed rather muted. Its Live initiatives were definitely not about making products such as Microsoft’s word processor and spreadsheet programs available online, no matter what one might have assumed would be part of something called Office Live. In this respect, Office Live has not changed. It is an example of what Microsoft terms ‘software plus services’.₂₂

However, recent comments suggest that there may be a (potentially profound) shift in the offing. ‘Bill Gates hinted that Microsoft would launch simple online versions of some of its Office desktop software tools as he hit back at suggestions that the new internet services from Google and others might start to eat into one of his company’s core businesses.’₂₃ Ray Ozzie’s arrival and influence at Microsoft certainly gives credence to this possibility. (More on Ozzie later.) Indeed, the belief held by both these major IT companies and industry analysts in the inexorable rise of applications over the internet at the expense of packaged software, is reflected in Gartner’s belief (tacitly acknowledged by Microsoft) that Vista will be the last major release of the Windows operating system.₂₄

 At first one might regard Gartner’s comments as somewhat sensationalist, but not if one considers the (changing) nature of the two competing giants that, through their competition, will drive forward SaaS. Google has always been an internet company and, unlike Microsoft, it is unencumbered by a vast ‘shrink wrap’ empire that SaaS threatens to undermine. It is young, agile, adaptable and eager to expand its horizons. It arguably understands the internet better than any other organisation and is best able to exploit its opportunities.

Microsoft knows that it has to embrace the emerging era of online business software, but it derives its huge profits mainly from its packaged products (which it must continue to support). It therefore has the difficult task of reconciling what to many people might seem to be mutually exclusive ways of providing IT. However, Microsoft also has a history of entering technology fields late, and, eventually, crushing its younger, more nimble, positioned rivals, even when the latter’s products are better. The situation with Netscape is the best example of this.

Maybe this time things will be different. Perhaps in this battle Microsoft’s huge corporate muscle will not be enough. On the other hand, it could once again surmount its late start and emerge dominant. In this context, perhaps the most important development concerning Microsoft is the change in personnel at the top of the company: the arrival and now technical leadership of Ray Ozzie, widely regarded as a true believer in what the internet and web in particular can offer in the field of online services, and the departure of Bill Gates, inextricably linked for most with the old ‘desktop apps’ model of IT of which Microsoft has long been regarded as the epitome.

Why are web services an ‘ideal fit’ for virtual law firms?

Collaboration is essential to most lawyers’ work. The legal services reforms make it and the efficient use of IT more important then ever. The conundrum facing VLFs is how to ensure seamless co-working among lawyers (and third parties) situated in distinct physical locations, when there is no central IT department to support them.

The existing and emerging online services address this problem. From the outset collaboration and sharing have been among the prime design considerations behind such products as Google’s online office ‘productivity’ software discussed above, whether that collaboration relates to sharing figures and formulae (spreadsheets) or co-writing and revising word processor documents. The products reflect the fact that collaboration and sharing will be the manner in which most work environments will function in the nascent internet work age. Consequently, these aspects are, justifiably, being sold as principal benefits of this approach to IT service.

The aforementioned feature on VLFs in fact demonstrates that SaaS is already suitable for, and in actual use by, law firms, because much of the IT used by the subject firms can be characterised as such. For example: ‘We provide each lawyer with most of the tools of their profession through a “virtual office” environment… the lawyers have access to the very same network and electronic tools that they would have if they were sitting in the Thames Valley HQ.’₂₅ Moreover, it is not only the standard office productivity tools that are being provided online. Already the possibility of hosted case and practice management is evident from one of those firms.₂₆

While the particular products featured in the VLF articles are more bespoke than the low-cost office programs that are the primary focus of this article, their use demonstrates that members of such firms are already using web services in order to achieve certain goals. These goals (particularly held by the younger generations of lawyers) include having flexible and more satisfying working practices, being able to work wherever they want (not bound to a particular physical office location), and having less of their earnings consumed by the expenses of IT staff and systems.

The demand for web services among the legal community can only grow if the appeal of VLFs for lawyers is as great and ever increasing as the authors of the above articles suggest, given the natural fit of such IT services with the location-free, minimal IT support model of practising law that such VLFs embody.

Moreover, as the online services market itself matures, increasing in scope, specialisation and sophistication, it will in turn make the appeal of VLFs greater. This is because its maturation will make such firms increasingly simple to establish and run, while at the same time making the need for in-house corporate IT progressively smaller.

