Hyperscale Group - Business Planning 2025
Given the pace of change in the market we thought it might help to share a few thoughts for 2025 and beyond (thankfully we are building these on what we said in 2024 which means we were in the right ballpark!).
Many have said that this could be the toughest and busiest year in Legal IT – they may well be right, but we have some of the best people in the industry in our marketplace and so am confident we can navigate this. Like many things future success will be about focus and taking the right choices – we all need to stay alert and not just carry on with what we have always done. A few thoughts from me to help with 2025 business planning:
Fresh Perspectives on Tech Stack and Value - Firms will question and revisit their tech architecture and licencing models given the increase in Gen AI and Microsoft dominance. Priorities will change. Value delivered per pound, euro and dollar will come into clear focus. Some products will win and others will lose out as the world evolves.
New Operating Models - Operating models will be revisited. Does every lawyer need access to every system or just interfaces to some linked via the Power platform? In an increasingly Microsoft dominated world where people have advanced data and dashboard strategies do you really need enterprise licences for all products? How will suppliers adapt to this? Also is the “best of breed” approach from the past really fit for these times anymore? The PMS/DMS/CRM/e mail operating model of the past has not hugely evolved in 35 years of LegalTech. Is it now time for something better as a model which drives process, customer experience and quality? A number of firms are beginning to look at this area and question if there is a lot more to client service than interfacing with e mails and deal rooms. Emerging cloud-based matter and case management systems may be part of the answer.
AI Rebalancing - Suppliers and businesses who have a credible plan re AI will thrive where others will perhaps struggle. We will see some thinning of suppliers given interest rate challenges and the toughening of the Private Equity Market. Importantly on this though will the market continue to tolerate compulsory AI being added to products for extra money? Law firms and clients will get tougher on the AI they want, the AI they want to pay for and importantly the AI they don’t want. Realistically most firms and clients do not have the resource to do extensive due diligence on the new AI from every supplier and there is no value in this.
Costs Realism re AI - We increasingly see suppliers of AI wanting to charge based on value delivered. This is logical in many ways but often the numbers don’t compute, especially when increasing annually. A £1000 lawyer job is often not replaced by AI and in any event the output needs to be checked by a lawyer. At the risk of stating the obvious there are many other factors which go into delivery including insurance, KM resources, supervision, salaries and more. What I am saying is that delivery is not one dimensional. AI is not going to replace the job a lawyer does, but it will assist and if suppliers are looking to “value” they need to be realistic. Also let’s not forget that Copilot and Azure AI and other big tech tools (which will continue to thrive) currently are much cheaper than many other AI tools and will have the might of Microsoft behind them.
Reliable AI Performance Data - I have heard some say incorrectly that lawyers don’t want to change or invest. Personally, from what I have seen this could not be further from the truth. If something works and delivers benefit lawyers absolutely want to invest – the challenge is that they are time poor and in the world of AI, it is hard to understand the true benefits of AI or even if it will work. I commend the word of Litig in this area Litig AI Benchmark Initiative – Latest Update — Litig - Legal IT Innovators Group to benchmark performance as we need this. We will also see firms develop much more focussed models to test AI prior to buying and to be more demanding about contract termination if a product does not deliver. Lawyer pilots have always been hard and in the world of AI sadly this is an essential. These proof of concepts must be done “with” lawyers and can’t be done “for them”. Many firms are therefore raising their game in this space as this will become BAU in the future.
M&A - We will see further M&A activity and consolidation of suppliers – Many will broaden their offerings and more products will be end of lifed. To subscribe to our M&A tracker please click HERE
Budget Certainty and SaaS - The SaaS market will perhaps be looked at by regulators. There are a huge number of advantages to SaaS but under old licencing models the balance of power perhaps used to be too much in favour of the customer, whereas now some of the price increases we have seen are perhaps showing that this has swung too far the other way The Silver Lining of Cloud Software? — Hyperscale Group Limited. Treble digit price increases/corrections don’t land well and whatever the numbers, IT teams need more forward-looking budget certainty. Perhaps we will see the emergence of a SaaS lease with price disagreement mechanisms as we do for conventional leases. Every customer should want their suppliers to make profit but equally they can’t lose control of their budgets and if every supplier pushes through material above inflation price increases the numbers simply won’t add up.
