It is widely accepted that innovation is important for survival; it is unquestionable that adaptation is essential.
If you are a professional in Contract & Commercial Management, committed to achieving the best possible outcomes from negotiations with all your trading relationships, then ‘Commitment Matters’ is the perfect source of regular articles and posts dedicated to helping you achieve that goal.
Dec 13, 2016 3:23:34 AM
It is widely accepted that innovation is important for survival; it is unquestionable that adaptation is essential.
Nov 15, 2016 4:33:25 AM
Last week I suggested that at least 35% of today’s jobs in contract, commercial and supply management will have disappeared within 5 years.
Nov 1, 2016 4:12:47 AM
“Investments in organizational capabilities rather than specific technology choices separate the leaders from those who still have work to do”.
Jun 8, 2016 3:34:56 AM
There are "three big technologies shifting and colliding and the impact of these shifts will be felt across industry, beyond borders and into the lives of all of us.
Jun 8, 2016 3:15:55 AM
This week, my major focus has been on technology and its likely impact on the world of contracts and contract management. It included a day at the MIT Labs, meeting with academics, legal and technology experts and then proceeded with a West Coast tour that embraced Los Angeles, Silicon Valley and San Francisco, having discussions with technology start-ups and several of the more established providers. In each location, we also convened meetings with local IACCM members.
May 11, 2016 4:28:58 AM
Recently, IACCM and Revitas (a leading application provider) produced a webinar exploring the impact of digitization on contracts and contract management. It generated excellent questions - including the perhaps inevitable "Does this mean that people in sourcing and contract management will no longer have a job?"
The answer depends on our readiness to adapt. Digitization brings new discipline to activities that have traditionally been steeped in uncertainty and driven by individual judgment. Contracts are a case in point. They provide variable - and often unclear or ambiguous - guidance to those charged with fulfilling some particular set of obligations or objectives. Digitization promises to standardize terms and conditions in a way that speeds negotiation, production and dissemination of contracts.
Certainly this will empower business users because, before long, they will be able to enter parameters for their deal or relationship and generate a model agreement, with defined negotiable options and parameters. They will also operate independently of political geography or language.
So what is left?
Organizations will still need commercial policies and strategies. The terms they are willing to use must be supported by business capabilities or reflect business needs. The relationship types they offer must reflect business goals and market competition. Performance challenges - and opportunities - must be addressed. There are still many areas where judgment will be required - and those areas are where meaningful jobs will exist.
Apr 28, 2016 4:49:21 AM
Back in 2014, IACCM identified the ‘ten pitfalls’ of today’s contracting process and practices – the areas where value is lost or eroded. Pitfall number nine is lack of suitable technology.
Our findings generated a lot of interest and many organizations are using the data to undertake their own analysis or ‘contract audits’ to validate the findings and implement improvements.
The research base for our initial work was predominantly in the most developed markets – North America, Western Europe, Australia – and ‘common law’ jurisdictions such as India and Malaysia. The results seemed to hold good everywhere we went. So it has been with great interest that we have now started testing our findings in Asian markets. With IACCM’s rapid growth in China and Japan, we have been able to check the relevance of these ‘pitfalls’ in markets with a quite different business culture.
In a series of member and corporate meetings over the last two weeks, it has become evident that the issues remain largely consistent – though with one or two interesting twists. One of those is the availability of the right technology to streamline contract management and support improved performance.
At first, hearing this reaction, we tended to assume that our audience simply did not understand, that they lacked appreciation for the value that advanced contract management and analytics solutions can bring. But that turned out not to be the case – or at least, it was only sometimes the story.
Many IACCM members in China have worked for both Western and Chinese corporations. Their experience is that technology in the latter is often far ahead of the former. Two reasons emerge. One is purely local and driven by government policies that restrict access to overseas servers. Clearly, that is not helpful to those businesses except to the (considerable) extent that it limits their international competitors and protects the domestic market.
The second factor is the standard ‘early mover’ issue. While Western businesses may have invested in technology for longer, that doesn’t make it better. In fact, on the contrary, large international corporations are typically struggling to adjust heritage systems and software, leaving them challenged by inconsistencies, incompatibilities and lack of integration. China started investing many years later and reaped the advantage of avoiding mistakes and benefitting from superior networked solutions – systems that actually do integrate and speak to each other.
