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Should we wave goodbye to contract management?

October 18, 2015

“Business today is increasingly digital, services-based and driven by intangible assets, including rights to exploit intellectual property, from patents to logos.”

This quote from The Economist (‘New rules, same old paradigm” – October 2015) indicates the challenge facing the world of contract management. The Economist article points to the fact that the laws and regulations relating to trade were mostly designed for the manufacturing age. Not only are they inappropriate, but they add to the complexity of dealing with a fast-changing environment.

Might that observation also be made with regard to contracts and contract management? In a soon-to-be-published article, IACCM will point to the ineffectiveness – indeed actual damage – of today’s contract design and primary terms and conditions. The apparent inability of this discipline to adjust to the digital age is making it increasingly anachronistic (register with IACCM if you would like a copy of this article).

But is there light at the end of this particular tunnel? Dalip Raheja believes that there is. He recently attended the IACCM Americas annual forum and I found his observations both interesting and encouraging. This is what he had to say:

“As we have observed in the past, this is one forum where professionals from both buy-side and sell-side get together and talk about their respective processes.  What has been fascinating to watch is how the language has changed in this community from contracting to commitment to relationships.  While there were still a few slides that talked about contracting and compliance being the main outcome, it was pretty obvious that the train has left the station on that one and most people are already on board having a great time on the relationship express!!”

(To see Dalip’s full article, click here)

Whether consciously or otherwise, the world of contract management is morphing into a world of outputs, outcomes and relational agreements. For leading corporations (and a growing number of government agencies) there is a real commitment and hunger for change. Practitioners are enthused by the idea of being associated with success, rather than spending their time fixing problems and handling contention. As Dalip observes, the IACCM Forums and meetings appear to be the one place they can go to gain insight to how they might institute those changes. In this context, he omitted one group that is critical to success – that is, the technology and service providers who were present at this year’s Americas conference in record numbers (and with a waiting list to attend).

Contract management in its traditional form will indeed become far less visible in the digital age. Like so many other activities, it is steadily moving to an automated process. But this creates a wealth of new opportunities, as we start to generate a mass of value-adding data and insights, releasing the potential for new commercial offerings and market intelligence. Among these will be the integration of ‘the contract’ and ‘the relationship’, no longer adversaries but rather complementary forces for driving business value.

The implications of this are significant. Systems, processes, organizations and job roles will need substantial adjustment. The IACCM event touched on many of these changes, harnessing the enthusiasm of those who have boarded the train that Dalip references and are already waving goodbye to the debates of the past.

 

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