How to transform raw data into useful management information

No businesses can succeed without timely and accurate management information. This is particularly true for law firms. Legal sector changes, such as the trend towards disaggregated legal services and fixed fee billing, have only increased management information requirements.

Law firms have always been good at recording raw data. But how do you take that raw data, and turn it into useful management information that enables you to make good business decisions?

What is the difference between raw data and management information?

A dictionary definition of data is “facts and statistics collected together for reference or analysis”. Data alone cannot help law firm managers to make decisions. Indeed, too much data can often distract from a manager’s decision-making process.

Data is only as valuable as the information and insight we can extract from it to help us make better decisions. So, in order to be useful, data must be converted into management information.

Management information is, quite simply, information that can be used to support decision-making by managers. Business intelligence is a term generally used for the set of techniques and tools for the transformation of raw data into meaningful and useful information for business analysis purposes.

Interestingly, BBC Bitesize has a great section for teaching teenagers the difference between data and information, yet there remains confusion about this concept among many adults, even within finance and IT professions.

Here are three examples of key differences between raw data and management information:

Raw DataManagement Information
Fees delivered value per bill
  1. Rolling 12 month trend of fees delivered
  2. Comparison of fees delivered between departments
Value of time recorded
  1. % of fee earner time spent on chargeable activities
  2. Number of fee earners who missed target hours in a month
Number of matters opened + fee estimate per matter
  1. Estimated value of new business per month / year
  2. 3 year trend of total estimated caseload value

(1) Choose the right management information to report on

Good management information should both encourage desired actions and highlight potential problems and risks. This should be the acid test when choosing the right management information to report on.

Ralph M Stair’s book gives a good definition of “valuable information” in his book, Principles of Information Systems:

  • Accurate. Accurate information is free from error.
  • Complete. Complete information contains all of the important facts.
  • Economical. Information should be relatively inexpensive to produce.
  • Flexible. Flexible information can be used for a variety of purposes, not just one.
  • Reliable. Reliable information is dependable information.
  • Relevant. Relevant information is important to the decision-maker.
  • Simple. Information should be simple to find and understand.
  • Timely. Timely information is readily available when needed.
  • Verifiable. Verifiable information can be checked to make sure it is accurate.

This list is equally valid for good quality management information.

All law firms record similar kinds of data, but the management information they require differs, according to their business objectives. Choosing the right management information to report upon is crucial.

(2) Combine your raw data with your business rules and context

Creating good management information involves incorporating your raw data with your business rules in the context of your organisation.

As an equation: Management information = Raw Data + Business Rules + Context

Your business rules relate to how your particular business chooses to interpret your data and statistics. So for example, your business rules might be:

  • How departments are organised – are your departments collections of individuals, or are they service areas, which may call on the resources of individuals from many nominal “departments”?
  • The formula you use to use to calculate lock-up days
  • Your definition of net fees – ie is this including or excluding write offs?

Armed with your list of business rules, you then need to consider your business context, which takes us onto the next point.

(3) Decide who needs to know what, and find out when they need it 

To be useful, management information needs to provide insight. To provide insight, it needs to be directed to individuals with the appropriate background knowledge. This kind of context will only be known by you or others in your organisation at departmental and individual level. Put simply: who needs what? And when do they need it? Consultation with all departments is crucial to get this right.

(4) Decide how best to display the information

Everyone’s needs are different, but my experience is that there is a lot of common ground in how law firm managers prefer to receive information. I would advise the following basic techniques for data transformation in a law firm:

  • Use appropriate graphical displays. As a generalisation, most lawyers are more comfortable with pictures than tables of numbers.
  • Ensure consistency. If drill-downs don’t add up to summaries, or if the same measure is defined in two different ways in two different places, users lose confidence in the information.
  • Communicate business rules and context. A basic ground rule for good communication is ensuring everyone is working to the same definitions and aims. Make sure everyone understands the business rules and the context used. This then increases confidence in the information.
  • Don’t overload individuals with information. Information presented to any one individual should be 100% relevant: provide only that which is required to enable them to perform their role and meet or exceed expectations. Anything additional will simply waste their time.

(5) Build a good management information system

The conversion of raw data to management information should not be an arduous manual task. Management information systems should be designed to automatically transform raw data into meaningful and useful management information – and deliver it to the right person at the right time.

If you have followed the steps above, you should be armed with all the key information you need to build an effective management information system that does all the hard work for you.

Our Katchr management information software has been developed over a number of years to meet the specific business needs of law firms. Our off-the-shelf version already takes into account the things that all law firms are interested in. But a key part of the process we go through with our clients involves tailoring the software for implementation at their individual firm. We consult with clients to understand their business rules and objectives, and then tailor the software to report to their specific requirements.

Typical tailoring requests cover business rules such as how departments are organised, the different formulas and calculations used to interrogate the data and deliver the right management information for each client.

If you’d like to discuss how management information systems could help your law practice to run more efficiently and profitably, please contact us by email or call 03333 010 766

You can also contact me on LinkedIn and Twitter: @KatchrData


This blog post was written by Graham Moore, Managing Director of Katchr

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