Embracing technology for a competitive and sustainable future
Disruptive forces are affecting not only legal firms in Australia but transforming every industry sector from banking to utilities and healthcare. In this white paper, we explore the parallels between the lawtech landscape and technological disruption in other industries.
The ever-increasing role and impact of new technologies is changing the fundamental structure and economics of organisations, the work they do and how they do it.
Digital disruption is changing the nature of employee-employer and client-company interactions. This trend is not contained to a single region, industry or sector and with the nature of many deals being international, the ripple effect of a change in one country is impacting others in real time.
Non-digital companies completed 48% more digital deals in 2015 than they did in 2011, with particularly big increases by natural resource, automotive, and consumer goods companies1.
THE M&A LANDSCAPE
In the mid-2000s, initial skepticism over virtual data rooms, their security, usability and risk redundancy was high.
Now accepted as a mainstream solution for physical archives (prone to issues of natural disaster, fire, theft, human error, to name a few) the industry is experiencing the next wave of transformation, as confronting as it may be to a highly regulated sector seeking assurance and validity in a changing global context simultaneously.
Inadequacies of traditional legacy systems and processes that were once fit for purpose are becoming apparent. Law firms, their clients and advisers are also demanding more, in terms of information sharing and transparency, and have started to adopt new technologies that will revolutionise their ability to collect, manage, distribute and analyse information.
Adoption of technology solutions is occuring exponentially as what was traditionally considered “IT software” is now valued as a strategic business asset, supporting the entire organisation and many staff across departmental silos. Suppliers are able to meet security requirements head on and commoditisation means that cost barriers no longer exist. Adoption isn’t keeping pace with awareness however, with many companies yet to introduce new deal processes.
EY’s Digital Deal Economy Study reports that it’s time to embrace digital technologies in our M&A mindset. It predicts that one of the four priority areas across the transaction lifecycle where organizations should focus efforts to transform and become leaders is in “rebooting M&A capabilities and processes to meet the specific deal demands of the digital environment”.2
In the United States, it took the telephone 76 YEARS to be adopted by half the population.
By contrast, the smartphone did it in under 10 YEARS
We are now watching blockchain move from a notebook sketch to an established technology in a tiny fraction of the time it took for the Internet to be accepted as a standard tool.3
DISRUPTION TRANSCENDS INDUSTRY SECTORS
With voice search, Google home and smart TVs, technology has penetrated nearly every element of people’s domestic lives and interaction with these lifestyle solutions has become seamless and frictionless.
This pervasive presence of technology is seeing old habits change and technology become a mainstream and invisible solution to people’s daily lives. Due to the mainstream nature of technology systems in our everyday lives, those same principles and new technology solutions are exerting a profound and transformative effect; changing the shape of industry from property, pharmaceutical and mining to renewables and healthcare.
No matter how small the home or how large the corporation, electricity is a basic requirement. As a result, utilities has historically not had a need to change - until now. Many utilities companies are not only accepting, but embracing the replacement of monolithic, expensive-to-maintain legacy systems with technology solutions often hosted in the cloud.
The catalyst for change within the utilities sector has emerged from a growing number of technologies and smart devices giving consumers complete insight into their energy usage on demand, thus empowering the consumer to affect choice in the types of energy and providers they buy from. This is necessitating real-time, two-way, communication between energy producers and consumers who now determine their energy requirements for themselves, creating a tension between the utility archetype and modern consumer expectations and choice.
This is more than consumer desire for competitive energy rates, it’s a paradigm shift in the way consumers control their choice over energy supply and in response to this, the way corporations use technology to access and offer diversity in energy supply options themselves.
ANZ reports that 40% of transactions are touched by robots4
Since 2015 ANZ Banking Group has been investing in robot software systems, which can do the work of employees in roles from payroll administration to helpdesk support in a fraction of the time. The core benefit of executing over 40 processes through robot software means that employees can be re-deployed from monotonous, time-consuming tasks on to higher-value and more rewarding endeavours.
AcuteNet is a Canada based organisation that provides technology solutions for healthcare providers by way of business model and open source technology platforms.
