Monday, December 18, 2006 6:29 PM
Picking up where I left off last Friday, when I suggested that Sharepoint will ultimately be the dominant document management system at law firms...
By my reading, Microsoft has deployed Sharepoint as a fairly generic platform with limited focus on customizing it for specific business verticals. The customization is being left largely to third parties; third parties I believe are appearing in the legal vertical. These third parties could ultimately move beyond building custom Sharepoint web parts for legal to customizing the DMS to specifically meet the needs of law firms and lawyers. These companies may be the same names we are all familiar with (Interwoven, Hummingbird/Open Text, Worldox, etc.) or they may be totally new companies.
While there could be a significant cost for DMS customizations, as the installed base of Sharepoint legal customers continues to grow, the economics begin to make sense.
As I mentioned earlier, other mid to long-term challenges for the current dominant players in the legal DMS space going forward will be simply keeping up with Microsoft's research and development and coping with Microsoft's innate advantages as the holder of dominant marketshares in other law firm software product categories. For example, Sharepoint's features and functions can be built using 'in-house' knowledge to simply work well, out-of-the-box, with Microsoft products like Outlook, Word and Internet Explorer. Conversely, third parties often have to rework their applications to integrate with these same products, something we have seen already among the major DMS competitors (e.g., Outlook integration).
Microsoft's dominant Office marketshare is unlikely to change in the near to mid-term. Thus, it is not a reach to suggest that the Sharepoint DMS competitors will have to keep pumping money into their products, both to make them work well with dominant Microsoft products, and to continue to keep innovating at a pace at least reasonably close to Microsoft. And, with the expected growth of concepts such as software as a service and the web as a platform, this innovation may be no small matter in terms of dollars and resources.
A nagging question in the back of my mind is whether these competitors, most of which serve other verticals beyond legal, will see the best possible return for each invested R & D dollar serving the legal space if they have to continually enhance and build ground-up solutions to compete with Sharepoint and its DMS. Especially, when considering that Microsoft certainly is not going to sit still and can be expected to continue its R & D investments. It may be that those R & D dollars offer a better return on investment in other areas of their product lineup or in verticals beyond legal.
In the end, perhaps my suspicions for the long-term are unfounded and I will be proven wrong. But, I just can't help but think not. Sharepoint will be the dominant DMS at law firms. Nothing happens overnight in the legal vertical, but check back in ten years, more or less, and we shall see.