The Intelligence of Business Intelligence

Business intelligence is essentially a decision support system in which data are stored, grouped, and analyzed to help provide useful information to the consumer. In other words, it provides a way to turn the billions of pieces of swarming data into organized information and then to turn that information into intelligence to help make good decisions. In the course of doing business, every law firm generates and tracks massive amounts of data, be it in a time and billing system, general ledger accounts, payroll, etc. Structuring those data into a meaningful framework allows a law firm to sift through a large amount of statistics to analyze and answer important business questions.

Law firms have always used some form of financial analysis in their business, whether it be simple reporting of Profit/Loss statements, or, more infrequently, advanced analysis using complex algorithms to tackle specific problems. Until recently, though, the practice of business intelligence was primarily academic. Those firms that had spent the energy and resources to set up the needed technology largely viewed it as a pet project rather than a strategic initiative. The information generated was used when expedient and ignored when inconvenient for firm leaders. Today, as the pendulum of purchasing power swings back in favor of clients, law firms are beginning to understand that the historical twin drivers of increasing rates and hours have limits, and an in-depth understanding of their other business drivers is needed.