You may not believe that you can yet do without the full Microsoft Office suite, and that web-based word processors and spreadsheet programs are not for you, and indeed that may well be the case for some members of your firm. But when your current Office products reach the end of their support, the ordeal of upgrading to Office 2007 (of which more next) should make you question whether everyone in the firm really needs it, or whether Google, Microsoft or another company’s tools will suffice for some staff and/or tasks.₂₇

The release (finally) of Microsoft Office 2007 – time to review your current setup

We all know that every software product has a finite life. Microsoft Office versions tend to have about five years of normal life (ie the period from initial release through various patches and Service Packs until their period of Mainstream (free) support ends). Then follows an Extended support phase (again about five years) during which security updates continue to be released and free but all other support must be paid for.₂₈

When a new version of a product is released and the level of support for its predecessors changes, third-party developers, hardware manufacturers and technology in general turn their attention to the latest version at the expense of the older ones. Consequently, the cost-benefit return on the older versionsbecomes increasingly negative, prompting the need, sooner or later, to abandon the relics in favour of something else. Therefore, the release of Microsoft Office 2007 (as with the release of any new Office version) serves as a useful prompt to consider the time-in-life of the Office versions you are currently using, and their replacement. Here is a little information to help you on your way. Mainstream support for Office 2000 ended in 2004. Mainstream support for Office XP ended in 2006.₂₉

As you will deduce, unless you are currently using Office 2003 you are already on slightly shaky ground (and mainstream support is likely to end next year). Thus, for any firm serious about its IT (and therefore its business), the question presented by the release of Office 2007 becomes, in essence, whether there is no alternative to the planning, costs, disruption, relearning/ retraining, etc, of deploying that product. In LTJ3 Neil Cameron sings the praises of Office 2007₃₀ and Liam Flanagan urges the adoption of Word 2007.₃₁ But are they truly the answer for every lawyer?

Office 2007 may indeed be a boon to your firm if you have the money to purchase it and the time to learn or be trained on what is a radically different piece of software from that which you are used to.₃₂ But what if you are a cost-saving smaller firm or sole practitioner, with limited resources of time and finance to become comfortable and familiar with this new product, let alone roll it out to colleagues and understand its idiosyncrasies? As Cameron himself observes: ‘The disincentive to rushing headlong into an early adoption [of Office 2007] is not chiefly the software licence cost, significant though that is. Rather it is the pain of reintegration; revising standards, forms, styles and templates; retraining; and – most of all – waiting for the various “gotchas” that you just know will be lurking around the corner.’₃₃

Furthermore, what if, like the vast majority of users of Microsoft’s desktop Office suites, you currently use only a small percentage of the features, have had neither the time nor inclination to learn anything more about how to use Word than what you knew when you last upgraded, and quite frankly would prefer that your word processor, while still retaining the interface with which you are familiar, was in fact simpler to use, less ‘feature-rich’, less of a hassle to support, not a huge capital outlay, and available to you wherever you happened to be, without having to lug a laptop around? Online tools start to satisfy these wishes. While some might compare them with Office 2007 and dismiss them as offering limited ‘functionality’, others regard them as simple, easy-to-use, intuitive tools that do what you have paid for (and no more), to be put away and forgotten about once your task is completed.

Neil Cameron asks rhetorically: ‘Do we have to upgrade? The answer is yes. Because there is simply no avoiding the steamroller global marketing IT behemoth that is Microsoft.’₃₄ It is true that there is no ignoring the Microsoft beast. However, it is also true that the beast is itself undergoing a fundamental transformation.

This is manifest (as noted above) in the recent arrival of Ray Ozzie, and the departure of Bill Gates who, whatever he might say himself, is for many inseparable from the pre-internet model of software provision (ie via products installed and run on the users’ own machines) on which Microsoft’s fortune has been built and which SaaS threatens to undermine.

Ozzie is highly regarded for his work on collaborative business software, whether over LAN or the internet (see his Lotus Notes and Groove networks products) and his belief in internetbased services is credible. His appointment to the role Gates is vacating demonstrates that while Microsoft will, of course, do all it can to sustain its hugely profitable ‘legacy’ businesses, it realises that it cannot stem the rise of SaaS and is determined to embrace it.₃₅ Even Steve Ballmer, the chief executive of Microsoft, acknowledges that the software model is changing and that the internet will become the way most software is distributed, and that Microsoft must change.₃₆

Alastair Morrison works in IT at Strathclyde University. In 2002 he was awarded the university’s LLM in IT and telecommunications law.