You said hundreds of contracts hardcopy. I suggest first sort them out by year and status. Are they already closed? History? active? and check with your records management department for how long you have to keep them ( normally 10 years) and then decide which ones can be archived and which cannot (example the ones that have a pending claim). Then sort them out by project, or by year or by contractor, whatever makes more sense and it is more practical for your organization. Make sure you label them properly and create a log of them. Good luck.
• tech updates
Customer contract management software are programs designed to manage contracts in an organization correctly. Customer contract management software just like other programs they have different creators, below is a list of the best customer contract management software.
It's a very interesting - and of course not uncommon - situation. I'll offer a few immediate thoughts and hope others add to them. I'll also be pleased to have a direct discussion to gather more details.
First, think about your customer's perspective. The situation you outline is unlikely to be unusual (though see what data you can find on whether your situation is typical in their other software relationships). Also explore their past experiences with your company and whether they have had problems or positive experiences in the past. Naturally they want to contain costs and most customers have experienced 'opportunistic' suppliers who try to push up prices post-award. So you need to build their confidence that you are operating with integrity and that any increases are fair and reasonable.
1) in doing your analysis, make sure you look for areas where changes may have occurred that actually benefit the customer. When scope changes, it is rarely all one way. By having a few trades that benefit your customer, you show your objectivity.
2) is the customer's problem that they want no increase, a smaller increase or (perhaps) a short term budget issue? For example, might additional charges be more acceptable if they can be slipped into the next budget year?
3) do you have a record of 'goodwill' examples - past situations where you have given concessions and value-add to the customer?
4) what mechanisms or measures can you offer to show the customer that proposed additional charges are reasonable and in line with market norms?
5) might there be an opportunity to change the way services are defined or delivered? Very often, SoWs and SLAs are created in ways that reduce supplier flexibility in HOW they are delivered, thus pushing up costs. Could you identify cheaper, better ways to deliver the services? Do they actually need current service levels? Are the KPIs the right ones?
As a negotiating strategy, I would be approaching this in a conciliatory fashion, highlighting how the speed of change in markets make it very difficult to establish precise requirements and therefore periodic renegotiation is normal. Hopefully, the ideas above then give you a context for how the customer is felling and some items of value that you can offer, such that they feel you are a fair and reasonable partner.
Thank you Tim. Your response is helpful. I have taken note of your suggestions. I may further approach for discussion.
I think I would try to focus on increased value rather that what the price per man day or intervention should be. The customer is asking for extra efforts, but the objective must be to achieve extra benefit for customer, not extra suffering on your side. Steering the discussion towards his benefit and a reasonable price versus the benefit he perceives may unlock a stalemate
City of Bloomington (Illinois)
We will highlight your question to members from public sector to see what experiences they can share.
actualmente estamos usando el sistema de ACONEX, para la gestion de documentos y brinda una gran transparencia y efectividad, no estoy seguro si pueda adaptarse para la administracion de contratacion, pero si se puede garantizar la proteccion de la documentacion
Sharon, the sort of functionality you mention would commonly be available through contract or project management software. It may be that you could use existing tools within your business - for example Sharepoint or Office365. Otherwise, your choices rather depend on the volume of agreements, their complexity and the budget you have available.
I will have a member of the IACCM team follow up with you to better understand your needs.
• BCS Global Networks Ltd.
Hello Sharon, I had fairly good experiences with Sharepoint a few years back. My current employer uses Salesforce, but other than the time within which we are processing orders, I don't believe other performance indicators are measurable. Haven't looked at Office365 but look forward to further input from the IACCM team.
I am looking at salesforce as I used this in my last job. At present its all manual work to pull a performance report together.
• BCS Global Networks Ltd.
the last company I worked for began using Salesforce as their contract repository tool; however, everything is manual labour and contracts admin personnel needs to manually enter very basic data such as Effective Data, Expiration Date, whether the contract auto-renews, and whether a termination fee applies in the event. All this is very rudimentary information and barely sufficient for effective contract management. A lot of other information in the contract cannot be managed via Salesforce unless the tool undergoes significant reconfiguration efforts. This is a costly undertaking a company which is already using Salesforce is less likely wanting to invest in.
Leaving aside that I would also have concerns around Confidentiality if a company begins uploading the entire agreement into Salesforce.
I'm in a similar situation. Last year, I was given a new position that had never been handled before. All of the spend had been previously managed by different departments and associates within those departments. It's hard to talk people into giving over power that they've always had. I decided to approach it one bite at a time.
Find someone willing to let me help but don't push. Tell them you're free help and you just want to help make their lives easier. Once you can get a couple wins under your belt, more and more people will be willing to let you help them.
Hope this helps.
It´s a good point the one you have raised, and I am happy to read from our colleague who is in a similar situation as the one you have described.
