Amending Contracts in Ariba – A Best Practices Approach


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We all know that the first step to successfully using the Ariba Contracts solution is to get your company's contracts into the system, however, contracts are also living documents, and during their duration, oftentimes necessitate change.

In this session, you will hear from a customer who has implemented a successful process for amending contracts that already exist in the Ariba system. There will also be a discussion of best practices for amending contracts let by an Ariba Best Practice Center consultant.

Bring your ideas and your comments- this interactive session is sure to open your eyes to functions and processes that can improve your usage of the Contracts solution.

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Amending Contracts in Ariba – A Best Practices Approach

  1. 1. Amending Contracts in Ariba: A Best-Practices Approach Tiffany Hughes, Sr. Contracts Administrator, JM Family Enterprises, Inc. Danny Bloom, Global Head of Contract Management and Spend Analytics, Moody’s Corporation Sherri Wheatley, Supply Chain Analyst, Hess Corporation March 18, 2014 #AribaLIVE © 2014 Ariba – an SAP company. All rights reserved.
  2. 2. Agenda • • • Welcome Contract Amendment Overview Customer Stories JM Family Enterprises, Inc. Moody’s Corporation Hess Corporation • • 2 Panel Discussion with Q&A Closing Remarks and Takeaways © 2014 Ariba – an SAP company. All rights reserved.
  3. 3. Ariba Amendments: Two Approaches Amend with a New Workspace Overview: There will be one workspace per amendment • Expiration dates need to be coordinated every time there’s an amendment • Reporting on the contract families is difficult within the tool, roll-up amounts need to go by the parent workspace • The number of contracts in the system is inflated – amendments, particularly renewals, don’t really represent a new contract. • How do you track and report on the value of the master and amendments? This is a business decision about the value of a contract as reflected in the workspace. • When there are changes, there are more workspaces to update. For example, if the contract term is extended and you have had two amendments created as sub agreements, you will need to update three workspaces. • Email notifications may be generated for all of the workspaces, many of which would be redundant. • Changes to other data fields (Business Unit, email notifications, supplier, etc.) need to be made for every workspace. 3 © 2014 Ariba – an SAP company. All rights reserved.
  4. 4. Ariba Amendments: Two Approaches Amend in place Overview: Each time a contract is amended or renewed, amend in the existing workspace. • Business decision about what the Contract Amount should be. Should this be updated with each renewal or amendment or is it the Original Contract Amount? • Amendment detail is lost – Contract Amount for each Amendment and changes to the Expiration Date. Recommend having d-form to record detail. • There are three ways to set up the Amendment process, each with advantages and disadvantages. • This method is needed for integrated environments. The interface to Ariba Procure-to-Pay will adjust according to the new Pricing Terms. • This is recommended as the best practice, but business needs may override. 4 © 2014 Ariba – an SAP company. All rights reserved.
  5. 5. Amendment in Place: Three Methods 1. 2. Same as 1, but the Approval task is on a folder in the documents tab. This way all of the other tasks automatically restart except the Approval task, but the documents sent in the approval email is limited to the documents in the specific folder. 3. 5 Tasks are defined as document tasks on the workspace itself. These tasks repeat for each new version (amendment) of the workspace. The approval task email sends all documents in the workspace. Amendment documents are all placed in one folder—one folder for each amendment. There is also a set of tasks for each amendment. Only the current amendment documents, perhaps including a d-form, are sent with the approval task. © 2014 Ariba – an SAP company. All rights reserved.
  6. 6. Welcome Tiffany Hughes Senior Contract Administrator JM Family Enterprises Tiffany Hughes has worked at JM Family Enterprises for more than six years and is currently a Senior Contract Administrator in the Procurement Group. Tiffany received a Bachelor of Arts Degree from Florida Atlantic University after relocating from New Hampshire. Tiffany has received the CPSM Certification from the Institute for Supply Management and the CPTE Certification from Caucus. Tiffany’s in depth Procurement career has spanned 15 years and three different Procurement organizations with a focus on IT Procurement. Additionally, Tiffany is the Administrator for JM Family’s Ariba Contracts Module. Tiffany and her husband currently reside in Boca Raton, FL. 6 © 2014 Ariba – an SAP company. All rights reserved.
  7. 7. • • • • • 7 JM Family is a diversified automotive corporation, based in Deerfield Beach, FL. Southeast Toyota – distributor of Toyotas in Southeast US JM&A – national provider of automotive F&I products World Omni – automotive finance and services company JM Lexus – largest-volume Lexus dealership in the world Founded in 1968 by automotive legend Jim Moran Approximately 3,800 Associates in North America $11.5 billion in revenues (2012) Forbes: No. 37 on list of "America’s Largest Private Companies" FORTUNE®: No. 32 on "100 Best Companies to Work For" list, 15th consecutive year © 2014 Ariba – an SAP company. All rights reserved.