Smarter Procurement - The death of the lengthy RFP and move to “smarter procurement” – some of you will know exactly what I mean by this. A level of governance needs to be applied on procurement but increasingly people are querying whether or not lengthy RFPs add any real value when looking at established products. As one contact said, “by the time you get to implementation, and given the rate of change, RFPs are a waste of time as they are out of date as feature sets have completely moved on”. I suspect this is not 100% true but we need to be smarter in how we make selections and use everyone’s time better.
New Approaches to Business Transformation - Firms will rip up the rulebook on business transformation, productivity and innovation – they will find very new ways of doing things in some areas which will affect their shape and size. Microsoft and Gen AI will become more embedded.
Smarter Pricing - Law firms will be much smarter at linking price to liability and outputs. Looking at risk, we all need to do things in a smarter way but if we don’t pay for a human checking everything, we need to recognise outputs won’t be checked. New risk mitigation models will emerge.
Greater In-House Legal Team Knowledge - We will see changes in how in house clients buy - with a greater focus on understanding tech and how Gen AI is utilised. They will increasingly look to outputs more than buying by the hour.
A Step Change in Education of our People - Education of our people will become much more critical and important than ever before. We are living in unprecedented times where the amount of change has never been as great. People need to understand what the tools can and can’t do, risk, MS365 and new pricing mechanisms. Any new learning tools need to be on demand, multichannel and allow people to add their own content and monitor utilisation (e.g. https://www.theprofessionalalternative.com/).
The Continued Rise of the Playbook - Playbook tools and embedded AI will do increasingly well as the work profile of lawyers alters i.e. they will need to review much more incoming content. Data lineage, data poisoning and governance tools will be widely adopted as will wider AI risk tools. Uptake is already on the up.
Data Strategies and Back Ups - Data strategies will become much more critical and real. We are and will see an increasing desire for firms to back up data from SaaS providers driven by: a) data strategy b) commercials c) risk management. Events like happened with Crowdstrike will continue to happen to others forcing more firms and businesses to do this.
The Era of TradTech - We are going to see some traditional technology practices coming back into modern day computing – The Era of TradTech — Hyperscale Group Limited.
New Approaches to Risk - The next few years of Gen AI will bring with it a material change in risk. We need to prepare ourselves and educate our people - Generative AI: A New World of Risk — Hyperscale Group Limited.
The Transformation of IT and Innovation - IT and Innovation teams will transform and reinvent themselves given the wave of Gen AI. Businesses will have no choice but to grow these teams to help assist with the increased volumes. Smart firms will reinvent their structures. We need to consider the new skills we will need and what demand will decrease. Every firm will need to invest and the only questions are when and by how much. All the benchmarking is showing IT costs are on the rise.
The Continued Rise of Cloud - The main cloud providers will dominate, and private cloud will diminish.
Regulations and Standards - Regulations and standards in AI will become more critical (inc ISO 42001/The European AI Act) and will start to become buying requirements.
The Start of a Journey - We will see the battle of tech titans continue to unfold with new developments by the day re: Gen AI – we need to remember we are only at the start of this journey. In the short-term firms and clients will not want to commit to long term AI contracts. Firms will develop models to monitor developments and strategies will become more agile.
The Growth of Gen AI Cyber fraud/attacks – I recently asked some experienced IT professionals what they would do with Gen AI if they were “Bond Villains” – it was horrifying. We need to continue to bolster our defences and evolve our approaches.
As I found myself saying to a client the other day, this will prove to be the very best or worst time to be in Legal IT – we have no choice though and need to deal with it and providing we adapt and focus, I for one am very hopeful given the experience and judgement I see from fellow professionals in the industry.
Hyperscale Group are an Independent Digital, Innovation, Operational Advisory and Implementation Business with over 25 years plus deep market experience. We work for In-House Legal teams and Professional Services Firms all around the world and support them developing and implementing their strategies. We help our clients to make the right things happen.
Our Experience: Click here - Our Services: Click here - Client Testimonials: Click here
How We Work: Click here
For more information, please contact Dereksouthall@hyperscalegroup.com
