SirionLabs Webinar Featuring Forrester - Why Modern Contract Management is a Must in Today’s Procurement World
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Enterprise procurement has undergone a significant shift over the past two decades with services emerging ahead of goods and commodities as the predominant spend category and contracts becoming more complex and dynamic. Built initially in the late 20th century, traditional contract management technology has failed to keep pace. Thus, businesses have not seen the desired impact on their contractual relationships despite investing millions of dollars. In this webinar, Andrew Bartels (Vice President and Principal Analyst, Forrester) and Ajay Agrawal (Co-founder & CEO, SirionLabs) explains how to get beyond the traditional contract lifecycle management tools in today’s modern world. Using real-world use-cases, industry frameworks, and best practices, this webinar will touch on everything from what advanced contract management looks like to specific success factors that will help you make smarter business decisions. Key Learnings: 1) Key phases in the evolution of contract management technology 2) Strengths and gaps in traditional contract management technology 3) How to identify the right contract management system for your organization’s needs
SirionLabs Webinar Featuring Forrester - Why Modern Contract Management is a Must in Today’s Procurement World
- 1. © 2012-17 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Why Modern Contract Management is a Must in Today’s Procurement World A WEBINAR FEATURING FORRESTER AND SIRIONLABS April 27, 2017
- 2. 2© 2017 SirionLabs. The contents of this presentation are confidential. BEFO RE WE GET S T AR TED THE HOUSEKEEPING ITEMS: • Webinar slides, recording, and Q&A will be emailed • Enter questions in chat on webinar panel • Or ask your questions on twitter - @SirionLabs - Use #ContractManagement
- 3. 3© 2017 SirionLabs. The contents of this presentation are confidential. MEET T H E S PEAKERS ANDREW BARTELS VP and Principal Analyst Forrester Inc. abartels@forrester.com AJAY AGRAWAL CEO & Co-founder SirionLabs ajay.agrawal@sirionlabs.com
- 4. 4© 2017 SirionLabs. The contents of this presentation are confidential. WH AT WILL BE C O VERED T O DAY CONTEXT AND LANDSCAPE Why CLM is critical for contract management? INSIGHTS How gaps in traditional CLM approach result in value leakage? BEST PRACTICES Leveraging modern CLM technology for effective contract management SIRION OVERVIEW How Sirion is transforming the way enterprises manage contracts
- 5. © 2017 FORRESTER. REPRODUCTION PROHIBITED. Why Modern Contract Management is a Must in Today’s Procurement World Andrew H. Bartels, Vice President and Principal Analyst April 27, 2017
- 6. 6© 2017 FORRESTER. REPRODUCTION PROHIBITED. Contracts play a central role in purchasing A sourcing event that chooses a supplier(s) and sets a price … That gets turned into a contract That gets executed through procurement and paid off of an invoice Or an expiring contract triggers a sourcing event
- 7. 7© 2017 FORRESTER. REPRODUCTION PROHIBITED. Contracts have their own lifecycle, requiring a specialized solution License Revenues 2 1 3 4 5 6 Contract optimization Contract renewal Contract compliance and administration Contract storing and repository Third-party contract importing Contract drafting and negotiation Contract lifecycle management (CLM) software handles the whole lifecycle
- 8. 8© 2017 FORRESTER. REPRODUCTION PROHIBITED. CLM solutions can deliver five sources of value 1. All contracts in an electronic repository (Cut costs of finding contracts, tracking renewals) 2.Analysis and reports of contracts (Identify duplicates, conflicts, obligations, and rights) 3. Automate contract creation (More efficient use of legal staff, faster cycle times, acceleration of revenues or savings) 5. Improved contract optimization (Maximizing business value from contracts) 4. Integrate transaction systems to contractual terms and conditions (More complete and effective compliance with contractual benefits and commitments)
- 9. 9© 2017 FORRESTER. REPRODUCTION PROHIBITED. But most firms have not gotten beyond Stage 3
- 10. 10© 2017 FORRESTER. REPRODUCTION PROHIBITED. Until CLM products and CLM implementations move beyond contract creation, they will not deliver strategic value Tactical and Transactional Driving success in contractual engagements through improved business outcomes – savings and revenue, performance, relationships, risk Reducing effort and cost in creating contracts Finding all contracts in one location Strategic and Transformational
- 11. 11© 2017 FORRESTER. REPRODUCTION PROHIBITED. That shortfall is especially important when it comes to services spending In most industries, firms spend more on services than on goods/commodities today 11% 15% 20% 20% 28% 40% 41% 58% 63% 64% 65% 75% 81% 85% 97% Retail trade Wholesale trade Manufacturing Construction Agriculture, forestry, fishing, and hunting Utilities Mining All industries Transportation and warehousing Arts, entertainment, leisure Government Education, health care Information Professional and business services Finance, insurance, real estate Services as a percentage of purchased inputs, 2015 Source: US Bureau of Economic Analysis, US Gross Output By Industry Yet the value of services comes after initial purchase, making contract management critical
