Planning Business Process Improvement in Contract Management

Here's a step-by-step approach to implementing a contract lifecycle management initiative in your company.


In the scoping phase, your objective is to determine how operations would be carried out in order to implement each response strategy. Key components of this phase include a capabilities review of the people, processes and policies, as well as maturity analysis, which includes a maturity map and a risk/reward profile. In short, the scoping phase addresses the operational requirements of implementing various strategies.

A useful tool to aid the scoping phase is a Process Lifecycle diagram, which enables you to determine the sequential activities involved from conception to closeout of the contract. A Process Lifecycle diagram can help to keep you focused on key contract management processes such as contract planning, development, interaction, administration, fulfillment, leveraging, optimization and governance.

Process Maps can help you discover your company's current contracting processes by diagramming in detail the end-to-end contracting process, which tend to be unique for each company. A Policy Library ensures you document what organizational policy direction is provided based on best practices, standards or other mandates such as regulation.

A Maturity Map will assist you in determining the logical growth path in stages that can easily be managed. In setting maturity goals, it is useful to ascertain what the stages and components of solution maturity are in terms of realizing business value from contract lifecycle management solutions. For example, if contracting is "siloed" and your organization is at Level 1 in the Maturity Map, you may simply possess a system of record for contract documents and data. While Level 1 is a good place to start, an acceptable growth goal may be Level 2 whereby contracting processes are cross-functional and routed in corporate standards. Building on this particular example, Level 3 might involve a highly responsive contracting process whereby best practices can be rapidly adopted. To complete our example, Level 4 in the Maturity Map can represent a closed-loop stage in which complete reconciliation of contracts and transactions is achieved.

Project Planning

Project planning as it relates to building a case for your CLM initiative will help to increase the probability of an initiative that meets its objectives related to cost, time and scope. It involves five key components that demonstrate best practices in project planning: staffing and coordination, business case and executive sponsorship, budgeting, change management, and technology evaluation.

Staffing and Coordination
Nothing is more important to project planning for contract lifecycle management initiatives than proper staffing and coordination. The first step is to map the business value to respective stakeholders, and then develop a cross-functional project plan. The cross-functional plan for the project should include a steering committee as well as accountability and incentives for its members. In addition, it should be executive-driven.

In mapping the business value to each stakeholder, assign primary roles and secondary roles to the processes you outlined earlier. An example of job functions with primary roles in a buy-side CLM initiative might be sourcing, procurement or vendor management roles. Secondary roles might include finance, legal and IT administration.

Business Case and Executive Sponsorship
Building a business for CLM and obtaining executive sponsorship ensures that the initiative and final solution are aligned with corporate methodologies and based on real organizational business scenarios. A useful way to perform the exercise is to create a CLM value hierarchy for each business process you believe can be improved. In this exercise, you will attempt to tie a measure of improvement in the contracting process to key performance indicators (KPIs) that the organization has prioritized.

For example, if the organization is tracking customer satisfaction rates, to what extent is reduced cycle time of negotiations and contracting a related contribution toward this objective? Continue with this exercise and tabulate the process improvements related to contract management that drive improved corporate-level KPIs. This value hierarchy is likely to be compelling if you can identify one-half dozen process improvement opportunities, tiering upward to multiple KPIs.

  • Enhance Your Experience.

    When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

Already have an account? Click here to Log in.

Enhance Your Experience.

When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

OR

Complete the registration form.

Required
Required
Required
Required
Required
Required
Required
Required
Required
Required
Required