Evaluating your Digital Maturity & The Legaltech Perspective

Digital Maturity & The Legaltech Perspective

By PracticeLeague, July 15, 2022 | 5 Min Read

What Is Digital Maturity?

Digital Maturity, as per a BCG matrix, is defined as the measure of an organization’s ability to create value through digital transformation. This is a key indicator of success for companies launching digital transformation for legal departments. Businesses that score higher on the Digital Maturity scale gain a clear competitive advantage along with multiple performance indicators –

Why The Need For Digital Maturity?

To put it simply, a more digitally mature organization is more likely to give a better top line and bottom line, and thus a more productive organization. Report after report has borne this out – here, we look at the reports from BCG and Deloitte.

The BCG report finds :

  • The most digitally mature companies are bionic companies- that is, companies that blend technology with human capabilities to transform operations, improve customer experiences & relationships, and develop new offers & businesses.
  • From 2017 to 2020, 40% of the most digitally mature companies grew their revenues by more than 10%, while only 19% of the least digitally mature companies achieved that result.
  • 33% of bionic companies increased total enterprise value by more than 10% while only 15% of digital laggards reported the same.
  • 66% of digitally mature companies saw an ROI of 10% or more on their digital projects while only 36% of digital laggards did the same.
  • Bionic companies were 50% more likely to reach the 10% ROI threshold than the digital laggards on 6 other KPIs – cost reduction, share price increase, market share growth, and three types of EMIT impact.

The Deloitte report adds :

  • 50% of respondents claimed that digital transformation was a central pillar of their strategy.
  • Innovation, Keeping up with change and resilience were the top 3 reasons for digital transformation.
  • 38% of respondents from higher-maturity companies saw a positive impact of digital initiatives as opposed to 27% and 13% from the next two tiers.
  • Digitisation saved average time-to-market by 15% to 20% for a consumer goods major; another organisation grew revenues to over US$1 Billion.

The Legaltech Connection

From the above numbers, we can extrapolate the impact of digitisation and automation on the business enterprise – increased return on investment, growth in revenue, and reduction of average time to market to name a few. The question then comes, what is the impact of Legaltech implementations on these aspects of a business enterprise? Among these, the 3rd is known to be a direct advantage or benefit of a Legaltech implementation, especially a CLM suite, which smoothens processes and thus reduces the time taken in expansions into markets, new products, and onboarding of new partners, etc.

There is also a direct traceable impact on organisational bottom and toplines through Legaltech implementations through improved compliance and reduced risk. This gives operational flexibility to companies, allowing for free resources for more direct business activities. Secondly, better handling of cases through an MMS system, and legal research ensures lesser penalties or higher settlements in case of disputes. Both of these feed directly into a company’s bottom and topline performance.

Digital Maturity and Legaltech

But as we have seen, a digitally mature organisation is about more than just numbers. Not all technology directly adds to numbers – some are value additions that enable a superior transactional experience, some add genuine innovation, while others are needed just for the survival of the company as the competition & customers use and expect them. This is the business landscape that is facing the Legaltech industry.

For this, we have to take into consideration the other 3 factors, namely Cost Efficiency, Product Quality, and Customer Satisfaction. Of these, the last is key for an organisation to be truly digitally mature. The reason is that we live in an increasingly digitised world, where the customers have come to expect a certain level of experience when dealing with any brand they consume – either as individuals or as a collective in an organization format. And a smooth digital interface is now considered de-rigueur, a minimum basic.

Any business transaction that is initiated has a legal document as the base – and in such a digitised world, the experience of executing and managing that document has to be equally digitised. If not, it would create customer dissonance, and dissatisfaction – quite apart from the delays, procedural hassles etc that it would generate for the business. Thus, it can be concluded that digitisation has a direct impact on the customer experience.

The next is cost efficiency – this is where Legaltech comes into its own when implemented in its full Enterprise Legal Management avatar with its entire suite of products on Legaltech. The suite of products helps prevent compliance issues, thereby saving costs through the compliance management software; they help identify potential risk spots, preventing cost overruns, business losses and more through the CLM; they help in effective management of legal expenses and legal cases and so on. Minus these, no organisation can be truly digitally mature, especially in an increasingly higher-regulated world where rules are changing frequently, and consumer activism is growing.

Lastly is the aspect of product quality. One may think that drawing a direct parallel between this and Legaltech is impossible – but deeper thought shows us the way. Legal Technology solutions enable a more nimble, better-adjusted organisation and functions smoothly. This frees managerial time and resources for key business activities. There are other aspects – for example, superior vendor and contract management provide more cost-effective raw materials at standard quality through enforcement and monitoring of the obligations. Hence, the indirect impact of Legaltech even on Product Quality is also traceable.

Conclusion

There are five parameters for judgement that make an organisation digitally mature. These are Revenue, Time to Market, Cost Efficiency, Customer Satisfaction and Product Quality. The above sections explain the direct impact of a digitally mature organization and then go on to trace the links of Legal Technology with each of these parameters in sequence. From that we can draw the conclusion that Legaltech is an essential cog for any organisation to move into the select set of organisations that are counted among those that are truly digitally mature, thus unlocking for them the benefits outlined in this article as given in the relevant sections.

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