Contracting Excellence

Most businesses view contracts as a defense mechanism. This means that while negotiation is in part about defining the relationship, it is used most extensively to agree on the allocation of risks. In addition, there is rarely a defined point of internal ownership carrying accountability for contracted outcomes.

As a result, the process is complex, lengthy and poorly defined. Or, alternatively, it is rigid, insensitive and focused on compliance. In either case, contracts are viewed by many as a bureaucratic necessity rather than a core business asset, and the impacts they have on business performance are inevitably sub-optimized.

This article suggests a way in which contracts can become a source of increased value and assist the business in driving growth and innovation. These recommendations apply to both sell-side and buy-side contracts and procedures — because in the end, no matter which group you represent, everything you do must support your ability to win in the market.

TIM CUMMINS, CEO, IACCM.

The IACCM Capability Maturity Model provides a mechanism to rapidly and accurately assess both buy-side and sell-side

process performance by focusing on the key commercial attributes that drive business outcomes. This article provides an insight into the model, discusses the procedures required to implement the model, and the benefits which flow from it, with examples from Rockwell Automation and Cisco Systems.

MARK DAVID, COMMITMENTOR; KATHERINE KAWAMOTO, IACCM; AND TIM MCCARTHY, ROCKWELL AUTOMATION

Jason Lemkin from EchoSign provides the special sponsoring contribution to this Measurement issue, in which he explains the values to be achieved from alignment of sales and contract management processes.

JASON LEMKIN, ECHOSIGN

Automation plays a fundamental part in managing key performance
indicators (KPIs) and metrics programs. This article discusses the
appropriate metrics to consider and implement in your organization,
and provides a case study with insights into how an organization
has implemented, and benefited from, an automated
KPI/metrics program

ASHIF MAWJI, UPSIDE SOFTWARE

In my article in the December 2007 issue of Contracting Excellence (Zero disputes? P 11),

I reported on the remarkable success of the construction industry — the most adversarial of all industries — in developing collaborative tools that actually prevent and control disputes. The article described some of the most well-known of these tools, and how they can be successfully adapted for use in preventing disputes in any kind of business transaction or relationship.

Because of space limitations, that article could not describe all of the innovative dispute prevention tools that are used in the construction industry. One of those, the ‘Disputes Potential Index’ (DPI), is particularly relevant to this current ‘Measurement’ issue of Contracting Excellence.

This article examines the common issues that cause SLMs to fail as well

as recommendations for addressing those issues.

IAN S HAYES, Clarity Consulting Inc.

If you can’t measure it, it doesn’t exist

One of the axioms that grew out of the quality movement was: ‘If you can’t measure it, it doesn’t exist.’ Its more recent derivative, ‘If you can’t measure it, you can’t manage it,’ has direct applicability to SLAs. However, being able to measure a process or service is necessary, but it is not sufficient to be able to manage it.

PATTERSON SHAFER, INTRASPHERE TECHNOLOGIES

Hardly a week goes by without some leading business publication

reporting on the topic of innovation, and it’s not hard to find listings of companies that are considered innovators. But why is innovation so important today? And how can business leaders use measurement to promote the kinds of behavior that inspire innovation? This article brings together two major topics that should be on the minds of most executive leaders — innovation and the metrics that help to inspire innovation.

Originally used within the construction Industry, ‘output-based’ contracts are

now winning favour in the IT industry. This was one of the findings of a 2007 survey by IACCM, which revealed that over half of the respondents were already using this type of contract.

MICHAEL PORTER, BLAKE NEWPORT

Vice President of Research and Advisory Services, and Advertising Sales enquiries
Katherine Kawamoto

Editorial Panel
Mark David, CommitMentor, UK.
Rose Gazarek, BAE Systems, US
Craig Guarente, Oracle, US
Helena Haapio, Lexpert Ltd, Finland
Christof Hoefner, IBM, Germany
Bruce Horowitz, Attorney/Arbitrator, Ecuador
Doug Hudgeon, Macquarie Bank Ltd, Australia
William Knittle, BP, UK

Automation and technology panel
Mark Darby, Alliantist, UK
Ashif Mawji, Upside Software Inc, Canada
Tim Minahan, Procuri, US
Terry Nicholson, Selectica, US

Address: International Association for Contract & Commercial Management (IACCM), 90 Grove Street, Ridgefield, CT 06877 USA. Ph: (1) 203 431 8741, www.iaccm.com.

This newsletter is intended to keep readers abreast of current developments in the field of contract and commercial management. It is not, however, to be used or relied on as a substitute for professional advice. Before acting on any matter in the areas, readers should discuss matters with their own professional advisers.

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