Commercial & Contract Management: Reflecting on a Decade

A report card for Commercial and Contract Management over the last decade would note several key developments:

• The increasing need for CCM competence in handling the challenges of volatile markets, more complicated trading relationships and more varied forms of contract
• Growth in the number of people with a contract management or commercial management job title
• Greater global recognition for the CCM role
• Growing distinction between ‘commercial management’ and ‘contract management’, though confusion about the difference persists
• Steady adoption of CCM job titles within traditional Procurement organizations
• Disappointing results from CCM technology deployments
• Slow adoption of professional standards and emergence of CCM as a formal discipline
• Early moves towards the development and adoption of contract standards

A decade of growing complexity

The Global Financial Crisis was a wake-up call and proved a significant factor in changing the attitudes of politicians and the public to many aspects of trading relationships. It ushered in a decade of increasing regulation, some global, some regional, some national. ‘Compliance’ became a major issue, yet at the same time trends towards outsourcing continued apace and commercial innovation became increasingly critical to survival. An accelerated shift away from products and towards services and solutions steadily changed customer / supplier relationships and led to many longer-term commitments, with suppliers accepting greater responsibility for performance and outcomes.

Contracting in this environment became more complex and required on-going oversight and management, resulting in growing recognition for the CCM role and the numbers employed with either commercial or contract management job titles (LinkedIn currently shows more than 16 million with one or other of these titles).

Tackling, but not eliminating, problems

Yet for all that growth, the CCM community has often been deployed to manage complexity at a transactional level, rather than to understand and reduce it. Most CCM practitioners have no formal training and therefore no standardized methodology for their work. Indeed, this lack of consistency and clarity is reflected in a community that complains about its unclear roles and responsibilities. This has in turn contributed to disappointing results from technology deployment. Only now, it seems, are technology solutions evolving to the point where they can meaningfully contribute to reducing complexity and streamlining processes.

As we reach the final days of the decade, there has been a noticeable upturn in the numbers calling for simplification and standards. The length of contracts, the obtuse language, the confusing structure are all causes of delay, errors and value loss – and each is avoidable. The need for a more professional approach to contract and commercial management is also better understood and for some, especially in Procurement, these are seen as opportunities for re-branding and expanding their role.

So where are we now?

Relative to many jobs, contract and commercial management has had a successful decade. Growing numbers, growing appreciation of the need, positive movements in role definition are welcome signs and provide a platform for the future. But as a truly respected discipline, a role with real status, there is still some way to go. Hence, I suggest our report card should read: ‘Making progress, must do better.’

Over the next decade, I have every confidence that progress will not just be sustained, it will accelerate rapidly. And that will be the subject of my next blog.