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I’m important – but I can’t demonstrate my value

January 31, 2017

In a recent webinar for leaders of procurement, commercial and contract management functions, over 70% indicated that they feel under pressure to deliver more business value. Just 12% felt confident that they were already on a path to greater stability and success.

With so much change going on around us, it is no wonder that many groups – and their leaders – feel insecure. As if the general turmoil in the business environment wasn’t enough, we also face the uncertainty of new technologies and the extent to which they will ‘steal our jobs’ (as I highlighted in a previous blog, our estimate at IACCM is that there will be a net loss of some 35% of current contract management / legal / procurement roles over the next 5 years).

So is this a cause for gloom and despondency? Only if you decide to give up and wait for your fate to overtake you. There are many things that should encourage us. One is that many executives have recognized that increased uncertainty demands stronger and deeper commercial and contract management capabilities; they are increasingly core to profitability. Second is that the jobs which disappear will be those that are routine. They will in many cases be replaced by much more rewarding jobs, drawing on the outputs from that technology.

The urgent need is for leaders and their teams to re-examine their role. At the same time as 70% say they are under pressure to increase value, 82% say that their biggest challenge is demonstrating that they have measurable value. In other words, their contribution is either not currently measured, or uses measures that no one really accepts as reflecting business value – for example, they count the number of transactions or declare theoretical savings.

I have written past blogs on this topic, setting out a range of methods and measures to illustrate value. It is frustrating when research clearly shows the scale of value erosion that comes from poorly structured and managed trading relationships that the practitioner community does not then take that data and act upon it. It seems to be frustrating executives as well, because many believe they have indicated their support for improvement, yet staff groups fail to act on the opportunity.

However, I am encouraged by the extent to which IACCM corporate members are starting to undertake Capability Assessments – a sure way to grasp their current alignment to business value and to obtain meaning ful benchmarks that lead to specific improvement plans. Many of these start to generate instant visibility for the role that contracts, commercial, legal and procurement will play in the businesses of tomorrow. While other may be proclaiming the death of procurement, legal and contract management, we see renewed life – so long as we step up to the challenge of demonstrating our value.

If you would like to learn more about the IACCM Capability Maturity Assessment and examples of the improvements it delivers, contact info@iaccm.com.

 

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