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Understanding the Contracting Capability Maturity Model: How
Competitive is Your Organization s Contracting Function?
March 24th, 2011
Presented By:
Huron Legal in cooperation
Association of Corporate Counsel and the Law Department
Management Committee
Nancy Jessen
Managing Director, Huron Legal
202-585-6841
Katherine Kawamoto
VP Research and Advisory Services
Verona Dorch
Assistant General Counsel & Assistant Corporate Secretary
How Competitive Is Your Organization s
Contracting Function?
Session Overview
It is common for companies to struggle at benchmarking their current
enterprise-wide contracting performance. Lacking key inputs, firms may not understand how to measure obstacles or understand the steps necessary to overcome roadblocks in order to be a mature and high-functioning
organization.
In this session we will review the contracting capability maturity model, which provides a framework to help companies evaluate their contracting performance. We examine several key inputs to the maturity model and discuss how to structure next steps toward achieving a world-class
About IACCM
The International Association for Contract & Commercial Management
enables
both public and private sector organizations and professionals to achieve
world-class standards in their contracting and relationship management process and
skills. It provides executives and practitioners with advisory, research and
benchmarking services, and worldwide training and certification for contracts,
commercial and relationship management professionals. IACCM is a non-profit
membership organization that supports innovation and collaboration in meeting the
demands of today's global trading relationships and practices.
§ Our globally scalable businesses serve major, long-term industries that are
fundamental to world economic growth and progress § 5 Divisions • Infrastructure • Metals • Minerals • Rail • Industrial
§ Headquartered in Camp Hill, PA
§ Global in 50+ countries
§ 2010 revenue: ~ $3B
Delivering Value | Driving Results
Enhancing Organizational Effectiveness and Reducing Legal Spend
Huron
Legal
Digital Evidence
Services Discovery Managed Services with Sp3ctrum™ Document Review Integrated E-Discovery with V3locity® Records Management & Document Management Contract Management Cost Reduction and Efficiency Improvement with IMPACT™ Law Department Optimization & Organization Redesign Law Firm Management Matter Management /E-Billing Outside Counsel Management Collections with R3con™
Why Assess Your Contracting Capabilities?
§ To understand your company s position relative to competitors
§ To increase performance, reduce cost, and mitigate risk
§ To become a better vendor AND customer
§ To identify initiatives needed to meet business objectives
Background
IACCM Contracting Capability Maturity Model History
§ Created in 2007 to benchmark the status of your contract and relationship
management processes against characteristics of world class organizations • IACCM • Rockwell Automation • BT • Grainger • TPI • Siemens • Cisco • CommitMentor Model Originators
IACCM Contracting Capability Maturity Model
The 9 Measurement Inputs
Leadership
Customer / Supplier Experience
Execution & Delivery
Solution Requirements Management
Financial
Information Systems / Knowledge Management
Risk Management
Strategy
People Development
Organizational Development Phases
1 (0%) - start-up
2 (25%) - under development 3 (50%) - discipline is functional 4 (75%) - continuous improvement 5 (100%) - world class
Harsco s
Core Ideology provides context for defining and adopting
a new vision for enterprise contract management
Core Purpose
To build teams that win with integrity anywhere in the world
Core Values
• Uncompromising integrity and ethical business prac7ces
• People – the A Team
• Con7nuous improvement
• Value crea7on discipline
Proposed Vision for Enterprise Contract Management
Recognize and manage contracts as enterprise-level assets to optimize the value of commercial relationships, reduce operational risk and
Compared to Industry Benchmarks, Harsco is at the start-up phase in
each of the nine areas of measurement.
Contracting Capability
Maturity Model Comparisons
Leadership
Customer / Supplier Experience Execution and Delivery
Solution Requirements Management Financial
Information Systems/Knowledge Management Risk Management Strategy People Development Start-up 1 2 3 World Class 4 5 2.6 2.9 2.8 2.5 2.4 2.2 3.0 2.6 2.8 Rating Scale 1: start-up 2: under development 3: discipline is functional 4: continuous improvement 5: world class H H H H H H H H H
Key Areas of Focus
• Strategy & Policy: Transform the prevailing business culture regarding contracts from
a focus on administrative processes to an organization and culture that is aligned with achieving the proposed vision for ECM.
• Process & Workflow: Develop and leverage a balanced and standardized contract
management process based on established best practices to improve consistency and reduce risk across the organization.
• Roles & Responsibilities: Redefine roles throughout the contract management
lifecycle and leverage defined escalation criteria to drive appropriate participation of resources.
• Systems & Information Management: Design and implement solutions to meet
Harsco s highly prioritized requirements, not all possible requirements, with a focus on local usability, as well as, on-going support and improvement.
Interactive Poll
§ In the next section, we present examples of these inputs and actual
contracting capability maturity model questions.
