A few weeks ago I was fortunate to be part of a webinar hosted by the International Association of Contract & Commercial Management (IACCM) to talk about how to take a process approach to Contract Management. Based on the turnout and questions, it seems that everyone understands the importance of “people, process and technology”, but many struggle with the next level which is where it is gets interesting and complicated.
When we talk about people, we all know what a good commercial manager looks like in terms of experience. A bit of legal and a dash of finance along with an understanding of delivery and procurement is a solid recipe. For technology I have seen companies use everything from Excel to high-end bespoke products. The point is that the contract management tool market is flooded, diverse, sophisticated and readily available no matter the need. What is most mystifying is the process element. I am lucky in that I get to talk with a lot of companies about their processes and contract management function. What I often see is bits and pieces of process but not a fully realized or enforced process. I am not judging. I know it is it difficult to get the powers that be to agree to a full process driven approach. But I would like to point out a few reasons why focusing on process will yield benefits.
- People without Process
Many organizations have great people and talent. But often times without process there is the weird situation where the 25-year experienced expert negotiates the ERP deal and also does data entry and review of the 50K EUR deal. This is an odd use of a resource not only because there is no process but also because the company has a work allocation system which only focuses on free time and not an intelligent use of resources. A proper process approach will look at the types of skills needed at each step and allocate the resources correctly.
- Technology without Process
My mom is 73 and a wonderful human being. But to her an iPhone is used the same way a rotary phone is used (and yes, I used a rotary phone reference - google it if you don’t know what it is). She doesn’t know about all the cool uses, methods and time saving processes around communication. This is often the microcosm of companies. They buy a tool and expect the magic of the internet to solve everything. What they don’t realize is that tools need data and discipline. And where do those come from? If you guessed process, give yourself a gold star.
- Process in Name only
So imagine there is a process but no one follows it. This is like the philosophical question about a tree falling in the woods and no one hearing it. In effect, it is not happening. We run into this when we see companies expecting their 30 year veterans to becoming data analysts and entry experts. There will be an adoption issue for sure and you don’t need me to tell you.
So what good does process do? Process is an engine for consistency and benchmarking. Process also allows for a way to use resources more efficiency. Besides cost savings, process ensures the discipline and value creation I have written about multiple times. Process stops the value evaporation and uses the right tools for the job. Don’t underestimate it.