  8. 8. Why Ariba? • Repository Event Alerts Template Documents, Version Control & Document Record Electronic Signature Interface • Workflow Consistency across Procurement organization Approval Record 8 © 2014 Ariba – an SAP company. All rights reserved.
  9. 9. Contract Amendments • Individual Contract Workspaces No distinction on type of Agreement Workflow remains the same for Amendment Easily view all documents associated with a supplier • Defined by Title and Hierarchical Type Amendment titled to define Agreement type Tree view shows Amendment under Master Agreement 9 © 2014 Ariba – an SAP company. All rights reserved.
  10. 10. Contract Amendments, continued • Use of Predecessor Project Quick access between two Contract Workspaces Connect Workspaces impacted by other Workspaces • Amendment functionality strictly for changes Update description, add documents, add additional notes 10 © 2014 Ariba – an SAP company. All rights reserved.
  11. 11. Feedback • Use of Tree View Quickly view amended Agreements Requires specific and descriptive title: establish naming conventions ahead of time • Expiration Email Confusion If Amendment is for term extension, where should expiration email come from? 11 © 2014 Ariba – an SAP company. All rights reserved.
  12. 12. Best Practice Center • What we didn’t know we didn’t know Assist with new process and procedure Understand Ariba in depth • Customer Advocate Find the correct people to assist with issues and concerns 12 © 2014 Ariba – an SAP company. All rights reserved.
  13. 13. Welcome Danny Bloom Global Head of Contract Management and Spend Analytics Moody’s Corporation Danny Bloom is the Global Head of Contract Management and Spend Analytics at Moody’s. He has focused on contract management tool implementations at major financial institutions, including two Ariba contract management implementations. Before joining Moody’s, he was a consultant focused on contract management at Morgan Stanley. In his current role, Danny is working to expand the contract management tool’s utilization within the firm. Danny has a bachelor’s degree from the University of Vermont. 13 © 2014 Ariba – an SAP company. All rights reserved.
  14. 14. Moody’s Corporation Overview Moody's provides credit ratings and research covering debt instruments and securities • • • • • 14 Moody’s has approximately 8,300 employees in 31 countries Moody’s reported $2.7 billion in revenue in 2012 Moody’s Executed over 2,000 buy side agreements in 2013 Prior to 2012, Moody’s had no centralized contract repository Moody’s contract management responsibilities are now fully consolidated to a single group © 2014 Ariba – an SAP company. All rights reserved.
  15. 15. Why did Moody’s Choose Ariba CMS? • Global SaaS provider that meets Moody’s strict IT security requirements • Fully scalable solution • Seamless integration with Ariba Procure-to-Pay and Spend Analysis • Excellent reporting capabilities • Competitive price point 15 © 2014 Ariba – an SAP company. All rights reserved.
  16. 16. How does Moody’s handle contract amendments? • Moody’s treats all contract amendments as individual agreements • When an amendment is executed, it is uploaded to its own workspace and linked as a sub-agreement to the agreement(s) it amends • The T&Cs of the parent contract workspace are updated accordingly (expiration date, contract amount, etc.) • When the term of an amendment expires the workspace is closed and if the parent agreement is re-amended, a new workspace is created 16 © 2014 Ariba – an SAP company. All rights reserved.
  17. 17. Why handle contract amendments this way? • Easy to track contract output and monitor the pipeline of the global sourcing team • One contract document per workspace is cleaner and less confusing • Provides clear reporting around the number of times a contract has been amended 17 © 2014 Ariba – an SAP company. All rights reserved.
  18. 18. Ariba Best Practice Center (BPC) • The BPC provided close support during the initial implementation phase in 2012 • The BPC helped us to develop a technique for capturing contract amendments that would effectively meet our reporting requirements to capture the number and type of contract documents executed each month • We partnered with the BPC to develop report templates that include the Moody’s logo, colors and formatting that can be uploaded into CMS for ―one-click‖ reporting 18 © 2014 Ariba – an SAP company. All rights reserved.
  19. 19. © 2013 Moody’s Corporation and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. (“MIS”) AND ITS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY’S (“MOODY’S PUBLICATIONS”) MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY’S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY’S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY’S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at under the heading “Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy.” For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657, AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for retail clients to make any investment decision based on MOODY’S credit rating. If in doubt you should contact your financial or other professional adviser. 19 © 2014 Ariba – an SAP company. All rights reserved.