So while China may currently lack some appreciation of the value that advanced contract management can deliver, they are arguably much better equipped with a systems architecture that drives performance. For them, IACCM pitfall number nine is seen as a molehill, rather than a mountain.
Mar 23, 2016 8:08:00 AM
There is a tendency by many of us to view technology with a degree of skepticism. We have heard it all before – this wave of transformational change that never seems to arrive.
The truth is that technical advances tend to creep, rather than explode. As a result, they steadily insinuate themselves into our lives, in a way that we often fail to notice. It isn't so long ago that there were no mobile phones; when contracts were produced on typewriters; when virtually all negotiation was face to face and there was no e-mail – most communications used a physical postal system.
Yet another large bank – this time HSBC – has announced the roll-out of biometric banking – the use of voice and fingerprints for customer recognition. I am sure many of us will welcome the elimination of today's increasingly complex password systems. It has taken about 20 years for the banks to become sufficiently confident in biometrics that they are making this switch. I recall projects at IBM in the early 1990s which failed because of the error rates – about 20% of people were not recognized.
So what, you may ask, has this to do with the world of contracts and negotiations? Well, biometrics is just one area of increasingly intelligent systems and collectively they will change our world over the next few years just as much as the advent of networked technology and email disrupted our ways of working in the 1990s. Certainly archaic concepts like signatures will rapidly disappear. One of my colleagues is meeting today with a voice recognition expert who has developed a matching system for negotiators - technology that helps you align with your counter-party, ensuring you have a negotiator who is most likely to build empathy and reach a more favorable outcome.
Nanotechnology also falls into this 'intelligent' category. I have written before about the FDA's provisional approval of nanotechnology-coated drugs which transmit messages to their manufacturer. Similar technology is being embedded into packaging, so that we could, for example, charge on opening or use. Such developments will lead to a surge in contracts where the supplier takes responsibility for on-demand availability – once one product is used, it is automatically re-stocked.
There are even more radical proposals to use collaborative development systems in generating 'contract standards', similar to the way that open source software was developed. 'Smart contracts' using the blockchain sytems that underpin Bitcoin is another area of development.
As I have written previously, many providers of contract management software moved down a blind alley, led by consultants and analysts who had little appreciation of the role of contracts in 21st century business. The issue is not automating what we have done in the past; it is about managing contracts as core business assets through increasingly versatile and intelligent systems. For anyone working in this field, it is essential that we start to understand the impact on job roles and future skills; we need to lead the transformation, not wait for it to overwhelm us.
Mar 8, 2016 8:38:00 AM
In many respects, these seem to be challenging times. I observe many commercial, contracts and procurement groups struggling to build momentum and indeed suffering cuts, because they are not adjusting to business needs. The question is whether the function can adapt and take on a wider role, or whether that wider role will be performed elsewhere. The need is for individuals to focus on the areas of the future, not those of the past, and to show a grasp of the emerging agenda driven by new technologies and digitization.
Just as the threat lies in technology, so do the opportunities. We must understand and use the systems that will define and support leading-edge supply chains. These enable a growing reliance on external sources of supply, with corporate size increasingly measured on revenue, not numbers of employees. Coordinating and integrating across these multiple, interdependent relationships will be key to survival. Another growth area will be SRM, due to the need for a more blended approach to supply management and innovation.
This means, for the right people, growth industries will be those where either there is significant disaggregation (and therefore dependence on commercial integration) and those where there is extensive regulatory / reputational oversight (and therefore dependence on integrity). As a result, I think there will be major opportunities in industries like pharma, financial services, insurance and perhaps telecoms, where better structured and well managed relationships will be critical. To a degree, that will also flow into IT and IT services, especially for companies that rely heavily on aggregation of suppliers and delivery of outcomes.
Capital goods and infrastructure industries should also need more commercial resource, but probably with a focus on building more effective supplier /project selection, negotiation and delivery management. As margins continue to operate under pressure, the theoretical savings generated by traditional procurement and 'risk management' provided by traditional contract management need to be turned into the ability to oversee contracts that deliver value, efficiency and improved margin.
Nov 17, 2015 1:11:32 PM
What will contracting look like 5 years from now? What role will it play in the business?
IACCM is currently updating its studies on ‘The Future of Contracting’ through a series of interviews and web-based surveys. Already, there are hundreds of participants contributing their thoughts and ideas.