Contract Management: Lots of focus, but what is ‘good’?
There has been a surge of interest in contract management in the last two years. Organizations have increasingly recognized its importance in delivering business results and, in many cases, have been driven by concerns raised through their Audit Committee. A range of factors underlie this shift – regulatory compliance, reputational risk, performance management, financial returns. It has resulted in extensive process reengineering and frequent attention to organizational design.
For many, the question is ‘how do we build capability / competence in contract management?’ This is quite distinct from questions about a contract management function. Decisions on organization should flow from the broader conclusions over purpose, process and systems. While many are taking steps to ‘professionalize’ their contract management staff, they are doing this within a context of overall efficiency and effectiveness of the process, which often includes greater quality of judgment at the business unit level.
Any successful implementation depends on clarity of goals. What purpose does contract management have? Frequently there is no consensus within senior management on this question, which then results in confused implementation and unsatisfactory performance. Many seek market reviews and benchmarks, but it is important to recognize that different models are designed for quite different purposes. For some, the drive is to improve the bottom line. For others, it may be to ensure greater agility and flexibility in meeting market needs. Many – especially in Procurement – are more focused on compliance and control.
IACCM is involved in multiple reengineering projects, providing its insights on ‘best practices’ for contract and commercial management. In support of this, we are about to undertake a major update on benchmarks, to supplement our wide range of existing data. If you would like to participate (and receive the results of these studies), the surveys are https://www.surveymonkey.com/s/PerformanceMeasurement2014