Drive Compliance, Mitigate Risk and Prevent Savings Leakage Through Collaborative Contract Management


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Collaborative Business Commerce considers how you buy, how you sell, and how you manage cash not just within the four walls of your business but with your trading partners. At the heart of business commerce is the contract, representing the relationship between those trading partners. In this session, learn from thought leaders on how automation has helped them make contract management a key imperative and strategic differentiator for their company in not only containing costs, but in adding bottom-line business value.

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  • According to Aberdeen estimates, around 2.2% of the average enterprise’s savings are lost due to savings leakage out of a possible 5.4% of negotiated savings from the surveyed strategic sourcing groups. That equates to almost 41% of lost negotiated savings! Why is this occurring? Contract utilization has long been the Achilles heel between negotiated savings and what budget owners and CFOs actually experience at the end of the year. The Hackett Group estimates an average of $9.4M for every $1B in spend of lost savings due to contract non-compliance, and that figure can be as high as $18.8M for some companies. This results in a sizeable opportunity for P2P managers to capitalize on enterprise value. From a competitive standpoint, there is a 26% gap in spend between organizations that drive the highest levels of contract compliance versus the bottom quartile. Aberdeen. (2010). Strategic Sourcing: The 2010 Guide to Driving Savings and Procurement Performance. Aberdeen.The Hackett Group. (2008). Purchase-to-Pay Alignment: The Missing Link to Delivering on Spend Cost Reduction. The Hackett Group.
  • Drive Compliance, Mitigate Risk and Prevent Savings Leakage Through Collaborative Contract Management