§ Please answer the questions based on an assessment of total company
capability, indicating the score for each question on a scale of 1 to 5:
• 1 (0%) - start-up
• 2 (25%) - under development
• 3 (50%) - discipline is functional
• 4 (75%) - continuous improvement
Interactive Poll
§ Answer the following statement:
I believe my company s enterprise-wide contracting processes are____
Next: Leadership
Interactive Poll
Leadership (1 of 2)
§ Answer the following statement:
Degree to which our company-wide commitment management processes & process ownership is established
Interactive Poll
Leadership (2 of 2)
§ Answer the following statement:
Degree to which business leadership incorporates commitment management as a key element into marketing strategy
Interactive Poll
Leadership
Poll Questions:
• Company-wide commitment
management process, & process ownership established
• Business Leadership incorporates
commitment management as key element in marketing strategy
Discussion Topics:
• What is Commitment Management?
• Impact of inconsistent messaging by
Leadership
Benchmark Survey Response:
Roughly 75% of survey respondents rated their leadership maturity as 3 or less.
Next: Customer / Supplier Exp.
Interactive Poll
Customer / Supplier Experience (1 of 2)
§ Answer the following statement:
Degree to which the contract is viewed as a tool to plan and track business relationships
Interactive Poll
Customer / Supplier Experience (2 of 2)
§ Answer the following statement:
Degree to which both parties openly discuss interests and desired outcomes
Interactive Poll
Customer/Supplier Experience
Poll Questions:
• The contract is viewed as a tool to
plan and track business relationships • Both parties openly discuss interests
and desired outcomes
Discussion Topic:
• Translating strong relationships into measurable contracting policies
Benchmark Survey Response:
• A majority of respondents believe
customer / supplier relationships are mature
• Related questions tracking contract
use as a goal-setting tool scored much lower
Next: Execution and Delivery
Interactive Poll
Execution and Delivery (1 of 2)
§ Answer the following statement:
Degree to which process are well-aligned and capable with tight control limits
Interactive Poll
Execution and Delivery (2 of 2)
§ Answer the following statement:
Interactive Poll
Execution and Delivery
Poll Questions:
• Processes are well-aligned and
capable with very tight control limits • There is no tolerance for
non-compliance
Discussion Topic:
How does a company s business model effect execution and delivery
Benchmark Survey Response:
• Responses indicate a large spread
among companies (72% either weak or strong)
• Comparatively small portion of
average respondents
Next: Info Systems /
Interactive Poll
Information Systems / Knowledge Management (1 of 2)
§ Answer the following statement:
Degree to which a contracting tool is deployed and utilized for all contract capabilities 1 (0%) - start-up 2 (25%) - under development 3 (50%) - discipline is functional 4 (75%) - continuous improvement 5 (100%) - world class
Interactive Poll
Information Systems / Knowledge Management (2 of 2)
§ Answer the following statement:
Degree to which the ECM tool is part of an overall enterprise information system (e.g. ERP, content management)
1 (0%) - start-up
2 (25%) - under development 3 (50%) - discipline is functional 4 (75%) - continuous improvement 5 (100%) - world class
Interactive Poll
Information Systems/Knowledge Management
Poll Questions:
• A Contracting Lifecycle Management
software tool is deployed and utilized for all contractual activity
• The [ECM] software tool is part of the
overall enterprise information system (e.g. ERP system)
Discussion Topic:
• Moving from a segmented management
process to an ECM
• Reasons for lacking a strong ECM tool
Benchmark Survey Response:
• Nearly 40% of respondents do not
have an enterprise contract
management tool (ECM) deployed • Even fewer respondents indicated
Interactive Poll
Summary
World Class Organizations Seek to Improve Fundamental Maturity Building Blocks
Process Define processes and develop measurable success metrics such that inputs can be evaluated and refined in future phases Technology Utilize an enterprise-wide solution for each input where
appropriate, and ensure that data extracted from the tool is robust, comprehensive, and complete
People Train the appropriate people to ensure competence and adaptability in addressing the input. Engage senior
management for buy-in and development of strategic initiatives Risk / Reward Evaluate all inputs and strive to reduce risk while increasing
From Assessment to Implementation
§ Conducting a contracting capability assessment is the first step.
§ Driving change will require translation of results into agreed upon
business objectives, an implementation plan and structured execution.
§ For continuous improvement and evolution along the maturity model,
organizations should implement a structured re-evaluation approach.
Current Contracting Capability Contracting Goals & Business Objectives Execution Implementation Roadmap
CCMM Assessment Operational Alternatives Action Plan
Re-evaluation and Improvement Building Towards Maturity
Questions?
For More Information, Contact:
Katherine Kawamoto, IACCM: [email protected]
Nancy Jessen, Huron Legal: [email protected]
Verona Dorch, Harsco: [email protected]
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