On February 7th 2017, SirionLabs conducted a webinar titled “How Vodafone is Building the Future of Commercial Contract Management” in association with the lovely folks at IACCM. The webinar featured Reinhard Plaza-Bartsch, Group Head of Commercial Contract Management at Vodafone, as a guest speaker along with Tim Cummins, CEO of IACCM and Ajay Agrawal, CEO at SirionLabs. You can watch the webinar, access the slides, then scroll down for some of the questions we were asked near the end.
Most organizations view commercial engagements with clients and suppliers as a business priority and make significant investments to ensure success in such relationships. But the complexity in such engagements has steadily increased during the last decade and hence managing them has become quite a challenge for enterprises of all sizes – but especially for the large ones due to the scale of their commercial arrangements. There are several instances of narrow and tactical initiatives executed by organizations to address these challenges that did not go very far. At the same time, there are a few examples where some progressive organizations (such as Vodafone) have implemented strategic programs that have made a transformational impact on the outcome of their commercial engagements with third parties.
One such example is the Commercial Contract Management (CCM) program at Vodafone, which takes a holistic, multi-dimensional approach to addressing the issues that limit the success of commercial engagements.
In this webinar, the architect of Vodafone’s CCM program, Reinhard, talks about how CCM enables Vodafone to effectively manage contractual performance, mitigate risks, minimize value leakage, and foster stronger collaboration and relationships in its supplier engagements. As shared by Reinhard, the journey for CCM started with an obvious yet difficult question – Are we really getting the full value of our contracts? Answer: No. There were several reasons contributing to this – legacy and in-consistent processes due to Vodafone’s growth through acquisitions; multiple systems and tools used across the lifecycle of a contract; limited visibility during the in-life management of the contract, etc.
To address these underlying challenges, the CCM program was constituted with the following objectives:
- Increase sustainable cost savings
- Reduce operational costs
- Manage risk effectively
- Improve delivery
- Improve relationships with suppliers
Reinhard touches upon the key aspects of Vodafone’s CCM journey including the back-story, program objectives, framework, org structure, technology (CCM is powered by Sirion’s contract management technology), implementation process, impact, and the road ahead.
As Tim said during the webinar – Vodafone’s CCM program is of “massive significance and importance” and in conjunction with technologies such as Sirion, it is creating a true commercial powerhouse. Tim shared valuable insights on how the contracts, legal, and procurement functions need to transform themselves into catalysts for business empowerment and agility, and move from being a cost center to an extension of business units enabling business outcomes. He also pointed out the need to challenge and reform the existing technologies that are traditionally used to manage and measure contractual relationships, and that new, innovative technologies such as Sirion are going to play the role of a critical enabler in this transformation process.
The objective of this session is to help expedite the pace of transformation in contract management by sharing the CCM program template for other organizations to use as a starting point in building their own contracting excellence programs. With over 1200 registrations and 400+ people in attendance, it seemed to have struck a chord with the audience.
Here is a quick round up of the questions.
Q. Process change in procurement takes a lot of time. What was the impact of this change, and how easy or difficult it was for employees and executives to get a buy-in to your modern vision?
Reinhard explained that he fully agrees that this takes time and it has been a transformative journey and a big change management program. Accordingly, he suggests allowing the program sufficient time and provide ongoing support with change management, communications and training. Further, the support from the executive level is critical. In case of Vodafone, the executive team has been extremely supportive of the vision and the potential of the program.
Q. There are already several procurement technologies available out there (CLM, P2P, performance management, etc.). Why do I need to consider an additional technology platform like Sirion to build a program like CCM at my organization as opposed to leveraging what we already have.
Ajay explained that eProcurement/P2P tools are suitable for ensuring a uniform discipline in on-boarding, transacting, and paying suppliers across the entire supply chain. Sirion is complementary to such systems and allows organizations to drill down deeper on a select set of complex suppliers whose performance and invoicing is a lot more complex to be managed by the one-size-fits-all approach of the classical P2P systems. Similarly, with respect to contract management systems, traditional CLM was designed for the general counsel to manage the risk in the pre-contracting or the negotiation phase and these tools are not designed to manage the business outcomes that are specified inside the contract. On the other hand, Sirion not only manages the legal risk like traditional CLM tools, but it also, by extracting the deliverables and obligations and bringing life into them post-signature, allows the business side of the organization to continue the process of value realization that traditional CLM is not able to do.
Reinhard chimed in by saying that Sirion makes the “contract come to life.” In traditional CLM systems, the contracts are quite static with some metadata or bits and pieces of information from the contract. But this approach fails to bring those elements to life and to enable collaboration with business partners, which is a key differentiator for Sirion.
To conclude, I have summarized below the three key takeaways from this webinar:
- Focusing exclusively on front-end procurement processes and ignoring in-life management of contracts leads to significant loss of value in commercial engagements
- Ensuring alignment between the contract, supplier performance and the invoice drives higher value in supplier engagements
- Besides enhancing business outcomes and value, technology can help improve collaboration, transparency and trust in the buyer-supplier relationship
I hope you found this blog and the webinar useful and relevant to your organization’s contract management objectives. If you have any feedback or questions, feel free to drop a comment below or holler on twitter at @SirionLabs.
Oh, one last thing – If you’re interested in taking a look at how Sirion is enabling this transformative change at Vodafone, you can schedule an introductory demo meeting below (no hard sell, but would love to show and talk to you about our product!).