He has recommended to find someone willing to help, without pushing and being available to make their jobs easier.
And I personally believe this is one of the responses to your point: we need to generate the certainty that Contract Management really matters and, according to IACCM findings and experience, create in Top Management the said awareness. Many IACCM corporate members have already succesfully proceeded like this!
I can bring some articles posted in our IACCM library which might me helpful, such as Kate Rodriguez' 'Top CEO Describe their perfect employee' (www2.iaccm.com/resources/ or the article from Wharton School of Management in response to the question 'What makes team work effectively?' (www2.iaccm.com/resources/ and/or this post in our IACCM library related to 'How the top innovators keep winning' (www2.iaccm.com/resources/.
However, I believe that the way to convince Top Management and other stakeholders of the contracing process so that 'business does no longer say NO' as you described, is by following the key messages resulting from Tim Cummins and Sally Hughes´remarks in our IACCM Americas conference 2016 (now that our 2017 conference in Toronto is around the corner):
Tim and Sally confirmed the speed with which contract and commercial management are transforming as business disciplines and in the value they are providing. Refer to this entry where you will find some ideas, examples and case studies regarding the critical importance of contracts in the business, taken by Tim and Sally after the conference: www2.iaccm.com/resources/;
Hope this helps and feel free to connect with me! Best regards,
• Nova Systems
I feel your pain. i am the first Commercial Manager at my company having come from a major prime. The difference for me is that i had support from my CEO to develop a Culture of Commerciality. Therein i Think lies the "secret sauce" - to develop a champion at the C suite level. You are on the right track by getting involved and just being helpful. When they work out that you can save them work then even engineers will come around!
Also good to remember you are there for a marathon not a sprint. It can be frustrating with some old die hards but stay at it.
just so you know i am the Community Lead for the Small Business and Start Up Group where other members face similar issues. Even thought you are from a large company you would be welcome join and see if others can assist.
Finally i am speaking at the IACCM Australian conference in a week on Developing a Culture of Commerciality. if you can't attend you can get the paper from the website.
Otherwise if you just want to chew the fat please feel free to contact me .
Good Luck and you will get there.
Reads like the job description in my last three jobs. One of my bosses told me a few years ago that Contract Management has a PR problem. We get a lot of nods along they way but ultimately, revenue focus trumps everything else. And don't get me started on what the Sales reps throw over the fence for others to deal with. Sometimes, one needs to move on, which could mean: seek other opportunities.
Stuart - I am not sure a UAT (assuming this is User Acceptance Test) would fully ensure the KPI's are ideal, as the UAT could potentially only assess whether there will be compliance to sub-optimal KPI's, leading to a sense of reasonableness but not necessarily effectiveness.
So, the ideal approach really needs to rely on a process. If you do not have an end-to-end contracting process the KPI's will usually prove problematic.
Early in the process, before ever approaching the contractor/supplier market, the customer entity needs to identify the overall objectives and goals from the project and related transaction - both from a relationship and contract document perspective. For example, one might identify risk mitigation, or cost leadership, or perhaps cyber-security as the key purpose and objective. Then the customer enterprise must identify the sub-objectives that enable the broader purpose. This all needs to be performed as a team, include those who will be leading the post-award phase. The KPI's need to then be included in the RFx/tender documents, as well as negotiated.
But, it sounds like you do not have the ability to take this steps now. The option that you suggest of a three-month trial period represents a potential solution. Plus, the three months might afford you time to undertake some of the above steps as well.
• Tullow Oil plc
Hi Stuart, just a few of thoughts building on the below - They may not commit to any change of the KPIs as these are often standard for all customers - the below are just observations around the theme that may or may not be useful, and their strength will depend on what the software does, how much you've spent on it, how core to your business is etc.:
1) They'll be most open to discussions when annual maintenance renewal time comes around, as that's when there's normally money on the line - so if the user community can be corralled into speaking with one voice, they could be a powerful ally in helping review whether the KPI's are useful in the first place and then challenging those that aren't
2) Also consider whether there are other potential purchases or expansions into your business - the person who originally sold you the software will probably have some sort of target to sell you more (even if via an audit...), so if it turns out that you can use the opportunity of future sales to sharpen up their performance then that might help
3) My cynicism is that a number of vendors will deliberately sell software that hasn't been fully tested, and then their customers essentially complete the testing through raising support tickets and the supplier improving the software through trial and error. See if the supplier has a user support community where you can compare the number of tickets you're raising vs. others, and whether root causes of any issues that arise are training or software-based
4) Maybe compare the functional specification with performance in reality - given that vendors typically warrant that the software will perform with the documentation, the argument most likely to drive change is more likely to be whether the system isn't performing against spec rather than they're missing KPIs
Hope this is in some way helpful, let me know if there are aspects you'd like to follow up on.
