I´d strongly encourage you to raise this question also within the IACCM technology network, which is a micro-community, where you will be able to get insights to new trends in this specific field and where I am sure you´ll have the opportunity to share ideas regarding the topic you have brought:
Also, please check our library: www.iaccm.com/resources/ where, you will find some articles about 'escrow agreements' for the software arena and other topics associated with risk management in the hardware world as well. By analogy you will explore ideas regarding hardware coming from best practices and escrow programs with the goal of risk mitigation
Hi Michelle - saw your post. For hardware: having a refresh plan with your supplier following a bit of a mutual benchmark, to see how best to provision for your upcoming capacity needs, might give some assurance. For services or subscriptions-based tech: having a documented 'cookbook' of key players and tech needed to recreate the service, including a list of any solutions 'not commercially available' or not easily re-purchased in Canada updated, might also be helpful to gage the difficulty of transitioning off your current tech,if needs be.
Those two governance-type processes, along with the typical supplier obligation to reasonably cooperate with any successor and to provide some mutually-agreed orderly termination assistance, might serve you well (outside escrow for software). Hope that offers some ideas...good luck. Cheers, Robin
Fully agree with you. We also follow a standard contract briefing template and prepare contract summaries for the delivery and business teams. They dont have to go through the legal T&Cs and get a contract briefing in a simple and plain language.
• BT GBS CDDS
The contract briefing template is essential as a summary, but what is disappoint even on the ICCM view is the lack of visualisation employed. The briefing needs to be more relevant into the operational delivery teams and focussed on the delivery clauses and conditions. Whilst senior stakeholders need the exec summary position there is room to improve what IACCM show as a template.
Having co-led the introduction of Relational Contracting into the Australian Department of Defence, where it is known as Collaborative Contracting, since mid 2013 with the help of IACCM I wanted to add my thoughts on your question. For the record we were lucky enough to have Jim Bergman help us on our journey!
In terms of 'Does Relational Contracting require long term commitment over multiple contracts for the parties to realize the benefits?'. Simply put, no it does not. A single contract can absolutely benefit from a relational approach, especially where there is a high level of uncertainty about main elements of the contract such as scope, performance, schedule and of course price. A relational approach allows both parties to work together collaboratively to evolve the solution, noting it could be a novel solution that has not been used before. For example, in the Australian Department of Defence we have a number of contracts where we are either the largest user in the world or the first user, which necessitates a degree of flexibility in the commercial structure since the uncertainty and risk is high. Both parties have to work in good faith to deliver the enterprise outcome to Defence. The relational contracting approach provides a commercial architecture within the contract to allow both buyer and seller to have these discussions without reverting to tightly fought commercial structures.
That said, I do believe that in large organisations such as the Australian Department of Defence, there should be levels of a relational contracting approach. For example, at the contract level, even for multi-party contracts, we'll use a Collaborative Contracting approach. However, when we combine multiple contracts with a single seller, we can then combine these relationships as a part of a Supplier Relationship Management (SRM) approach to vendor management across a program or portfolio of contracts. Again, Jim assisted us with this, although we are still on the SRM journey.
In terms of 'How do we ensure that the benefits (price competitiveness, quality of service, innovation etc.) that can also accrue from competitive sourcing are not lost?'. The Australian Department of Defence has been using Performance Based Contracts (PBCs) since 2005 to ensure both short-term and long-term benefits are being realised. In 2012 we started using what we refer to as Generation 3 PBCs which includes enterprise performance and enterprise behaviours (relational) within the performance measurement framework linked to both commercial consequences, both positive and negative. In this case, we typically use incentives such as contact extensions, sometimes known as rolling wave or award term contracts, to ensure the seller is maintaining the long-term behaviours you described. You can get more information on these type of performance based contracts at my blog at www.performancebasedcontracting.com.
Finally, to assist with the successful implementation of Collaborative Contracting into our commercial functions we developed and released on 28 September 2018 a Collaborative Contracting Better Practice Guide a copy of which you can get from the following link www.defence.gov.au/casg/Multimedia/Collaborative_Contracting_Better_Practice_Guide-9-8860.pdf.
Anyway, I hope this helps. And of course, as part of the IACCM Australia New Zealand Advisory board and an IACCM Fellow I would be happy to answer any further questions.
I am also seeing more stringent contracting practices on a "take it or leave it" basis form large groups with a focus on transferring nearly all risk to the vendor. This does impact upon our risk profile and has lead to discussions with our insurance broker as to our exposure in accepting contracts that go further than Common Law recovery (in Australia). One wonders if this is a good practice in developing mutual relationships or whether it will leave to increased costs (from premium rises for example) or push people to behaviours that are in no-one's best interests (eg the setting up of shelf companies). Keen to hear if there are any suggested solutions if this is a common problem.
