Editor’s Note: The following post can best be described as my notes “on the fly” based on listening to the SciQuest – IACCM Webinar titled “Contract Management Success: The Secret Sauce.”
As you read through them please keep in mind that they are for the most part spontaneous and unedited – something that I wanted to do as it reflects my reaction to what was being presented. I would of course encourage you to access the on-demand version of this webinar to fill in the proverbial blanks, however, this should give you at least a reference point to the theme and direction of the discussion.
So here I am waiting for the SciQuest “Secret Sauce” webinar to start and I have to admit that I am going to do everything I can to have an open mind in terms of what is being presented.
The challenge, and has highlighted in my recent posts on SciQuest, is that I cannot help but wonder how we could put any stock in the company’s purported expertise, especially given their most recent set-backs in Oregon and Colorado. Perhaps this is a “those who can do, those who can’t teach scenario . . .
Anyway, here we go . . .
Great underpinning message . . . where are common areas of value erosion . . .
The more challenging the task, the more potential for something to go wrong . . .
Markets are maturing . . . buyers have moved from the world where the responsibility for outcomes or performance is born by one party to a world where outcome responsibility is shared between all stakeholders . . . there is a reshaping of contracts . . . they should refer to Andy Akrouche’s model and book (Relationships First: The New Paradigm in Contract Management).
What drives contention? Refer to Slide 4 . . . what about dishonesty at the top re stakeholders lie to one another. Why didn’t Tim mention his post on this . . .
Scope . . .
Change Management Myth . . . what is the difference between change and adaptability . . . Tim also talks about governance . . . again they should refer to Akrouche especially as it relates to a single point of truth.
Cost overruns . . . UK government Serco reference by Tim . . . he should mention that cost overruns and Serco-type problems are managed when you abandon a static pricing model and create a Relationship Charter that enables stakeholders to adapt to changing realities from both an execution and cost standpoint.
Progress reviews . . . again why not reference Akrouche’s model.
All good points being raised by Tim re challenges . . .
Where probable risk occurs is usually based on an unclear scope . . . a lack of communication . . . while Tim talked about managing risk based on past experience, he misses the point as it relates to unforeseen risk especially in areas of FutureSourcing (refer to page 46 Akrouche’s book), where neither the buyer nor the supplier have any prior experience . . .
Once again, driving shared resolution is based upon having a solid Relationship Charter . . . perhaps this is what Tim is referring to when he talks about a “risk registry.”
Cultural and behavioral fit . . . is key . . . this is where a proper industry analysis comes into play. Why doesn’t he talk more about industry analysis models as automating a contract management process when the wrong partners are involved is useless. It’s like asking your plow horse to win the Triple Crown . . .
SciQuest comment . . . it’s (re Tim’s information) is “really good stuff?!?” Stuff . . . now there’s a term to use when describing complex relationship contracting . . .
SciQuest is promoting an automation response to the problems referenced by Tim . . . they need to emphasize that technology does not replace or overcome the need for a sound Relationship Charter. Emphasis by SciQuest placed on redlining re track changes in Word doesn’t work but instead you need a real document comparison tool . . . great, but what if the terms and conditions are not aligned to the shared outcome to which Tim referred.
Tim failed to tie-in the link to automation . . . re having a good tool to measure contract performance means little if the performance metrics are not properly structured and managed on a real-time basis . . .
Wrap up by Tim . . . why the ROI question is fundamental . . . achieved through a portfolio-based view . . . the key is to understand value erosion . . . 27% of all contracts or $3 billion per year are under-performing according to Tim, and is attributable to poor contract management . . . Tim indicates the need for automation to better manage contracts.
I asked the following question . . . how does automation address the point you raised in your post about lying at the top? Specifically, your comment that “the ‘conspiracy’ that leads executives on both sides of the table to ‘lie’ to their trading partners and to create a combined version of ‘the truth’ that leads to mutual delusion over what they can achieve, by when and for how much.”
Governance and choosing the right partners are a major reason why contracts run off the rails per Tim . . . it is critical to recreate a single point of truth and thus avoid the blame game re cost overruns etc.
Is contract management for a project different from a program . . . SciQuest response was that contract management could be different for a project versus a program . . . did not really say anything.
Tim passed on my question because it is too big to address during the webinar, but he (being Tim) will come back to me personally (refer to Tim’s response in the comment section below).
Final comment; Parent – Child contracts . . . interesting final point by SciQuest . . . are the challenges the same as they are with the Parent – Child SKU scenario? This is definitely a post for another day.
Summary . . . while IACCM’s Cummins’ provided an reasonably solid overview of the challenges relating to contract management, the fact is that you could have plugged any vendor into the SciQuest part. The real question that remains is one of automation’s role in addressing said challenges.
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Procurement Insights 
tcummins
October 1, 2013
Jon
an interesting set of observations!
With regard to your original question, i doubt technology has any substantive role in addressing the ‘culture of optimism’ that I addressed in the 2010 blog. Indeed, that issue is typically most evident in the disagreements over scope and goals that we covered in detail during the webinar.
More broadly, i welcome the endorsement that you – and Andy Akrouche – offer with regard to IACCM’s extensive research and development of relational contracting methods. As you observe, the techniques we identified during he webinar are gaining considerable traction. IACCM is working with many corporations and national Governments on implementation.
Overall, there is no doubt that technology has a major role to play in driving improved performance and value from contract management. As with any solution, customers need to be clear about their requirements and exercise diligence in their selection process.
Thanks for your lively contribution!
Tim
piblogger
October 1, 2013
Thank you as always for your comments Tim.
In light of the relational paradigm shift in terms of contracting you should probably list Akrouche’s book on your website as required reading given that his 20 plus years of developing and implementing his model compliments what IACCM is attempting to do relative to present day private and public sector requirements.