IACCM Contract Management Forum

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2017-02-10 13:44:28

SAP/Ariba Contract Drafting Tool - Fundamental Flaw?

I've been learning about the SAP/Ariba contract drafting tool set, with clause libraries, negotiation and approval workflows, and reporting capabilities. Our company is preparing to implement the combined SAP/Ariba solution in the medium term horizon (3-5 years). The functionality seems to meet our needs from a contracting lens, with one major flaw ... the tool is designed for contract drafting and negotiation to take place only AFTER the completion of sourcing and selection of a supplier. This can't be right! How do bidders know what they're bidding on? How can proposals be evaluated without alignment on the scope of work, compensation mechanism, terms and conditions, etc? Has anyone else seen the tool and reached the same conclusions? Do you have the same concerns? How can we influence this?
 •  World Commerce & Contracting  •   2017-02-10 14:28:33
This is indeed an important issue. It reflects ignorance of the role and purpose of contracts and their impact on successful outcomes. I am raising this with SAP and will advise on progress. If there is none, we will rapidly assemble a pressure group to ensure a satisfactory response.

Thanks for highlighting this important topic
 •  New Zealand Defence Industry Association (NZDIA)  •   2017-02-12 21:14:04
Will be following this discussion with interest. There have been some recent evolutions in awarding tenders to companies on the basis of innovation and relationship, with contract drafting to follow. System functionality needs to be able to address multiple approaches with flexibility.
 •  Deloitte  •   2017-02-14 07:41:25
I reached out to the Product Owner of the Ariba Product and here is his response:

"Although there are many aspects of a contract, the two in reference here are the actual clauses within the contract and the quoted pricing. Thus, you have to look at the two processes: Collecting Quotes during Sourcing and Contract Creation/Authoring. In the case of collecting quotes, today companies are able to include the terms of the contract within the quoting process. It is up to the company to decide what is negotiable during the quoting process and what isn't. So the bidders do actually know what they are bidding on based on what is included in the sourcing event.

There is a secondary issue though. Companies need to sometimes start the contract creation/authoring/negotiation prior to the quoting process finishing. Although this is allowed within the SAP Ariba tool, it doesn't allow you to pass the information from the sourcing event to the Contract in this specific instance. One must create the contract separate from the sourcing event. As a result the quoted information must be manually copied from the sourcing event once the sourcing quoting process has completed. There are multiple ways to do this within the tool such as using Excel Export/Import and copying from the library.

The good news is that we have further enhancements planned in our roadmap for 2017. A user will be able to create the contract prior to the quoting process ending and, more importantly, we will automatically copy the negotiated terms to the contract workspace once the sourcing quote has completed. These enhancements should speed up the process such that one doesn't need to manually copy the information from the sourcing event to the contract.

We would be happy to work with you further if this doesn't answer your question."

Just reply and I will forward to him!
 •   2017-02-14 13:43:01
Thanks, Kai. Unfortunately, I think we're still missing the key point.

Contract drafting - things like selecting the appropriate base template, adding/changing terms and conditions, and integrating the scope of work and proposed compensation mechanism - this all needs to happen BEFORE the start of the sourcing event. In other words, the buying organization needs to assemble all of their requirements in the draft contract that will be included in the RFP sent to bidders. This allows the bidders to have the full picture when submitting their proposals.

Then, contract negotiation may start with multiple bidders before the completion of the sourcing event. This happens because the buyer may not be in a position to select one or more suppliers until they know how the negotiations will shape the final contract terms.

As part of the negotiation and governance process, the approval workflow and tracking of clause changes will be very useful - but this can't wait for the close of the sourcing event.

Yes, the pricing information needs to be transferable from the sourcing event to the contract, but this does not happen in a vacuum - separate from the remainder of the contract.

Thanks for looking into this - and I hope that this discussion is helpful for others. I'd love to also get additional feedback from other members.
 •  Deloitte  •   2017-02-14 14:15:25
Hi, will forward your thoughts below to the Productowner... or link you two directly (just approach my via kai.jacob@sap.com)
 •   2017-02-24 19:51:12
I have had to deal with this as well as a few other issues with SAP/Ariba. I have deployed the sourcing and contracts module throughout my company. From my experience, they do not seem to understand what their customers' needs are.
On the positive side, the tool does provide great reporting and has been key in having all contracts in one place that multiple people can access at the same time.
 •  Determine, a Corcentric company  •   2017-03-01 23:49:11
A late response to this post, but worth adding some thoughts. In this day and age, you shouldn't have to change the way you work to accommodate a contract management solution. You should always find a solution that either meets your needs out of the box, or one that's easily configurable to meet them. The fact that you are thinking/planning to deploy a solution that will force a huge workaround to your current process should raise some red flags.

Since you are still 3 - 5 years out from deployment, use the time wisely to shop and compare point solutions vs. suites vs. platforms. There is no shortage of choices, depending on your specific company size, geographies, industry, etc. Bear in mind, whatever you choose you're going to have to live with it a long time. If it's difficult to use or doesn't conform to your needs, you will have serious problems gaining user adoption. And even the best solution is useless if nobody uses it. As a suggestion, here is a 'shopping list' of best practice features you may want to use to compare what's available in the market.

Look for:
• Technology that is affordable, and easy to implement, maintain and grow.
• A user experience intuitive enough to be used by everyone across business units and devices.
• Modular solutions that let you start with one or two and add on as needed without reimplementing.
• A single source of data truth that's visible, accessible and spans the enterprise.
• Business process management that links solutions and departmental workflows together.
• Depth of capabilities that solve for immediate challenges, and when your needs grow.
• Built-in self-service tools that really empower users across organization.

There are solutions that solve the contract management problem you are describing in a far better and more cost-effective way. If you're not happy before deployment, imagine how you're going to feel once you're stuck with a poor choice.
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