Commitment Matters Blog

 

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.

Losing money on your contracts?

Posted by Tim Cummins | Feb 20, 2019 7:42:00 AM

Only 29% of organizations are actively monitoring the profitability of their contracts. That’s just one of the findings in IACCM’s latest benchmark research, which gathered data from 752 organizations.

Why is this not surprising? Well, for most, accurately associating costs with specific contracts is challenging, both in terms of collecting and consolidating the data. Given the amount spent on technology, it might appear that problems like this should have been overcome, but it really depends on the type of technology that has been implemented. For most of that 29%, I suspect that much of the analysis is based on standardized apportionments rather than detailed analysis.

Today’s technology is mostly about efficiency

In the typical corporation, many of the tools and systems have been implemented to automate and streamline existing activities and processes. These are interesting because they reduce operational costs and potentially raise quality, but their design frequently results in incomplete or fragmented data flows. However, there are other tools and systems that deliver far greater value by offering previously unavailable insights and knowledge – data that is actionable and potentially transforms business.

Information breakdowns are typically most severe at the cross-over point between processes or organizations. When data meets boundaries, it frequently depends on manual support for its transmission, with the result that it often gets lost, corrupted, delayed or ignored – and this is clearly the case with something as complicated as cost and profitability data on contracts or customers.

Enabling relationships through business intelligence

Transformational technologies are typically those that cross traditional boundaries and I was therefore excited recently to speak with some of the revenue leakage experts at Pramata and gain insights to their system, which is designed to provide precisely the sort of intelligence needed to support sales decision-making and ‘ease of doing business’. Pramata software equips an organization with real-time data on the overall performance and profitability of specific customers or clients, enabling resources to be targeted towards the best returns and to reduce value leakage.

By consolidating fragmented data, Pramata is equipping organizations to better manage the commercial relationship with their clients, whether dealing with new opportunities, billing, servicing existing contracts or planning renewals. It certainly appears to be filling a critical gap in business intelligence and supporting the IACCM mantra that contracts must be handled as key economic assets.

 

Topics: contract /commercial management

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