- 12. 12© 2017 FORRESTER. REPRODUCTION PROHIBITED. Failure to tie the contract to each stage in the procurement process leads to problems Define services to be provided Choose vendor and scope, price and timing of services to be provided Engage with services provider to initiate work Manage services provider’s performance during engagement Process invoice and pay vendor Invoice doesn’t agree with contract Work performance is poor Work doesn’t agree with contract Massive impact on bottom line equivalent to 5% to 10% of the value of the contract
- 13. 13© 2017 FORRESTER. REPRODUCTION PROHIBITED. In this changed procurement landscape, contract management must: • go beyond the traditional pre-signature focus to cover the full lifecycle • enable and secure intended business outcomes • enable comprehensive risk management through the duration of the engagement • cut across internal and external silos and facilitate collaboration and engagement within the enterprise and with suppliers • offer intelligent and dynamic technology with advanced analytics, workflows and integration with other enterprise systems
- 14. 14© 2017 FORRESTER. REPRODUCTION PROHIBITED. What advanced contract management looks like CLM value stage Advanced features Contract repository Natural language processing and machine learning to extract and categorize metadata Reporting and analytics Analysis of actual performance against expected and audited supplier invoices Contract creation Artificial intelligence to help users choose the right contract terms and conditions for a new contract incorporating performance data from past contracts Contract compliance In addition to integration with transaction systems, workflows to facilitate completion of obligations and track current status Contract optimization Analytics to identify risks or lost value from existing contracts and identify necessary changes to contract language
- 15. 15© 2017 FORRESTER. REPRODUCTION PROHIBITED. Success factors for reporting and analysis › A good portfolio of existing out-of-the-box reports • Contracts by spend, geography, renewal date, etc. • Contracting process and cycle-time analysis reports • Compliance analysis reports › Dashboards to monitor status of service levels, obligations, governance issues and action items, etc. › Tools for creating custom reports • Wizards for business users to generate reports they need
- 16. 16© 2017 FORRESTER. REPRODUCTION PROHIBITED. Success factors for contract compliance › Automated workflows to facilitate and track completion of service levels and performance obligations › Automated performance and invoice validation › Granular tracking of regulatory and policy compliance obligations › Management and tracking of governance issues and action items › Alerts and reminders for upcoming contract renewals and expirations › Change management to keep the contract metadata and obligations updated
- 17. 17© 2017 FORRESTER. REPRODUCTION PROHIBITED. Success factors for contract optimization › Make contract improvement a goal! › Use the analytics of your CLM product to identify bottlenecks and weak controls. › Compare the actual business results from your contracts with your expected benefits.
- 18. 18© 2017 FORRESTER. REPRODUCTION PROHIBITED. Building the ROI for CLM solutions › Hard Savings • Reduction in supplier invoice amount due to correction of discrepancies/ errors • Enforcement of service level credits by closely tracking supplier performance › Business Outcomes • Improved service delivery and performance • Ability to close contracts more rapidly › Risk Reduction • Identification and management of contract risks and exposures › Effort and Cost Reduction • Reduction in cost of finding existing contracts • Reduction in legal department’s cost to review contracts • Reduction in number of unintentionally lapsed or renewed contracts • Reduction in human effort for post-signature management of strategic contracts © 2011 Forrester Research, Inc. Reproduction Prohibited
- 19. 19© 2017 FORRESTER. REPRODUCTION PROHIBITED. Recommendations › CLM solutions have real, tangible benefits, but you need full implementation to realize the strategic benefits, and not just the tactical benefits › Look for products with advanced features for contract compliance and contract optimization to capture this full strategic value of CLM › Implement in stages, but get buy-in from all stakeholders for all the stages of value › If you buy a CLM solution for buy-side contracts, get legal involved, and look to see if it can be used for sell-side contracts as well • Focus legal on creating library of terms and conditions, and wizards, scripts and templates for creation of contracts, as well as approval workflow and controls
- 20. FORRESTER.COM Thank you © 2017 FORRESTER. REPRODUCTION PROHIBITED. Andrew Bartels +1 516.869.0128 abartels@forrester.com
