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Do you need contract managers?

November 10, 2016

“No debate, not a word of warning – just 6 months’ notice that the role is being eliminated.”

That was part of a conversation I had last week with the leader of one contract management group, reeling from the shock of an unexpected announcement.

But contrast that with this conversation which I had on Monday.

“We see accredited contract managers as a critical and growing role for our future. In fact, we see it as perhaps the most important area of our business because almost all other functions can be outsourced – and then we are left with nothing but contracts. Our performance will be totally dependent on our capability to manage those contracts”.

Two very different perceptions of the future? In fact, no. When I dig beneath the surface, I discover that both organizations see contract management as a core competency, but are approaching its creation in different ways. In the first example, management has concluded that capability must be built across the organization and will be led by a Center of Excellence within the Legal function. They have decided that existing contract management staff do not have the necessary skills or attitudes to transition to a future that is far more about contracting strategies and technology deployment. Indeed, when I spoke with their COO, she explained quite simply: “If the existing team had been part of the future, they would have been the ones promoting this change – and they never did. They just sat and waited for the future to hit them”.

In the second example, there is no history of centralized contract management; it is a distributed activity and business units have been responsible for delivering results. Contracting strategies have had no clear point of ownership and were generally based on standard templates managed through Legal and Procurement. This arrangement led to consistent poor performance and the realization that contracting must be elevated to a prominent position and role across the organization.

It is examples such as these that led to my blog last week, How Many Contract Managers Do You Need? There, I highlighted the importance for every contracts and commercial group to step back and develop its strategic plan. Every business function is challenged by the wave of new technologies that are no longer on the horizon – they are at the gate and, in some cases, already inside the building. If you fail to plan, if you fail to visibly lead your own self-surgery, you will most likely suffer the fate of our first example – others will decide your destiny.

The future will look different. To prepare, you can gain extensive insights from IACCM research, from webinars or at member meetings and conferences (see for example the theme of our next member meeting in Washington DC or our next conference in Dublin at the IACCM events page). As an example of that future, we worked recently with a corporate member to undertake a current benchmark (their resources compared with industry norms) and then evaluated the changes needed to convert from a largely operational to an increasingly strategic role. In our findings, the overall budget for contract and commercial management reduces by around 10% over the 5 year period, yet headcount falls by 35%. A combination of automation and more highly skilled staff accounts for that variation.

So the future is by no means bleak – unless you fail to plan.

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