Koen Vercauteren, Product Management Leader at Birdseye
Ask any colleague for a current contract and chances are you will immediately be sent a PDF. But when you ask what really needs to take place under that contract, or who is responsible for what, things often go quiet. Contract management is work that involves people, and requires control over content, cooperation, clarity and structure.
In the previous blog we discussed two of the four pillars of CATS CM: the contract management essentials and the contract management process and contract management scenarios that give contract management structure and predictability. In this blog we will be looking at the other two pillars: work to be done and all other contract matter; and roles. These two pillars directly affect the people within the organization, and thus behavior and cooperation. They call for extra attention, to ensure support and ease of use within the organization.
An important aspect of CATS CM is the distinction it makes between the work to be done and all other contract matter. This distinction provides focus. Both are equally important and supplement and support each other.
The work to be done is one part of the core of a contract: the performance and results that must be delivered, and therefore ultimately generate value. All other contract matter, such as payment terms, term, penalty provisions or confidentiality, are the other part of the contract core. Together, they define not only what needs to happen, but also the conditions under which it must happen.
This explicit division forces organizations to continuously manage on the basis of the core of the contract. This prevents contract management from getting bogged down in legal details or paper checklists, and keeps the focus on the essential question: is this contract delivering what we intended?
The method also makes a clear distinction between different roles within the contract management process, each with their own responsibility. These include the strategically responsible contract owner, the contract manager who is coordinating and supervising, and the realization and verification manager for whom performance is the most important factor.
These roles ensure clarity, ownership and accountability. They prevent contracts from falling between the cracks, or that no one really feels responsible for the implementation and results. In addition, a clear division of roles helps in the event of escalations: Who decides? Who consults? Who monitors the relationship with the supplier?
The method is robust, but its application requires attention and skills from the people who have to work with it. Some proven best practices recommended by CATS CM and partners that can help are:
• Start with explanation and examples: Explain the distinction between work to be done and all other contract matter with recognizable examples. This prevents misunderstandings about what is really central to the contract.
• Invest in soft and hard skills: Alongside knowledge of contracts, conversation skills, relationship management and negotiation skills are also important.
• Work with a plan: Don't just map out roles and responsibilities, but also consultation structures, KPIs and improvement cycles.
• Use tooling intelligently: Make roles, deadlines and achievements visible using software. This supports desired behavior and prevents agreed arrangements from being forgotten.
• Let practice be the guiding principle: Adapt the methodology to the working practice, not the other way around. CATS CM does not impose rules, it provides a framework.
The power of the methodology lies not only in the logic of the model, but especially in its use. By making the distinction between work to be done and all other contract matter explicit, and by establishing clear roles, you create peace of mind and gain control over the contract management process.
But this will only succeed if organizations also invest in adoption: in training, guidance and good examples. Ultimately, utilization determines the value of the method. And the existence of this value is evident from the fact that prominent Dutch organizations such as ABN-AMRO, KPN, KLM, Philips, Port of Rotterdam and Schiphol are CATS CM ambassadors.
What remains is the question: how mature is contract management in your organization, and where can you start improving tomorrow? We will discuss this in blog 3 of this series.