- 21. 21© 2017 SirionLabs. The contents of this presentation are confidential. ABO UT US USA INDIA GERMANY DENMARK UK SINGAPORE FAC T : $200-300 B OF VALUE IS LOST ANNUALLY DUE TO LACK OF EFFECTIVE GOVERNANCE OF SERVICES CONTRACTS PORTFOLIO COMPANY UK Government G-Cloud Supplier THE WORLD’S MOST INNOVATIVE COMPANIES Sirion is transforming the way buyers and suppliers of complex services engage with each other
- 22. O UR APPR OACH Algorithmically reconcile “what is supposed to happen” from the contract to “what actually happened” using live performance data Use the signed contract as the source of truth Eliminate human errors by rejecting and adjusting invoices based on “what you need to pay”
- 23. 23© 2017 SirionLabs. The contents of this presentation are confidential. S T R ONG EXPERIENCE AC R OSS INDUS TRIES FORTUNE 500 AND GLOBAL 2000 CLIENTS Banking and Financial Services Oil and Gas Healthcare Wind Energy Insurance Telecom Information Technology Aerospace and Defence Airport Operations Food & Beverage COMPLEX SERVICES MANAGED IT BPO Telecom Facilities Management Third Party Logistics Complex Manufacturing Construction Projects Contingent Workforce Healthcare Services
- 24. 24© 2017 SirionLabs. The contents of this presentation are confidential. S IR ION IMPACT $1B TOTAL INVOICES PROCESSED SAVINGS DELIVERED IN 2016 $68M (6.8%) 10,000+ TOTAL CONTRACTS MANAGED $3B+ TCV UNDER MANAGEMENT 350,000+ TOTAL OBLIGATIONS MANAGED
- 25. 25© 2017 SirionLabs. The contents of this presentation are confidential. WH AT’S MIS SING IN C O NVENTIONAL C O NTRACT MANAGEMENT ? Negotiation Contract Drafting Signature Contract Repository Contract Admin Contract Performance Relationship Management CONVENTIONAL CONTRACT MANAGEMENT VIEWS THE CONTRACT AS THE END PRODUCT OF PROCUREMENT, OFFERS LITTLE POST -SIGNATURE CAPABILITY Post-signature (36-60 months)Pre-signature (6-12 months) (Not designed to support frequent updates to the contract) Renewal and Termination
- 26. 26© 2017 SirionLabs. The contents of this presentation are confidential. PO S T -SIGNATURE C O NTRACT MANAGEMENT | T H E BO T TOM LINE IMPACT SIGNS OF DEFICIENT POST-SIGNATURE CONTRACT MANAGEMENT • Outdated contract documents in the repository • Deliverables and obligations tracked on spreadsheets • Invoice payments made based on supplier data • Governance issues and action items tracked on emails Pre-signature (procurement) Post-signature (supplier governance) Time What is delivered “Value Realized” The business case “Value Expected”Value captured during procurement “Value Promised” Value 20% 8% Soft Leakage 12% Hard Leakage
- 27. 27© 2017 SirionLabs. The contents of this presentation are confidential. S IR ION’S END -TO-END C O NTRACT MANAGEMENT APPR OACH Service Level Management Obligation Compliance SOW/WO/PO Management Credits & Earnbacks Regulatory Compliance Policy Compliance Supplier Audits Governance Forums Issue/Action Item Management Governance Process Health Survey Management Invoice Auditing Spend Pool Management Financial Analysis and Planning Value Assurance Clause Library Template Library Authoring Workflow e‐Signature Document Repository Obligation Capture Document Change Management Contract Interpretations
- 28. 28© 2017 SirionLabs. The contents of this presentation are confidential. B R IN GING C ON TRAC TS TO LIFE - 1 Computational Objects Key Risks • Hierarchical storage • Advanced search capabilities • Change management Contract Repository Expected Outcomes Base Charges Rate Cards SL Credits Earn Backs KPI Calculations Pricing Adjustments Regulatory Liability Indemnity Insurance Obligations Milestones Service Levels Deliverables Contract Authoring
- 29. 29© 2017 SirionLabs. The contents of this presentation are confidential. S MART C O NTRACT R EPOS ITORY
- 30. 30© 2017 SirionLabs. The contents of this presentation are confidential. B R IN GING C ON TRAC TS TO LIFE - 2 COMPUTATIONAL OBJECTS KEY RISKS Algorithms EXPECTED OUTCOMES DATA FROM ENTERPRISE SYSTEMS Workflows Workflows PERFORMANCE INVOICECONTRACT Reports and analytics
- 31. 31© 2017 SirionLabs. The contents of this presentation are confidential. UNIFIED C O NTROL O VER O UT COMES AND PAYMENTS
- 32. 32© 2017 SirionLabs. The contents of this presentation are confidential. UNPRECEDENTED INT ELLIGENCE AND INS IGHTS
- 33. 33© 2017 SirionLabs. The contents of this presentation are confidential. WH AT C US TOMERS S AY ABO UT S IR ION We recovered our investment in Sirion within the first few months as it enabled us to identify discrepancies in our supplier invoices which would otherwise go unnoticed. Although Sirion has only recently gone live we have identified increased revenue and/or cost avoidance which if applied across the Trust’s portfolio of commercial agreements, will deliver a projected saving/revenue increase of circa £20m within the next few years. “ “ Sir Robert Naylor | Former Chief Executive Henrik Krarup Stefansen | Senior Director, Global IT Sourcing
- 35. 35© 2017 SirionLabs. The contents of this presentation are confidential. WH AT’S NEXT • Please complete a brief survey at the end of this webinar to give us your feedback on today's webinar. Your response fuels our growth. • Look out for a follow-up email with a copy of these slides, a recording of the webinar, Q&A recap, and other fun stuff • View and share this presentation on ݺߣshare - Join us for more such events