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When East Meets West: Is technology a consistent problem?

April 27, 2016

Back in 2014, IACCM identified the ‘ten pitfalls’ of today’s contracting process and practices – the areas where value is lost or eroded. Pitfall number nine is lack of suitable technology.

Our findings generated a lot of interest and many organizations are using the data to undertake their own analysis or ‘contract audits’ to validate the findings and implement improvements.

The research base for our initial work was predominantly in the most developed markets – North America, Western Europe, Australia – and ‘common law’ jurisdictions such as India and Malaysia. The results seemed to hold good everywhere we went. So it has been with great interest that we have now started testing our findings in Asian markets. With IACCM’s rapid growth in China and Japan, we have been able to check the relevance of these ‘pitfalls’ in markets with a quite different business culture.

In a series of member and corporate meetings over the last two weeks, it has become evident that the issues remain largely consistent – though with one or two interesting twists. One of those is the availability of the right technology to streamline contract management and support improved performance.

At first, hearing this reaction, we tended to assume that our audience simply did not understand, that they lacked appreciation for the value that advanced contract management and analytics solutions can bring. But that turned out not to be the case – or at least, it was only sometimes the story. 

Many IACCM members in China have worked for both Western and Chinese corporations. Their experience is that technology in the latter is often far ahead of the former. Two reasons emerge. One is purely local and driven by government policies that restrict access to overseas servers. Clearly, that is not helpful to those businesses except to the (considerable) extent that it limits their international competitors and protects the domestic market.

The second factor is the standard ‘early mover’ issue. While Western businesses may have invested in technology for longer, that doesn’t make it better. In fact, on the contrary, large international corporations are typically struggling to adjust heritage systems and software, leaving them challenged by inconsistencies, incompatibilities and lack of integration. China started investing many years later and reaped the advantage of avoiding mistakes and benefitting from superior networked solutions – systems that actually do integrate and speak to each other.

So while China may currently lack some appreciation of the value that advanced contract management can deliver, they are arguably much better equipped with a systems architecture that drives performance. For them, IACCM pitfall number nine is seen as a molehill, rather than a mountain.

 

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