Adding value through contract management
Author: Tim Cummins
For 20 years, IACCM has been at the forefront in identifying and quantifying the impact of good contract management on business results. Value is achieved in several ways - for example, reducing contract value erosion, supporting contract growth, contributing to reputation and ensuring ethical practices.
I am excited by the work now being undertaken by the IACCM Research Forum and the impact this is having on value realization and delivery. Working with a group of top international corporations, we are elevating the role and practice of contract management to a new level. For example, our continuing work on 'as a service contracting' is revealing the challenges and importance of this fundamental shift in business models and the critical role it can play in sustainability. More recently, our development of the VCU Framework promises to revolutionize planning and execution of post-award contract management and governance.
The reason this is exciting is because the research is not simply theory – it is delivering real impact through implementation and in the process generating fresh understanding and respect for the role of contract management.
Why it matters
Few people would disagree that business continues to become more complicated. The speed of change, disruptive technology, increased regulation, geopolitical uncertainty – multiple factors contribute to the challenges we face in our decisions and market relationships.
Contracts are put in place to bring a level of definition and certainty to our dealings. Contract management is the discipline through which we oversee performance. This is clearly an important discipline – LinkedIn tells us that there are more than 8 million people who have Contract Manager as a job title. The problem is that, for most, it isn't really a discipline at all – typically they are untrained and either self-taught, or taught by colleagues. For many, it is an oversight role, reacting to events rather than shaping them.
Making a difference
By coordinating and overseeing research activity, IACCM is increasingly able to provide its members with the methods, the data and the facts needed to turn contract management into a proactive and influential discipline. What this is showing us is that the overall scope of contract management spans the entire lifecycle of a trading relationship, from inception of the opportunity to termination or close-out.
Businesses make or lose money based on the performance of their trading relationships and most of these are defined by contracts. Smart leaders are increasingly investing in people with the skills, knowledge and training to oversee the management of value from those contracts, including the deployment of tools and systems that automate and streamline organizational competence.