With our sharing economy, the cost of application infrastructure is shared across all our customers, as a result, customers can significantly reduce costs, and they have unlimited user access and clinical assessment on our platform.5
The business imperative for AcuteNet to move its application to the cloud was to provide a stable platform to scale for growth and reduce costs in administrative functions that were typically high-volume but low value.
The solution AcuteNet moved to was a cloud based technology that allowed scalable and secure administrative functions and interconnected client relations. In this way, information was shared from their client network directly to their end-users (patients) and their physicians in real-time.
The solution also allowed AcuteNet’s clients to onboard new customers in weeks instead of months through an information sharing platform and due diligence checks, all conducted in the cloud. Information transfer was instant and reduced administrative oversight to a minimum at the conclusion of signing.
An additional benefit was regulatory transparency, a huge step forward for an industry that is highly regulated and highly risk averse, similar to financial services.
INDUSTRY-AGNOSTIC EMERGING TRENDS
There are several key themes that dominate the technology landscape, regardless of which industry it’s adopted in.
Until relatively recently, many organisations continued to take a singular approach to new technology solutions. The focus was on individual remedies to solve immediate problems. However, as experience of software matures, the focus has shifted away from individual technologies and towards convergence, reducing the headaches of maintenance and cost associated with running multiple single-point solutions which erode value because of the high overheads and integration requirements.
Finding a holistic solution that is able to solve multiple organisational problems simultaneously has been avoided largely due to the lack of IT investment or appetite to consolidate legacy systems into a single environment and organisations being unsure of where to invest. The reasons are many and include the perceived diffculties of an enormous change management program, the time and cost involved as well as finding a best fit solution that is effective across the organisation.
In the Asia-Pacific region, over half of all financial services firms agree that technology which can provide a holistic business solution is required to be competitive and meet client expectation and user-experience.
A mere 15% of these companies also agree they have adopted these technologies, revealing an industry that is seeking solutions but unsure where or how to invest.
The elastic nature of cloud subscription models allows companies and corporations to grow and adapt their technology investment at the same rate as markets and client needs change, thereby not being slave to a long-term technology solution that is rigid in its service delivery and costly in change requests.
Historically, new technology implementation has caused anxiety regarding risk and confidentiality of client and organisational information until a significant number of companies have adopted the platform and it’s security credentials are proven. Where technology used to be solely the domain of the IT department, it’s now a company-wide imperative due to its strategic value to many modern organisations.
Technology providers who offer robust enterprise solutions which include disaster recovery procedures, immutable security and comply with privacy policies and procedures for maximum data sovereignty are king.
The absence of, and requirement for, building inherent trust between parties is what has seen technologies like blockchain become a mainstay of many financial transactions.
Transparency is a key component of trust within organisations and third parties. A technology solution that is able to provide real-time information on deal progression, stoppages, information transfer and key accountable parties mitigates risk, increases collaboration to manage volumes of unstructured information into a single source of truth.
Technology is having a profound effect on the access of and delivery of services in B2B and B2C environments, across multiple sectors.
Organisations that drive technological disruption, are reaping multiple rewards from this effort. Trust, transparency and collaboration is being built between technology providers, organisations and clients; and environments created where higher-value tasks and strategy can become the focus of a workforce alleviated from administrative burdens.
Technology is eliminating high-volume, low impact manual processes, fraught with human error and enabling seamless processes with large volumes of disparate information transferred in a structured and controlled manner, in real-time.
Rather than simply reacting to a change in the way in which services and information is solicited and disseminated, companies are now proactively embracing the opportunity to directly liaise with their clients in customer focussed platforms and in real time.
- 1 M&A when the target is digital, J. Neely, PwC, 22 April, 2016
- 2 Digital Deal Economy Study, 2nd edition, EY, January 2018
- 3 Financial Services Technology 2020 and Beyond: Embracing disruption, PwC, 2016
- 4 Simen Munter, General Manager of Group Hubs, ANZ
- 5 Fariba Anderson, AcuteNet CEO