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The Importance Of Timing

July 29, 2010

‘If only we had been involved earlier’ is a comment that occurs with great regularity from those in the world of contracting.

There is no question that the contribution of contracts expertise – buy-side, sell-side or legal – can make a tremendous difference to outcomes. And much of this potential for value is down to timing. The reason why many feel frustrated is because their late involvement often results in poorly defined requirements, ill-considered commitments or badly structured relationships that  fail to realise the full business opportunity.

This issue of timing can arise in the bid, negotiation or change management phases. My experience – confirmed by IACCM’s research – leads me to agree that late involvement by qualified contracts and commercial resources costs many businesses a lot of time and money. It frequently sub-optimises opportunities, delays their closure or results in poorly assessed risks.

But for those who exprience this problem, I suggest there are two fundamental questions to answer. The first of these is to ask “Why does it happen?” Many times it is because the business or opportunity owner simply doesn’t want ‘the people from contracts (or legal, or procurement)’ involved any longer than necessary. Their image is often not that of a real ‘team player’ and there is a concern that their negative views (of risk, in particular) will de-rail or delay the deal. But even when the business would welcome early involvement, I often find the commercial / contracts / legal group reluctant to provide it. They are frequently too busy to get engaged in the up-front phases of deal structuring or strategy.

The second question is: “How might it be addressed?”  Many businesses have failed to think about how to achieve early intervention in a resource and cost-efficient manner. They have also failed to consider the use of technology. As a result, physical resources are engaged in far too many situations  and they are frequently absorbed in repetitive, low-value tasks and fire-fighting. This adds to their reputation as tactical and risk-oriented.

There are two immediate steps that any contracts group can take. One is to increase their alignment with product or service management. By understanding the markets in which products or services will compete, we can ensure the terms being offered are appropriate to these markets and reduce the frequency of exceptions and negotiations. Contract standards are structured to support business needs, rather than the ‘one size fits all’ approach that is a business imposition, or the ‘every case is different’ argumant, which means no established contract standards and guarantees the need for negotiation every time.

 And secondly, we must escape the assumption that commercial acumen is always delivered by physical means. The most successful organizations are those that empower good decision making early in the process – and they can do this by a mix of education and information availability. With today’s technology, we have no excuse for failing to deliver the rght tools and knowledge to the business.

So my advice to those who say ‘If only we had been involved earlier’ is to ask the question ‘What do we need to do differently to make sure that the business has the benefit of our knowledge and skills when and where they are needed?’

  1. Steve Schwarz permalink

    I agree completely albeit for different reasons. There certainly is a reluctance to engage Contracts/Legal/etc and I believe that this is driven predominantly by commercial imperative and, to a degree, by ego. My experience is that by the time a RFT/RFQ is made known there is limited time available to construct the solution, put together the sales document and work out the terms of the engagement: Contracts/Legal are seen as being impediments to expediency. In terms of “ego”, I have found that, from the Contracts perspective, I am usually required to amend or contradict the Sales Lead (for instance, we are offering a deliverable that can be neither measured nor managed): Not only does this tend to get the Sales Manager off-side but it usually leads to a requirement to totally review the offering and associate commercial aspects (that is, re-pricing given a perceived reduction in deliverables being proferred).

    You are quite right, though, in the approach that needs to be taken. The Contracts/Commercial Manager needs to be seen as a vital part of the sales process and one that adds value, and this usually needs to be at the start of the process (reducing the amount of time re-visiting the offering and allowing a collaborative approach with the Sales team). Hence, advertising the value-add and having executive support is essential to achieving this outcome.

    This then leads me to the Contracts Maturity Model and the ability to implement guidelines/standards/processes …

  2. I completely agree with the premise – timing is everything when it comes to contract professional’s involvement. In addition to your reasons listed for the failure of businesses to involve contract professionals early in the process, I have also seen a reluctance to add the costs of our involvement.

    Thanks for the great post!

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