Implementation and Use of a Contract Management
Methodology
Introduction to contract management
processes and to the fundamental
aspects of contract management roles
Ole Horsfeldt
[email protected]
Practical experiences from contract
management methodology
implementations
IACCM European Conference May 2017
Introduction
Contract and vendor management at the core
of the (outsourced) enterprise
VISION
A clear vision and strategy on what it
takes to be an outsourced enterprise
PROCESSES
Ability and processes that link business technology
with business strategy in an proactive manner
HR STRATEGY
Knowledge retention and appropriate HR
strategy covering skills and incentives
CONTRACT MANAGEMENT
A formal contract management implementation
with clear roles and task descriptions integrated
with contract manuals/playbooks
Use of a common contracting platform
(templates) for all types of outsourcing contracts
Implementation of a service agnostic risk
management system
IACCM European Conference May 2017
When implementing a contract and vendor management methodology, we
face two main challenges…
Contract management is in reality
performed in a cross organisational
manner but contract management
is most often organised in a silo
Contract
management
procurement
and
Most organisations don’t have a clear
understanding of which informal processes
they actually use and which processes would
serve contract management purposes well
Delivery and
obligations tracking
D&O reporting
legal
finance
Recipient/
user
Service management
Incident
management
Domain
experts
IACCM European Conference May 2017
Issue management
Performance
management
Issue
qualification – is
there a dispute?
Escalation,
negotiation
Dispute
management
Dispute
resolution
processes
In 2014 a client asked us: How to do you see contract
management – what is contract management to you?
Having responded we were then asked: Please implement
your ideas.….
This presentation tells our journey from inventing and
designing a role based contract and vendor
management methodology to implementing it with a
variety of buyer organisations
Introduction to Gorrissen Federspiel’s contract management methodology
The core of our philosophy
Contract management is about:
o use of well structured know how in a Consistent manner
and
o taking appropriate discretionary decisions
o in other words decisions taken by well-trained people applying
years of accumulated knowhow )
based on
a. Contracts
b. understanding of the organisational attributes of your own
and the supplier’s organisation
Contract management is done by
c. the involved personal dynamics and relationships
individuals and groups of individuals The core ability to do contract management is not about
collaborating in a coordinated manner automation, storage of contracts, and software solutions but can
with distinct responsibilities
benefit greatly from being supported by such systems
IACCM European Conference May 2017
The framework - Gorrissen Federspiel’s contract management methodology
The philosophy
Each person must understand her role – that requires detailed role
and task descriptions and work flows
IACCM European Conference May 2017
The framework - Gorrissen Federspiel’s contract management methodology
The philosophy
…and you must add training
and easy-to-use event based
playbooks that double as
contract manuals
…thereby giving your contract
managers an understanding of
details of their specific task and
role and where they fit into the
overall picture
IACCM European Conference May 2017
The framework - Gorrissen Federspiel’s contract management methodology
The Contract and Vendor Management Framework
Service and contract generic
contract specific or agnostic
Tasks for roles
Roles
Workflows
between roles
Processes
IACCM European Conference May 2017
Playbooks/contract
manuals
The framework - Gorrissen Federspiel’s contract management methodology
The 6 contract management processes
Performance
management
To ensure
performance of
the services and
to enable
enforcement of
such performance
Financial
management
Optimization
management
Compliance
management
Dispute
management
Time
management
Financial
control, budget
compliance and
foreseeability and
to avoid overpayments and
value leakages and
to use financial
incentives to drive
behavior
To extract value
the parties
contracted for
and to optimize the
value beyond the
original
expectation
To enable the
Customer to
remain
compliant with
legal
requirements
relevant to its
business
So that disputes
and
disagreements
are dealt with
efficiently and
quickly without a
detrimental effect
on the relationship
between the parties
So become aware
of and use the
rights and
strategic
opportunities
that apply at
particular intervals
IACCM European Conference May 2017
The service and contract generic – or agnostic roles and role descriptions
Tasks for roles
Roles
Workflows
between roles
Processes
IACCM European Conference May 2017
The service and contract generic – or agnostic - roles and role descriptions
The 6 contract management processes
Performance
management
Financial
management
1. We assigned roles to each of these 6 contract
management areas who together have the
responsibility for managing that area
Optimization
management
Compliance
management
2. Roles are allocated to people
IACCM European Conference May 2017
Dispute
management
Time
management
3. One person can have several
roles
The service and contract generic – or agnostic - roles and role descriptions
Role description – setting out overall/general responsibilities for that role
PROACTIVE TASKS
and REACTIVE EVENT-BASED
Performance
management
•
•
•
•
•
•
•
•
Lead Manager
Transition Manager
Performance Manager
Multiple Vendor
Manager
Change Manager
Risk and Security
Manager
Technical Architecture
and Policies Manager
Retransfer Manager
The 6 contract management processes
Financial
management
•
•
•
•
•
Lead Manager
Budget Control Manager
Financial Change Manager
Audit Manager
Benchmarking Manager
Optimization
management
•
•
•
•
Lead Manager
Innovation Manager
Relationship Manager
Contract Information
Manager
Compliance
management
• Lead Manager
• Data Protection Manager
• Regulatory, Policies and
Confidentiality Manager
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Dispute
management
• Lead Manager
• Dispute Manager
Time
management
•
•
Lead Manager
Time Manager
12
The service and contract generic – or agnostic - roles and role descriptions
Role description – setting out overall/general responsibilities for that role
PROACTIVE TASKS
and REACTIVE EVENT-BASED
Performance
management
•
•
•
•
•
•
•
•
Lead Manager
Transition Manager
Performance Manager
Multiple Vendor
Manager
Change Manager
Risk and Security
Manager
Technical Architecture
and Policies Manager
Retransfer Manager
The 6 contract management processes
Financial
management
•
•
•
•
•
Lead Manager
Budget Control Manager
Financial Change Manager
Audit Manager
Benchmarking Manager
Optimization
management
•
•
•
•
Lead Manager
Innovation Manager
Relationship Manager
Contract Information
Manager
Compliance
management
• Lead Manager
• Data Protection Manager
• Regulatory, Policies and
Confidentiality Manager
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Dispute
management
• Lead Manager
• Dispute Manager
Time
management
•
•
Lead Manager
Time Manager
13
The service and contract generic – or agnostic - roles and role descriptions
Example of role description for a Performance Manager under Performance Management
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14
Example workflow
The service and contract generic – or agnostic - roles and role descriptions
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The implementation project
IACCM European Conference May 2017
The implementation project
Let’s be clear about the challenges!
