Over the past 5 years, general counsel have become increasingly aware of the need for the corporate legal department to steward an enterprise contract management business process. The previously "federated" approach to ownership of the process meant that groups like legal, procurement, finance, marketing, sales, etc., all were involved in "contracting" at some level, but this also meant that no one owned the management and optimization of the contracting business process across the entire company. This awareness has translated into a trend of the office of general counsel taking over administrative control of the enterprise contract management business process in order to properly manage risk and value for the company.
Among the key developments that are part of this trend is that contract lifecycle management (CLM) technology has become an important factor in enabling an efficient and effective business process. One of the biggest appeals of this automation is that the previously distributed and uncontrolled process of contract creation, negotiation and approval can get more structure and standardization. With this, comes consistency and therefore more risk control. What has not, until late, become of paramount importance as part of this technology enablement effort, is the establishment of a deliberate "source of truth" of all material obligations in the repository of the contract management system.Continue reading >>
In the past, Supplier Information Management (SIM) systems have focused on, well, managing supplier information. They kept everything in one place and made supplier data available to those who needed it. But that’s essentially where it ended. And that old SIM method is no longer enough.
Sourcing is increasingly complex, forced to satisfy a growing number of regulations and strict compliance requirements, in addition to constant directives from executives to trim waste wherever possible. As a recent Spend Matters™ paper points out (you can download it for free here), the problem with SIM platforms is that they’re often disconnected from the overall sourcing process. They take an exclusively data-management approach that overlooks crucial analysis factors, which can heavily impact an enterprise’s bottom line.Continue reading >>
As I was looking through some industry stories recently, I came across this report of a ski resort in Park City, Utah, that lost its lease on land it had held since the 1970s due to a data management oversight. Had the contract been renewed according to standard procedure, there never would have been an issue. Unfortunately, because of poor data management, no one knew the lease was coming up for renewal; and by the time they realized the deadline had passed, the landowner was already looking for new tenants.
The Park City debacle is exactly the kind of situation that legal departments are there to avoid. The legal department's ultimate goal is to keep the company out of court to begin with – and if they do end up in court, they want to be sure that their side wins. This got me thinking about how effective CLM methods help businesses avoid litigation and access the information they need to win if a contract does end up in court. Legal departments need tools that allow them to gain visibility into data and proactively respond to risk, litigation, investigations, and compliance requirements. Effective use of CLM software can provide that visibility.Continue reading >>
In a recent post, Getting clarity for building a holistic approach to Procurement technology, we looked to address the challenge of the terms often used to describe procurement technology. Even the other day our sales team encountered a client RFP that asked us to elaborate our capabilities of RFx and auctions in the context of eProcurement. What? The initial reaction was that RFx and auctions are a part of eSourcing, not eProcurement.
Based on this example, and hundreds of others out there, it's clear no consistency exists for using terms like eSourcing, eProcurement, or ePurchasing. Hence, one approach posited in the earlier post was to provide some transparency by breaking down the source-to-pay process into two core parts – upstream and downstream.
While not new terms to most in procurement technology and used by some technology providers for years, they perhaps provides the easiest and simplest way to conceive of the processes that encompass the complete "source-to-pay" cycle without getting bogged down with e-anything. And what’s interesting, the upstream / downstream concept is not unique to procurement.Continue reading >>
For too long the legal department has been seen as something of a necessary evil within an enterprise: vital in keeping the company out of court or at least on the winning side of legal battles, but unable to add much value beyond those duties. This attitude, however, is changing. Increasingly, legal departments are contributing more and even becoming zero-cost centers by streamlining operations, uncovering and inventing new revenue streams, and participating more fully in the enterprise’s overall strategy.
Here are three ways to make your legal department a more valuable part of the enterprise as a whole...Continue reading >>
In his recent book Global Supply Chain Ecosystems, Mark Millar wrote, "…today's supply chains encompass complex webs of interdependencies, frequently spanning the globe, designed and deployed to optimize critical attributes – such as speed, agility, and resilience – that drive competitive advantage."
His point plays out on a daily basis through the contract management strategies and practices in many organizations. Because our supply chains are no longer linear or consecutive, we may be buying from and selling to the same company at the same time. This puts our organization in the role of being simultaneously both buyer and supplier.Continue reading >>
At the IACCM Europe conference last July, two out of three participants said that their companies lacked a clear, consistent workflow for contracting. Meanwhile, there was wide variation among business units in how workflow was defined. Organizations with effective contract workflow management, however, are achieving superior business results, while those without it too often lose revenue and valuable cycle time during the contracting process.
The IACCM has outlined some of the pitfalls that can arise when contracting workflow isn't well-defined or managed. Primary among these is a lack of clarity about the scope and goals of a contract, which can lead to wasted time, increased risk and, at worst, legal disputes. Combine this with the competitive exposure of protracted negotiations and the poor handling of post-award contract lifecycle management, and your contracts could lose an average 9.2% in value.Continue reading >>
"Big data" and "analytics" are the buzzwords of the day. Or as our friends at Ardent more concisely say, visibility". From the solution provider's perspective, the challenge of delivering on the promise of visibility requires plenty of hard work, collaborating with customers and, frankly, a little trial and error. Prioritizing which critical areas to enable is more often than not the key decision a solution provider must make. Which brings me to this article that I found to be an informative asset as we at Selectica continue to build out our analytics solution. Informative to me as an affirmation of procurement's priorities and I expect informative to all those seeking to drive corporate initiatives.
The three findings cited by Ardent Partners in this article clearly lay out a case for investing in visibility so that Procurement can have the INSIGHT it needs to act. Ardent introduces three areas of visibility as leading indicators of a procurement organization that is achieving or tending towards best-in-class performance. Combined, these indicators are a clear road map for success, putting aside whether you are seeking to be best in class or not.Continue reading >>
It's not news that enterprises are dealing with more contracts and more complexity than ever before. Increasing numbers of stakeholders have skin in the game and creating, executing, and managing contracts plays a crucial role in ensuring a company's profitability. There are plenty of news stories about legal and financial risk involved when contracts are poorly managed.
Yes, contracts can make all the wrong headlines if not properly managed and monitored, as last year's story about Walgreen's botched financial forecast makes clear. The company failed to factor in an upcoming change in the price of generic drugs it sells under long-term contract, and its initial earnings projection was over a billion dollars too high. How did that happen? And how can enterprises avoid these contract fiascos?Continue reading >>
It is the worst question Procurement ever faces. C'mon – you know what question I'm talking about. That horrible, terrible question from Finance for which there is no good answer…
If procurement worked so hard and saved all of this money, WHERE IS IT?Continue reading >>