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Benchmarking is often the key to survival

August 8, 2018

Quality, time and cost are critical indicators for most business functions as they compete for funding and resources. Many contracts and commercial groups struggle to gather reliable data, leaving themselves vulnerable to arbitrary judgments regarding their performance and value. A lack of information frequently leads to unfortunate decisions by senior management.

Where do you stand?

Over the years, IACCM has gathered comprehensive data, enabling its members to undertake industry and competitive comparisons. It is interesting how rarely contracts, commercial and legal groups make proactive outreach that anticipates the need to have data which demonstrates their worth. As a result, many requests are made in desperation, with questions like:

  • Can you give data on typical workload / cycle times / expense to revenue / headcount ratios?
  • Can you tell us the typical reporting line of contracts / commercial staff and what impact this has on results?
  • Can you advise on the effectiveness of different organizational models – for example, centralized, center-[ed, decentralized?
  • Can you provide information that shows the financial impact of having / not having dedicated contract and commercial staff?

The list goes on – and we have, or can readily obtain, answers to these questions, split by different industries, company size etc. The problem is that, by the time we are asked, it is often too late. A decision has been made and it is an uphill battle to have it reversed.

So what should you do?

Successful, high performing groups are typically driven by data. They want to know how they are performing – both against their own past and against competitive or industry norms. Increasingly, these groups are not just looking at relative efficiency, but want to assess their effectiveness. New technologies are making that increasingly possible. For example, some of our benchmark leaders have us monitoring market shifts in terms and conditions or in contracting models. Others are assessing the impact of terms and conditions on the cost of commercial operations and the relative ‘ease of doing business’ for their trading partners. Some commission directly comparative research to understand their ranking against competition on key capabilities, such as their approach to negotiation or competence in post-award contract management. Armed with information like this, they are consistently demonstrating their value to senior management and, while this does not guarantee that they are immune to organizational change or budget reductions, it certainly strengthens their position and their voice.

In a forthcoming webinar, we will discuss current standards – for example, what metrics are typical, the impact of reporting line, organizational model and automation, scope of responsibilities, typical cycle times – and also emerging trends, which include more extensive financial measures, the implementation of standards and contributions to innovation or business operations.

If you would like to discover today’s norms and leading trends as organizations gear up their contract and commercial capabilities, simply click here. Participants in the webinar will also be among the first to have the opportunity to participate in IACCM’s 2018 Global Benchmark Study and to receive (at no charge) the resultant comprehensive report on Contract & Commercial Benchmark Standards.

One Comment
  1. Sam permalink

    Hi Can you please help me to find me some stats / facts on when a contract management resource is required based on level of spend. For example $20-$30m of spend requires 1 contract manager depending on complexity

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