    1. 1. Drive Compliance, Mitigate Risk andPrevent Savings Leakage throughCollaborative Contract Management© 2013 Ariba, Inc. All rights reserved.Moderator:Sundar Kamakshisundaram, Ariba, an SAP CompanyGuest Speaker:Helle Kierbye, Nordea
    2. 2. Agenda• Introduction• Importance of Collaborative ContractManagement• Customer Panel PresentationCollaborative Contract Management at Nordea• Q & A© 2013 Ariba, Inc. All rights reserved.2
    3. 3. 60% of corporatelitigations arerelated tocontract disputesSource: Fulbright & Jarowski2010 Annual Litigation Survey© 2013 Ariba, Inc. All rights reserved.
    4. 4. Sourcing and Contracting TodayRequires the ability to deliver savings results quicklyAre my Buyersmeetingsavingstargets?Whatinformation dowe have on thesupplier?Where is thelatest contracttemplate?Where is thesupplier’scontract?I mustincrease myspend undermanagement!Am I missingopportunities tore-source orrenew contracts?How do Ideliver a rapidtime-to-value?I need tomaximize costsavings!
    5. 5. Contract Management© 2013 Ariba, Inc. All rights reserved.5eCONTRACTS – THE GLUE to Drive Compliance!Contract termsandConsumptionCatalog items
    6. 6. Aberdeen Report: The 2010 Guide to Driving Savings and Procurement PerformanceContract compliance – key tominimizing savings leakage
    7. 7. The Benefits of CollaborationSource: McKinsey & Company, “The rise of the networked enterprise,Web 2.0 finds it’s payday.” Survey of 4,394 executives. Spring 2011“ Networked enterprises are 50% more likely tohave increased sales, higher profit margins, gainmarket share, and be a market leader. ”41%improvedcollaborationacrosssilos55%betterinformationsharing24%increasedrevenue77%increasedaccess toknowledge63%increasedmarketingeffectiveness43%greatermarketshare8%highermargins“Increasingly companies areembracing collaboration as partof their strategy to grow.”© 2013 Ariba, Inc. All rights reserved.7
    8. 8. Contract Management: TypicalAdoption StagesStage 1:CentralRepository Easy to search Good accesscontrols Contains header/structured data andall documents Automated alerts ReportingStage 2:ContractAuthoring Use of clause andtemplate libraries Integration withMicrosoft Word and externalcollaboration tools/workflows AssociatedreportingStage 3:IntegratedCompliance Structured item/pricing data Automated backend establishment/call-off Usage-basedalerting Advanced usagereporting
    9. 9. Determining Contract ManagementPrioritiesRepository• Contract portfolio assessment (active, expired; spend coverage)• Reporting and visibility needs (for manual compliance as well)Authoring• Streamlining contract creation processes• Minimizing risk relating to contract languageCompliance management• Employee usage of the right contracts• Automating pricing structure complianceWhat is your company’s top priority today?
    10. 10. Agenda• Introduction• Panel Discussion• Key Takeaways• Q & A© 2013 Ariba, Inc. All rights reserved.10
    11. 11. The Panel TeamGuest Speaker: Helle KierbyeHead of Sourcing Development & Projects , Nordea© 2013 Ariba, Inc. All rights reserved.11Moderator : Sundar Kamakshisundaram,Sr. Director – Solutions Marketing, Ariba, Inc
    12. 12. Collaborative ContractManagement
    13. 13. From static repository to collaborationHBR: To build collaborative communities, companies must master a new set ofskills:• Define and build shared purpose• Cultivate an ethic of contribution• Develop scalable processes for coordinating people’s efforts• Create an infrastructure in which collaboration is valued and rewarded13
    14. 14. Repository14Current stateChallenges Milestones / Deliveries• Two Sourcing organizations with different reporting lines• Category management area of responsibility do not always followorganizational structure• Five category mgt. teams and two contract mgt. teams reportinginto two different organizations• Contract owners and budget owners not always identical• Lack of clear guidelines and contract structure• Lack of clear change procedures• Data mismatchCreation of Business process ownershipforum/Change bodyUsing ”Payment forms” to allocate contract spendAll savings registered in AribaCreation of Operational HandbookContract naming conventionCreation of supplier workspacesLearnings Master Data Project• Business Process Ownership• One operating model• Clear guidelines
    15. 15. Status on CM Repository• Number of active suppliers: 1053• Number of active contracts: 205315
    16. 16. Authoring16Current stateChallenges Milestones / Deliveries• Negotiating changes to our contract template require access toscarce legal resourcesCreation of a clause library (Low tech)Ariba integrated Clause Library?E-signing?Learnings• The business case for authoring Contracts in Ariba ContractManagement is still a work in progress since most of ourcontracts are based on our internal Master Contract template
    17. 17. Compliance management17Current stateChallenges Milestones / Deliveries• Lack of knowledge about “Global” agreements and terms• Lack of good service descriptions lead to “double buying” ofsame services• Not able to capture spend per contract• Not able to follow up on compliance and perform discountmanagement on all contractsDevelop tailor-made dashboards on IPhone appCapture contract on invoiceUsing payment forms to allocate spendE-auctions as a call-off method in “falling” marketsBetter service descriptions on contractsEnrichment of the UNSPSC structure to better suitour needsLearnings• Communication, communication, communication….• Reliable data is a prerequisite for managing compliance• Good processes are a prerequisite for reliable data
    18. 18. Demo18
    19. 19. © 2013 Ariba, Inc. All rights reserved.Define Goals Clear definition of Goals and PrioritiesObtain Executive Sponsorship from senior leadership(e.g., CPO, Chief Counsel, CMO, Business unit GM)When implementing solution, balance systemcapabilities with trying to meet business needExecutiveSponsorshipsBalance Need &RequirementsCollaborate Be willing to collaborate with key stakeholders including legaland marketing on rollout and adoptionPrepare clear documentation, design simple process anddefine strict compliance policies to drive adoptionDrive AdoptionSummary and Key Take-aways
    20. 20. © 2013 Ariba, Inc. All rights reserved.20Q&AContact info:Sundar Kamakshisundaram:
    21. 21. © 2013 Ariba, Inc. All rights reserved.21Please Complete Session SurveyFind Sessionin ScheduleClickChoose oneRateSessionThank you for joining usClick Survey andSelect BreakoutSession Survey