• Toyota Material Handling USA
Stuart, Agree completely with other's comments/ideas posted. Really think the key will be in communicating and documenting your overal objective. It doesn't sound as if you are certain that a clear overall objective has been communicated to your software provider,. If that i truly the case, would get to work on detailing it as soon as possible (at the time of the RFP would be best). Be prepared to have a conversation with the software provider after you're comfortable that the overall objective is clear. It may be that an amendment to the agreement will be needed.
Would also consider creating a process for determining your overal objective prior to your next RFP going out. For example, create a cheat sheet of gemeral key topics to be covered; legal entities to the agreement, key contacts, pricing, payment terms, purpose of the agreement, etc. Find that when a process has been defined and I follow the process everytime, there are fewer of those UhOh moments.
• New Zealand Defence Force (NZDF)
Hi Stuart, All great comments to consider. having been in exactly the same position 1 year ago, these were some of the key lessons learnt.
1) Keep it simple - don't unnecessarily overcomplicate it.
2) Inputs or outputs based KPI's
3) What is your customer's / business key requirements - requires alignment
4) What's more important the KPI's or SLA's (there is a difference)
5) determine if the urgency to get the agreement signed outweighs the importance of fully developing the KPI's/SLAs.
While we don't have the full details, your proposed solution to this can be a way forward and can have teeth; provided you clearly articulate the review criteria in the agreement. But as mentioned before, vendors typically have standard SLA/KPI's and anything bespoke usually costs a premium especially after the fact. So I would urge you depending on the importance of this implementation and the impact on the business, to resolve this before you sign.
• Taystar Inc.
Perhaps this has resolved itself already, but perhaps consider looking at the 10 Pitfalls in the IACCM resources and working WITH the Contractor to identify (perhaps 5) KPIs that relate to the work being undertaken in the first calendar year. Then evolve those based on experience/needed improvements.
It is essential that measurement criteria be established and agreed up-front (documented in a Guide signed by both parties) and that measurement timelines are adhered to. Have experience with payouts against a x% holdback on a periodic basis based on a sliding scale scoring of measurement criteria - (significantly below expectation = full retention of holdback by Owner, significantly above expectation = 1.5 x holdback paid out, on par with expectations = holdback paid out.)
At least agree that some form of Perf Measurement will be undertaken (jointly developed) at the time of signing the contract. Implementation can follow asap thereafter.
• Hewlett-Packard Company
What about asking for some reference customers and reaching out to them?
Have you seen the discussion thread started by Andrew McIntosh on 4 July, which is five threads below? There were responses by Mark Filer and Jim Pearson, which provide insights which might be of value to you.
Although I'm not aware of an existing case study on this topic, however, during my experience of contract negotiation, I have come across such situations and happy to share some tips that I usually apply. Typically, large MNCs or Government institutions like to push their contract templates and are averse to any changes.
During the beginning of the negotiation lay out on what I call the 'ground rules'. Meaning the aim of the negotiation is for both parties to explore solutions to the issues and not have an ego-tussle. The words "No" or "I don't agree" or "It cannot be done" will be used only after exploring all the available legal options. There is always something to bargain, never give away a demand for free, always ask for something in return. Try beginning with smaller issues first. In many common law jurisdictions, entering into a contract by using undue influence make the contract voidable.
The uncontrolled expansion to product or project scope without adjustment to time, cost and resources is referred to as Scope Creep. Scope management Plan can reduce the risk of scope creep.
Disadvantage: Loss of Cost and Time and can derail the Project;
1 Ambiguous scope;
2 Design errors / omissions, lack of material, labor issues, new legislation / regulation, financial issues, environmental issues;
3 Improper Scope management process;
4 Lengthy or tedious Change management process;
5 Lack of proper Monitoring and Control;
6 Too many cooks spoil the broth;
7 Informal meetings with Client / Customer leading to change which is carried out but neither recorded nor approved.
Measures to avoid Scope Creep:
1 Team awareness: Every team member must be aware about importance of Change management process and ill effects of non-adhering to same. Change alert card must be available with every team member in order to highlight the issue in time and conduct periodic meetings of team members;
2 Define Scope, create WBS with well-defined work packages, link them with resources and allocate definite time for same. Monitor progress as per Scope Baseline. Update progress reports periodically.
Monitor progress of individuals / groups and for any shortfalls / delays, ask reasons. Maybe they are carrying out work which is not part of Work Package (Scope Creep) hence even though work is carried out but it does not show any progress as per Scope baseline.
3 Ensure that Project includes all the Work required and only the work required (avoid gold plating) to deliver right solution to the Client / Customer in an efficient and cost effective manner.
• Hewlett-Packard Company
My general thought here is as follows: 1. The contract is only one step, and; 2. an appropriate governance model can be established in detail after the SOW outlining the general governance model is executed.