• Adhock media
Despite the rising popularity of entrepreneurship, startup culture brings its own unique set of challenges and problems that its leaders must commit to addressing. Some of them are,
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I'm in a similar situation. Last year, I was given a new position that had never been handled before. All of the spend had been previously managed by different departments and associates within those departments. It's hard to talk people into giving over power that they've always had. I decided to approach it one bite at a time.
Find someone willing to let me help but don't push. Tell them you're free help and you just want to help make their lives easier. Once you can get a couple wins under your belt, more and more people will be willing to let you help them.
Hope this helps.
It´s a good point the one you have raised, and I am happy to read from our colleague who is in a similar situation as the one you have described.
He has recommended to find someone willing to help, without pushing and being available to make their jobs easier.
And I personally believe this is one of the responses to your point: we need to generate the certainty that Contract Management really matters and, according to IACCM findings and experience, create in Top Management the said awareness. Many IACCM corporate members have already succesfully proceeded like this!
I can bring some articles posted in our IACCM library which might me helpful, such as Kate Rodriguez' 'Top CEO Describe their perfect employee' (www.iaccm.com/resources/ or the article from Wharton School of Management in response to the question 'What makes team work effectively?' (www.iaccm.com/resources/ and/or this post in our IACCM library related to 'How the top innovators keep winning' (www.iaccm.com/resources/.
However, I believe that the way to convince Top Management and other stakeholders of the contracing process so that 'business does no longer say NO' as you described, is by following the key messages resulting from Tim Cummins and Sally Hughes´remarks in our IACCM Americas conference 2016 (now that our 2017 conference in Toronto is around the corner):
Tim and Sally confirmed the speed with which contract and commercial management are transforming as business disciplines and in the value they are providing. Refer to this entry where you will find some ideas, examples and case studies regarding the critical importance of contracts in the business, taken by Tim and Sally after the conference: www.iaccm.com/resources/;
Hope this helps and feel free to connect with me! Best regards,
I feel your pain. i am the first Commercial Manager at my company having come from a major prime. The difference for me is that i had support from my CEO to develop a Culture of Commerciality. Therein i Think lies the "secret sauce" - to develop a champion at the C suite level. You are on the right track by getting involved and just being helpful. When they work out that you can save them work then even engineers will come around!
Also good to remember you are there for a marathon not a sprint. It can be frustrating with some old die hards but stay at it.
just so you know i am the Community Lead for the Small Business and Start Up Group where other members face similar issues. Even thought you are from a large company you would be welcome join and see if others can assist.
Finally i am speaking at the IACCM Australian conference in a week on Developing a Culture of Commerciality. if you can't attend you can get the paper from the website.
Otherwise if you just want to chew the fat please feel free to contact me .
Good Luck and you will get there.
Reads like the job description in my last three jobs. One of my bosses told me a few years ago that Contract Management has a PR problem. We get a lot of nods along they way but ultimately, revenue focus trumps everything else. And don't get me started on what the Sales reps throw over the fence for others to deal with. Sometimes, one needs to move on, which could mean: seek other opportunities.
Although I'm not aware of an existing case study on this topic, however, during my experience of contract negotiation, I have come across such situations and happy to share some tips that I usually apply. Typically, large MNCs or Government institutions like to push their contract templates and are averse to any changes.
During the beginning of the negotiation lay out on what I call the 'ground rules'. Meaning the aim of the negotiation is for both parties to explore solutions to the issues and not have an ego-tussle. The words "No" or "I don't agree" or "It cannot be done" will be used only after exploring all the available legal options. There is always something to bargain, never give away a demand for free, always ask for something in return. Try beginning with smaller issues first. In many common law jurisdictions, entering into a contract by using undue influence make the contract voidable.
The OLA is a more detailed document on which the SLAs are built. Any KPI/commitment should be backed up by the OLA.
If you think of a SLA as a way to measure performance, the OLA supports achieving the SLA.
See for example, the ITIL definition of OLA:
"Operational Level Agreement (OLA) (ITILv2): An internal document, owned by the Service Management Team, that defines the working relationship between different functional areas within an organization. The OLA sets out the responsibilities for the support and delivery of IT services to Customers. Between a Service Desk and 2nd level support/software maintenance/network management it may be mainly concerned with activities that must take place should a service fail. In other circumstances, for example, in support of Change Management, it is likely to describe the various executive responsibilities and activities of the parties involved. The terms of an OLA must support the qualitative and quantitative statements contained in the Service Charter, Service Level Objectives (SLOs) and Service Level Agreements (SLAs). There is a strong relationship between OLAs and procedures."
Hope this helps,
• Unisys New Zealand Limited
Typically an OLA is not a contractual document. It is maintained by the relevant operational teams and covers everyday interactions. It might be internal to your organisational only, or it might span more than one organisation with operational teams working in one "space", e.g., for a common customer.
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