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Commercial & Contract Management 2020

October 29, 2019

A new decade is almost upon us. It’s the decade of RRP – Relationship Resource Planning – when a great wave of efficiency and cost reduction will be achieved through streamlining the management of external relationships.

Automation is key

Just like ERP (Enterprise Resource Planning), RRP will be driven by automation. In developing this term, IACCM identified how a new wave of technology is starting to provide the platforms and intelligent systems that are needed as an overlay to, and interface between, existing enterprise software. This increased flexibility is already starting to impact attitudes towards commercial and contract management and generating a set of ‘big themes’ for 2020 and beyond.

1. From documents to data. The traditional view of contracts as ‘documents’ is fast giving way to an appreciation that they are in fact a critical source of ‘data’, at both transactional and portfolio level.

2. From Risk transfer to Economic value. Traditional approaches to contracting and negotiation focus on contracts as mechanisms for risk transfer. Over the next decade, as research and analytics help us better understand the balance between risk and opportunity, we will witness a shift to contracts becoming instruments for economic value.

3. From boundaries to pathways. Contracts today tend to set boundaries, often influenced by an approach that seeks to impose responsibilities and establish protections for when things go wrong. Our new era of increasingly open, transparent data flows will see contracts establishing pathways through better structured and more formal relationships that place greater emphasis on creating the conditions for success.

The broader impacts

Underlying these major changes will be a number of important enablers, for example in areas such as contract design and structure. Current trends towards visualization and graphics will accelerate. Similarly, advances in the use of blockchain will create platforms that generate visibility across supply chains, while initiatives such as Robotic Process Automation will hasten the push towards ‘self-service’.

Perhaps the biggest change that’s occurring is growing appreciation that contract and commercial management are frequently out of step with corporate goals and strategies. They often lag behind shifts in priorities. For example, while executives may promote speed, flexibility and collaboration, such initiatives typically take time to be reflected in commercial and contract terms and practices. In the 2020s, supported by dynamic market intelligence and contract analysis, commercial management will increasingly inform and shape corporate strategies, assuming a position of leadership in the execution of change.

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