‘What management will think
What management needs to understand
We need one contract manager
Everyone who interacts through personal
interaction or through email with the supplier
is a contract manager
We need to buy a system
You never need a system before you have the
knowhow and the right people
We have a vendor management
organisation, they can run our
contracts
Contract management is done across the
organisation by the ITSM organisation, by
finance and internal audit, by legal, and by
vendor management: you’re one team
Implementation is easy, just get
it done quickly
Implementation is a fundamental change
project that needs to be driven from top down
The implementation project
The two implementation models
Organisational approach: a group of dedicated contract
managers handle many contracts and fulfil a specialist role
(typically just one role) in relation to many contracts
Contract approach: The separate team per contract
approach where dedicated individuals manage only one
contract and each individual will have multiple roles
Apply to all relevant
major contracts
Add
playbook/contract
manual for each new
contract
No matter the model, the key is resolving the cross organisational riddle and the assigning of
persons to roles
IACCM European Conference May 2017
The implementation project
The organisation approach recommended: Large company with many
business critical outsourcing contracts (this is an outsourced company)
Performance
management
•
•
•
•
•
•
•
•
Lead Manager
Transition Manager
Performance Manager
Multiple Vendor
Manager
Change Manager
Risk and Security
Manager
Technical Architecture
and Policies Manager
Retransfer Manager
Financial
management
•
•
•
•
•
Lead Manager
Budget Control Manager
Financial Change Manager
Audit Manager
Benchmarking Manager
Optimization
management
• Lead Manager
• Evolution and Innovation
Gain Sharing Manager
• Relationship Manager
• Contract Information
Manager
Compliance
management
• Lead Manager
• Data Protection Manager
• Regulatory, Policies and
Confidentiality Manager
Dispute
management
• Lead Manager
• Dispute Manager
Time
management
•
•
Lead Manager
Time Manager
• One person per lead manager role
• Groups of persons for each manager role – a person can have main
responsibility in relation to a particular contract or domain of contracts
• Implemented across many contracts
• ITSM or similar roles mainly manned by separate organisation
IACCM European Conference May 2017
The implementation project
Both implementation models recommended: Medium sized company with
one major outsourcing contract and additional outsourcing contracts
Performance
management
•
•
•
•
•
•
•
•
Lead Manager
Transition Manager
Performance Manager
Multiple Vendor
Manager
Change Manager
Risk and Security
Manager
Technical Architecture
and Policies Manager
Retransfer Manager
Financial
management
•
•
•
•
•
Lead Manager
Budget Control Manager
Financial Change Manager
Audit Manager
Benchmarking Manager
•
•
•
•
Optimization
management
• Lead Manager
• Evolution and Innovation
Gain Sharing Manager
• Relationship Manager
• Contract Information
Manager
Compliance
management
• Lead Manager
• Data Protection Manager
• Regulatory, Policies and
Confidentiality Manager
Dispute
management
• Lead Manager
• Dispute Manager
Streamlined roles with essentials
Lead manager can have other roles within that area
One person can have more than one role
SMEs will possess contract manager roles
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Time
management
•
•
Lead Manager
Time Manager
The implementation project
Contract approach recommended: Smaller companies with one business
critical outsourcing agreement
Performance
management
•
•
•
Financial
management
Time and Optimization
management
Several processes collapsed into fewer processes
One or a small team per contract area
One person can have more than one role
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Compliance and Dispute
management
The implementation project
Existing
delivery/services
processes are connected
to the contract
management processes
through process maps –
This is an essential part
because this is where
the “end to end” process
is created that enables
efficient contract
management
IACCM European Conference May 2017
22
The implementation project
Example of the performance manager role mapped into a RACI chart
for incident manage
•R=Responsible
•A =Accountable (Approver)
•C= Consulted
•I= Informed
User/Custo
mer
Contract
Manage
ment
Perform
ance
Manager
Service
Desk
ITSI
R
R
R
R
R
R
C
I
C
I, A
A
A
I
I
R
R, A
War-room creation
I
R
Escalation (If SLA not met)
I
R
I
Create change or problem
I
R
I
I
Responsibility
Create Incident
Provide Info
Resolution confirmation
Analyze Incident
Resolve front-end issues
Responsible for S2-S4 issues
Forward back-end issues to vendor
Inform customer, Service Line and ITSI
Close incident
Incident follow up
Responsible for S1 issues
R
R
R
I
I
I
Reporting
I
I
I
I
C
I
I
I
I
R
Analyze incident
Solve incident
Vendor
I
I
I
R
I
I
A
R
I
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23
Recap and time for questions
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Recap and time for questions
The 6 contract management processes
Performance
management
Financial
management
Optimization
management
Compliance
management
Dispute
management
Time
management
Processes
Roles
Tasks for roles
Workflows
between roles
IACCM European Conference May 2017