Justin has over 23 years of global experience delivering complex projects and transformations in the public and private sector. Justin currently advises the World Bank, Asian Development Bank, US Trade and Development Agency, and the US International Development Finance Corporation on best practices in operations, project feasibility, GovTech, and procurement. He has created procurement strategies for over USD $2B in global infrastructure and technology projects. He spent the early part of his career at United Airlines, Lufthansa, and SunGard Data Systems working on complex multilateral procurements. He has an MALD from The Tufts Fletcher School of Law and Diplomacy, a B.A. from the University of Virginia, and completed the Program on Negotiation (PON) at Harvard Law School.
Contract Lifecycle Management System Implementation - Case Study
Jan Malasek • December 26, 2023
Many organizations benefit from implementing Contract Lifecycle Management System (CLMS). The key issues that implementation of a CLMS addresses include (i) lack of a central repository for contracts, documents, and reports, (ii) lack of direct access to documents outside of the contracts organization (email is used to share documents with employees who are not in the contracts organization) and (iii) potential document version control issues. OnDemand recently helped a client with their initial phase of Contract Lifecycle Management System implementation. I want to share the approach and lessons learned as I believe that you will find them helpful as your organization considers enhancements to the way contracts are managed.
SITUATION OVERVIEW
A non-profit, research and educational institution was seeking to rapidly assess the procurement technology market as part of a wider project to modernize their finance and procurement systems. After mapping their procurement, contracts, and finance processes, it was determined that the organization could benefit greatly from the implementation of a
Contract Lifecycle Management System (CLMS).
The client engaged the consulting team of
Justin Valentine and Travis Mells, members of the OnDemand Professional Network, to assist them with a 3-phased sourcing approach:
Phase 1 – Requirements Validation and Market Research
Phase 2 – Streamlined Request for Proposal (RFP) Process
Phase 3 – Implementation Support
Justin and Travis had previously engaged with the client to perform process mapping and have deep IT category strategic sourcing expertise and an extensive background in procurement technology and technology acquisition.
APPROACH
During Phase 1, the consulting team established streamlined approach that included the following activities:
- Worked with organization leadership to understand and validate their key system requirements and the prioritization of those requirements (e.g. “must have” versus “nice to have”).
- Conducted interviews with key staff, including those who would be heavy / “power” users of the system and the IT function, to better understand their requirements for the system and how its implementation will impact their daily work.
- Performed a market calibration study which included gathering insights from top research organizations (e.g. Gartner, Forrester, Capterra) to help determine the initial pool of vendors for outreach.
- Developed and distributed a Request for Information (RFI) to gather information from vendors regarding their ability to meet requirements and high-level pricing.
- Conducted brief introductory meetings with potential vendors to gauge their interest in responding to the RFI and answer any questions about the sourcing process. A small number of vendors chose to not respond to the RFI after these introductory meetings.
- Reviewed RFI responses to assess potential vendor’s ability to meet key requirements and flag vendors that presented unreasonable pricing. A small number of vendors were eliminated from the process after reviewing their RFI response based on their inability to meet key requirements.
- Scheduled and held system demonstrations with potential vendors to confirm their ability to meet key requirements and evaluate their systems in terms of user interface design and ease of use. Implementation timeline and required resources were also discussed during system demonstrations.
- Compiled RFI responses and feedback on system demonstrations to present recommendations for which vendors should move forward to the RFP phase.
CRITICAL SUCCESS FACTORS
- Performing market research to develop a deep understanding of the CLMS market landscape and system capabilities, including recent offerings that include artificial intelligence (AI).
- Clear understanding of existing business processes in the client organization and how the introduction of the CLMS will improve those processes, bolster employee efficiency, and complement existing IT systems.
- Establishing and prioritizing key requirements which determine the pool of vendors that may be appropriate to move forward to the RFP phase.
OnDemand's team will kick off Phase 2 of the engagement after the New Year, and we will share Approach and Critical Success Factors once that Phase is completed.
Meet JUSTIN VALENTINE AND TRAVIS MELLS - OnDemand Professional Network Members Since 2013
Travis has over 20 years of industry and consulting experience in the public and private sectors. He has led several cross-agency transformation initiatives within the Federal government and has also advised non-profits, International Finance Institutions, political campaigns, and private sector companies on a range of topics including technology transformation, business process improvement, and acquisition strategy. He holds a B.S. from Washington and Lee University, an M.S. in Mechanical Engineering from the Pennsylvania State University, and an MBA from The Wharton School of the University of Pennsylvania.