  20. 20. Welcome Sherri Wheatley Supply Chain Analyst, Services – SC Procurement Performance Hess Corporation As System Administrator of Ariba for Hess Corporation, a leading global independent energy company engaged in the exploration and production of crude oil and natural gas, Sherri serves as the face of Ariba for Hess personnel and is integral in project implementation for Ariba Sourcing and Contracting. Sherri has been actively involved in every aspect of Hess selection, design, configuration, implementation, and adoption of Ariba since 2011 and continues to explore ways Ariba can further enhance Hess’ existing sourcing and contracting processes. Sherri’s professional career includes over 15 years with Hess in areas of Administration, Procure to Pay, Contracting and Procurement. A native Texan, Sherri currently resides in Houston, Texas with her husband of 20 Years, James. 20 © 2014 Ariba – an SAP company. All rights reserved.
  21. 21. Hess Corporation Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on Hess Corporation is available at 21 © 2014 Ariba – an SAP company. All rights reserved.
  22. 22. Hess Process • Hess utilizes the Amend in • 22 Place Method #3 as outlined in April Miller’s presentation The user completes a recurring task to initiate each new amendment phase © 2014 Ariba – an SAP company. All rights reserved.
  23. 23. Hess Process • • 23 There are separate tasks associated with individual document folders for each amendment phase. This allows us to force approval on each amendment with only amendment documents being attached to the approval email. We initially implemented six (6) amendment phases in May 2013. We are just now beginning to see workspaces where additional amendment phases are required. © 2014 Ariba – an SAP company. All rights reserved.
  24. 24. Hess Process • 24 Individual Amendment Approval Document folders allow us to populate the ―legally approved‖ amendment documents for our users © 2014 Ariba – an SAP company. All rights reserved.
  25. 25. Hess Process • Hess utilizes Ariba Sourcing, Ariba Contract Management and Ariba Spend Visibility. • • 25 © 2014 Ariba – an SAP company. All rights reserved. Our Best Practice Representative, Sharon Horton, has been proactively involved with us in system configuration from system implementation. Sharon has been invaluable in this process as well as multiple other customizations of our system. She designed this amendment process for us as well as a customized approval flow that allows us to base our approvals on our corporate Delegation of Authority structure and streamline our integration with SAP.
  26. 26. PANEL DISCUSSION AND QUESTIONS 26 © 2014 Ariba – an SAP company. All rights reserved.
  27. 27. Closing Remarks • • • • 27 Engage Stakeholders Early Discuss Amendment Process before deployment, if possible Consider reporting needs Utilize available help and information (BPC, Webinars, Training) © 2014 Ariba – an SAP company. All rights reserved.
  28. 28. Amendments: Issues Methods 1 and 2 When you repeat the same task, there’s some issue in that the previous task start and stop dates get lost to analysis, but this hasn’t been raised as a concern. For the repeating of the tasks, the SPM technique would actually be better where each repeat of the amendment creates its own phase and set of tasks and corresponding document folders. The major issue is, however, with the approval task: If the approval task is also set up on the workspace, every document in the workspace is sent in the email notice of approval. • If there are a large number of documents, this may exceed the customer’s email limits. • More importantly, the approver doesn’t focus on the documents that need to be approved. • As more amendments are made, more documents are added, further increasing confusion on the part of the approver. The approval task can be set up on the amendment documents folder, but then it doesn’t repeat, a new round needs to be submitted for each amendment process. When you view the task, it shows as ―Approved‖ so users are not submitting a new round to get the approval. Since it’s not required to resubmit this task, the amendment can be published without approval. 28 © 2014 Ariba – an SAP company. All rights reserved.
  29. 29. Amendments: Issues Method 3 This method is the preferred method and best represents best practices: one folder and one set of tasks for each time the workspace is amended. When Ariba improves the Amendment process, this will most closely resemble the improvement method. Issues: • Ariba needs to be involved to build two fields that will control the display of the amendment tasks at the appropriate time. • Each set of tasks and folders needs to be built separately in the template. The customer needs to guess how many times workspaces will be amended for the template type and build a set for each expectation plus some ―cushion‖ sets. ♦ The task names can be duplicated using MS Project Export and Import so that the task names don’t have to be typed each time. However, the task details need to be edited for each task. • The conditions that control which amendment phase and folder are displayed need to be built in the template as well. (Ariba Best Practice Center has a how-to for this process) 29 © 2014 Ariba – an SAP company. All rights reserved.