20. Accelerating
B S Sales Through
Better
Contracting
From reactive to
proactive capability
Tim Cummins
CEO, IACCM
21. Contracting Capability Is a Source
of Competitive Advantage
• Contracts are core business assets. The faster we win
them and the better we perform against them, the
greater the value of our business.
22. Competition Speed of
change
Regulation
Shifting
supply
Complexity
base
Technology
Financial
Increased pressures
Globalisation
scrutiny
25. Create a Framework for Success
Indicator Time Cost Defects
Mutual objectives 8 7 4
Gain and pain sharing 2 9 8
Trust 10 6 2
No-blame culture 4 3 6
Joint working 1 10 3
Communication 9 1 5
Problem-solving 6 5 1
Risk allocation 3 2 7
Performance measurement 7 4 9
Continuous improvement 4 8 10
Source: Int’l Journal of Project Management, Issue 30, Vol. 2, 2012
26. Accelerate Decision-Making
Risk index exists for each contract type:
Working
Penalties Liability Scope General
Capital
Content and weightings based on previous margin impact in
legacy contracts.
CONTRACT TERMS RISK INDEX
Working Capital Penalties Liability Scope General TOTAL
[XX]% [XX]% [XX]% [XX]% [XX]% [XX]%
27. Proactive Commercial Management
Contract Risk Index - Product/Service Areas
• In-depth knowledge of risk 70%
within/across categories
60%
50%
40%
Product/Service Area A
• Defines future negotiation 30%
Product/Service Area B
strategies
20%
10%
0%
Scope Working Capital Penalties Liability General
• Defines post-sales Customer Contract A
mitigation strategies 100%
80%
Initial Customer
Requirement
•
60%
Provides a dynamic view 40%
Negotiated
Position
of customer’s changing 20%
requirements 0%
Scope Working Penalties Liability General
Capital
28. Drive Improvements through
Benchmarking Sales and Customer Owned
Support Team Owned
Sales and Customer Owned
*will involve Support Team and/or
Avg Customer Contract Cycle Time* = 30 calendar days Legal if rework is requested
July, 2011 – December, 2011
Generate Initial
AFTER Draft Document Internal Approval
Negotiation and Draft Signature
Understand Customer Rework
Needs/ Develop Deal
41% 13% 36% 4% 6%
Avg Customer Contract Cycle Time* = 41 calendar days
January, 2010 – June, 2011
BEFORE Generate Initial
Draft Document Internal Approval
Understand Customer
Needs/ Develop Deal Signature
Negotiation and Draft Rework
25% 6% 56% 5% 8%
0% 100%
50%
29. What is the average cycle time from the initiation of the bid to contract
signature for each contract type (in weeks) Domestic contracts?
Sell Side Buy Side
Low complexity
0-25% 4 or less 4 or less
25-50% 4 or less 4 or less
50-75% 5 5
75-100% 8 8
Medium Complexity
0-25% 5 5
25-50% 8 7
50-75% 9 11
75-100% 19 16
High Complexity
0-25% 10 8
25-50% 17 15
50-75% 21+ 19
75-100% 21+ 21+
30. What are the major improvement initiatives
that are being observed or considered in
your organization? (Sell side)
Adoption of Contract Management… 64%
Development of term and contract… 45%
Skills development, certification 34%
Increassed role in risk management /… 32%
Role to be expanded 30%
Knowledge management systems 25%
Relationship segmentation, strategy 16%
Revised measurement systems 16%
Growing awareness and use of external… 15%
Organizational change 14%
0% 10% 20% 30% 40% 50% 60% 70%
There is significant data that shows how automating contract management processes and data can benefit a company. Point solutions aren’t good enough however. This table illustrates the step change increase in capabilities for various contracting functional requirements in moving from a contract management automation solution to one that is integrated with a CRM system. The significant increase in Process Management isn’t all that surprising…integrating two formerly disconnected processes will have a positive process impact. But look at the significant increase in opportunity management, security, and fulfillment. Have you ever had a contract automatically renew that you wanted an opportunity to re-sell? A business case for a solution could be built on better renewal management alone.