Strategic Sourcing is often associated with driving down cost, efficiency improvement and increased service levels. There are some situations where Strategic Sourcing is needed to help rebuild supplier relationships while enhancing trust all the while securing additional resources for core capabilities. Such is an example of work that OnDemand Professional Network member Chris Vu did for post-bankruptcy period at a hospital serving a major metropolitan area. SITUATION OVERVIEW A hospital in New York had emerged from bankruptcy and needed to stay afloat since it was the largest hospital and biggest employer in its Brooklyn neighborhood. The Materials Management/Purchasing Department was able to manage day-to-day activities to support patient care. However, indirect and ancillary areas were secondary in priority and the suppliers were extremely unhappy losing money as a part of the bankruptcy protection process . Chris was brought in to negotiate new contracts with suppliers to obtain improved terms and ensure uninterrupted service. APPROACH An incumbent approach was taken to help prevent disruptions in service and allow stakeholders to focus on their day-to-day responsibilities. In addition, it was difficult finding new suppliers willing to work with a financially distressed organization. As a part of the approach, Chris not only had to negotiate improved terms, but rebuild trust and rapport with suppliers . Expectations were reset with suppliers encouraging them to view the hospital as a new organization and to look forward and not backwards. The hospital’s group purchasing organization was leveraged as a baseline for pricing and terms . In addition, Chris met with current and potential new suppliers, where available, to support operational improvements for the future. CRITICAL SUCCESS FACTORS Leveraging the current supplier base Rebuilding trust with incumbent suppliers Developing custom pricing outside of the hospital’s GPO Identifying innovative opportunities for the longer term RESULTS Pricing and terms were negotiated to provide annual recurring savings of 11% across 36+ suppliers . 2 to 3-year terms were secured with suppliers to ensure continuous service, and in most instances, pricing better than the hospital’s GPO. Stakeholders were also pleased since they were able to maintain their current supplier relationships and didn’t have to trial or switch to new products/services . Furthermore, a pipeline of potential opportunities was left for the hospital to explore in the future. For example, the hospital could invest in new disposal containers for used needles that optimized storage capacity. Or the hospital could review several rent vs. buy scenarios from wheelchairs to floor mats to mops. Meet CHRIS VU - OnDemand Professional Network Member Since 2020
Structured approach, cross-functional leadership and rigorous analytics are key to procurement success. I asked a member of our OnDemand Professional Network Priya Kumar to share her approach. Here is her example. SITUATION OVERVIEW Biotechnology company wanted to establish a procurement function for their $120 MM global external operations. Priya was brought in as a Procurement leader to work with the organization to develop a strategic procurement function to drive savings and improve efficiency. APPROACH She worked closely with engineering teams, product development, manufacturing operations and global planning to understand current processes and business priorities. Additionally, she conducted a supplier activity and spend assessment to analyze the current landscape. A thorough analysis of current challenges and gaps in processes revealed the following: Supplier relationships with significant spend were highly transactional Risk and relationship oversight was complex and arduous Frequent planning and forecasting changes led to additional costs, cancellation fees and high risk exposure Supplier contracts were often one-sided, with limited benefits for the client EXECUTION & BENEFITS Priya successfully crafted a robust category strategy to effectively manage and optimize the $120 million expenditure with suppliers . This strategy encompassed thorough market analysis, supplier evaluations, and strategic sourcing initiatives aimed at maximizing value and minimizing risks. Her next step was to streamline processes across the organization, while building a truly strategic procurement function. She built the foundation for strategic sourcing, supplier relationship management and contract lifecycle management. This fostered harmonization in supplier engagement, elevating the value extracted from deepened supplier relationships. By aligning procurement activities with organizational goals and industry best practices, she also fortified the supply chain operations to withstand dynamic market conditions and unforeseen challenges. In partnership with other stakeholder groups, she implemented robust visibility mechanisms within procurement , leveraging advanced analytics and reporting tools to enhance spend transparency and facilitate informed decision-making. This heightened visibility empowered stakeholders to proactively address potential bottlenecks, mitigate risks, and optimize resource allocation. Priya’s greatest achievement was the immediate identification of several contract re-negotiation opportunities that served as quick wins to show procurement value early. Priya developed the negotiation strategy and conducted negotiations with many key suppliers, ensuring alignment with the category strategy and business objectives. In an ever-changing landscape, Priya showed excellent insight and maturity in making agile decisions that would mitigate loss and risk throughout the lifecycle of the contract. She achieved >$15MM of cost savings for Year 1 & 2 through execution of the newly developed category strategy. By leveraging strengthened supplier relationships and employing rigorous negotiation tactics, she secured favorable contract terms and pricing arrangements, driving tangible bottom-line results while maintaining quality standards and service levels. Meet PRIYA KUMAR - OnDemand Professional Network Member Since 2018
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