Thursday, February 17, 2011

"Vendor Sourcing" : Thinking the unthinkable as a strategic alternative to outsourcing

The new economics of the legal industry dictate that Law Library Directors and CKOs must seek strategic alignment with their firms by considering bold new thoughts on how and what we manage. We need to step back and identify the causes and sources of inefficiency within our organizations. Some processes and assumptions are so entrenched that it is sometimes difficult to discern the contours of the problem - let alone the solution.


Let's face it; we have for too long made our administrative processes subservient to the idiosyncrasies of individual publishers. This disparate collection of operational inefficiencies makes our organizations vulnerable to outsourcing. The LPO pitchmen are at the CEO’s door. We need to take the lead in considering all options for maximizing the efficiency of our organizations, including outsourcing. But before we outsource we need to ask more fundamental questions. Rather than paying a third party to take over “the obsolete and the inefficient,” shouldn’t we first consider the option of “vendor sourcing?”

I define “vendor sourcing” as a process by which we shift the cost of vendor generated inefficiencies or the inefficient processes themselves, back to the publishers.

Large vendors routinely articulate the benefits of “partnering” with our firms. I have outlined below several significant “partnership “opportunities which have been largely overlooked. The prospect of “vendor sourcing” might expedite the industry's transition to a more efficient business model for the acquisition and distribution of information resources.

Publishers verbally profess their support for the value of law librarians while simultaneously enmeshing our organizations in a host of unsustainable business methods. I find special irony in noting that one major publisher has acquired an LPO business and is selling process improvement to lawyers while its print publishing operation is guilty generating some of the back office inefficiencies afflicting law firm libraries.

While publishers have made enormous strides in making vast stores of digital content available, we still remain tethered to print publications due to a combination of generational and research style preferences, as well as technical and cost considerations. The administrative overhead generated by acquisitions and management on print resources (space, filing, claiming, invoice coding and processing) cries out for reinvention or elimination.

Let's take a look at a few of the opportunities for “vendor sourcing”:

Loose-leaf filing. Have you looked at what you are paying for the filing of loose-leaf updates and wondered by human beings are still engaged in this activity? What could possibly explain the survival of this costly and mind numbing 19th century process in the 21st Century? Would publishers still be supporting this model if we shifted the cost of the loose-leaf filers back to them? Maybe we should consider calculating the cost of maintaining each title and deduct that amount from the invoice price to be paid. E-books have existed for decades as an experiment and novelty in legal publishing - but only a handful of core legal titles are available for the growing army of Ipad toting lawyers. We are clearly reaching a watershed moment of opportunity for both publishers and law librarians to develop new models for pricing and distribution.

Billing and shipping errors. Several years ago I did a workflow study of my technical processing department. The data showed that one week of staff time was spent each month on resolving billing and ordering issues. What does this statistic suggest about the scale of inefficiency tolerated by publishers in their own organizations? A cost which is no doubt passed on to us as price increases! For years I have wondered by we don’t charge vendors for the cost of the staff time spent resolving, billing, shipping and claiming errors.

Bill processing and coding. Even when there is no error in the bill, the routine process of managing and coding invoices is an enormous undertaking. Law firm practice groups are now organized into financial business units and costs are no longer lumped into a single library budget. Managing and assessing practice group expenditures requires the repeated coding of thousands of invoices with numerous general ledger permutations for each office and practice group. More than a decade ago when a major publisher launched a customer “dashboard” for managing acquisitions and subscriptions, (which I applauded) I suggested that they allow customers to enter our general ledger and practice group codes for each publication in the dashboard so the invoices would arrive “pre-coded.” This would eliminate the repetitive re-coding every time an invoice was received. I am still waiting.

I was initially skeptical of the “flat fee print” LMA contracts which publishers offered to make pricing more predictable. I now believe that their greatest value may lie in elimination of paperwork and staff time spent processing hundreds of invoices. I have now successfully negotiated for two major vendors to provide a pre-coded spreadsheet from which we can upload all billing and general ledger details for our annual subscriptions. I have yet to see this embraced as an industry standard.

Forced bundling of print and digital content. I regard this as one of the most outrageous practices by publishers because it completely disregards the right of the law firm to manage its own resources and work flow. It is also decidedly not “green.” Years ago when a major publisher refused to let the firm cancel a loose-leaf serial publication that was no longer needed, my staff arranged to have the weekly updates shipped to the vendor’s sales rep (who sympathized with our position although his employer did not). Why should my staff have to continually handle and dispose of unnecessary updates? But the more troubling implication was that the vendor was so “fat and happy” they preferred to continue printing and shipping things that were destined for the landfill “at birth.”

The American Association of Law Libraries will be hosting a colloquium with the major legal publishers. Let us hope the discussion goes beyond nibbling around the edges of the old problems and someone actually "moves the cheese" into the 21st Century.

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