CPO Shop Talk (SAP Procurement Summit): Contract Management (1) Deployment (2) Feedback (3) Supply Risk

Last week brought me to Palo Alto to present the keynote at SAP’s Procurement Summit West, an event that SAP‘s SRM/Procurement team uses to bring its customers together for networking and the sharing of best practices as well as an opportunity to communicate its solution strategy and roadmap. We’ll focus on one enterprise’s experiences with a contract management solution.

1 – Contract Management Deployment Best Practices

The first and most interactive client presentation at the Summit was delivered by the Director of Sourcing at a Large Media Company. This company deployed SAP’s Contract Lifecycle Management solution as a standalone solution for more than 300 users, selecting it over other providers for functionality and integration reasons. His top recommendations for deploying a contracts solution include

• Value the contracts skill set – since few resources within an enterprise understand the contracting process very well, make sure to leverage as much of their knowledge as possible.
• Legacy contract migration is not an IT project – legal or paralegal resources can be extraordinarily valuable in this process
• Sourcing AND Legal participation is a must for success – This team had a Steering Committee manned by the VP of IT, EVP of Sourcing, and VP of Legal. The Operating Committee and project team also had resources from sourcing and legal.
• Use your system workflow – If the Contract Management solution offers robust and flexible workflow, use it. Make sure to build it into your processes from the start.
• Use of clauses versus templates – Define a balanced and practical approach in collaboration with your sourcing category team and legal.

2 – Contract Management Early Feedback

Although still in the early days following its launch, the team has heard very positive feedback from different constituencies –

Legal – “We should have had this years ago.” The legal team also finds the audit trail very helpful for court cases

Sourcing – This team was the most resistant to a Contract Management solution being deployed. Now their feedback is “we have one place to get all our active contract.” The sourcing team values the ability to track contract leakage and the ad-hoc workflow keeps the process moving without causing delays.

Business – “If the sourcing owner moves, our contracts are easy to find.” This constituency sees great value in having all contracts, historical pricing, and T’s & C’s in one place. As a bonus, one group will also be able to leverage the current SAP system for a planned royalty management project.

3 – Contracts and Supply Risk

When the earthquake/tsunami/meltdown hit Japan, this company knew that it had a certain level of exposure in several key business areas. With the new contract management system in place, the CPO’s team was able to pull together a report that detailed all of the different areas of the business that were exposed to Japan and were able to work with the business to develop a risk assessment and mitigation plan. Something that could have taken weeks in the past, took a few days because of an automated contract management system.

Contract visibility saved time and helped the business make smart decisions in a period of dramatic uncertainty. It is hard to build an unexpected need like this into a formal business case, but it is another very real example of how valuable contract visibility truly is. Groups struggling with manual contracts should keep this example at their fingertips.

RELATED TOPICS