“AOL reported that the solutions provided by DataCert save the global web services giant $7.33 million within the first year of implementation,” explains an item in Met. Corp. Counsel, Vol. 16, June 2008 at 52
The source for this statement is a case study on DataCert’s website. It offers some details, four parts of which (A-D) I will discuss. “During its first year using DataCert’s AIMS technology, AOL billed approximately $33.8 million in legal invoices. Since implementing the solution [A], the Internet company has identified nearly $4.35 million in invoice entries that were either outside of its billing guidelines [B] or which had been billed to the wrong matter [C]. AIMS also enabled the legal department to realize and track nearly $3 million in negotiated rate, early pay, and other discounts [D].”
A. I assume this means in the first 12 months, but the first two sentences leave some ambiguity.
B. The idea represented by “outside its billing guidelines” could have been stated more clearly. If it means, “AOL wrote them off and didn’t pay them” then there are savings. If it means something else, such as that the law firms adjusted their bills and resubmitted them, then we can’t know the ultimate economic result.
C. If the law firm eventually bills the time to the right matter, there is no savings by AOL.
D. Would AOL not have done negotiated rates, prompt payment discounts, and other discounts without the software? To the degree that the department would have done so, how can you attribute savings to it?
I applaud the effort to calculate savings, but as my questions indicate, return-on-investment calculations are notorious for interpreting figures to reach a desirable result.