Transcript Cylon Technology (Pty) Ltd

Contracts and Managing Key Deliverables
for Efficient and Effective Government
Prepared by:
Gregg Barrett
Cylon Technology
[email protected]
+27 11 662 1034
www.cylon.co.za
Enterprise Contract Lifecycle Management (CLM)
Aberdeen Group Public Sector Study
Contracts Pivotal in the Public Sector

“Creating, managing, and controlling compliance to supplier contracts are the
greatest challenges faced by buying organizations in the public sector”

“Procurement is key to reducing the cost structures of government agencies,
improving operating performance and service levels, and satisfying policies and
regulations — without negatively impacting service to the public.”
Poor Contract Lifecycle Management
Storing contracts in paper format limits the ability to:




Locate contracts
Manage contract versions and compliance
Identify specific terms and clauses
Analyze contract performance
Limited visibility into contract and performance results in:






Inflated costs
Diminished negotiation leverage
Missed rebates and savings opportunities
Overcharging by suppliers
Low rates of compliance to non-price terms and conditions
Greater risk of regulatory violations
Challenges to Success

The Aberdeen-GCN study strongly suggests that public sector firms will
most likely find the greatest opportunity for improvement in how they
manage supplier contracts. Survey respondents from all public sector
organizations identified the monitoring and enforcing of contract
compliance as their most challenging supply management activity
Conclusion

Regardless of jurisdiction, all government agencies would be well served
to tackle the contract management challenge that they are facing. The
reason: An organization’s ability to effectively create, manage, and
control contracts is the primary driver of value.
So what needs to be done

Standardize contract procedures department wide

Develop a central repository for all contracts

“Activate” or “embed” contract terms within the software of online
transaction systems

Track compliance more often

Devise performance metrics and, likewise, embed them in
transaction systems

Improve automation of the contract management life cycle
The Result
Employing such systematic and automated procedures for the management of
supply contracts has:
•
•
•
•
Reduced material and administrative costs
Shortened contracting cycles,
Optimized contract usage and controls
Diminished operational and regulatory risk
A sound contract management infrastructure can also improve the value and
return on investment (ROI) for existing supply and IT initiatives, such as strategic
sourcing, ERP, eProcurement, and eSourcing.
Case Study
Insight into Alberta
Insight into Alberta
Albertans enjoy a very high quality of life
•
•
•
•
lowest overall taxes in Canada
highest level of services
highest disposable incomes in Canada
lowest unemployment rate in Canada.
Insight into Alberta
Population: April 1, 2007, Alberta's population is estimated to be
3,455,062 (Source Alberta Finance)
Government: Government of Alberta (GOA)
•
•
•
•
large regional government
over 25,000 employees
24 distinct departments
known to be very progressive
Being Progressive
How progressive
•
•
•
•
•
No provincial sales tax
GOA leads the public sector in Canada
Consistent year on year budget surplus
Lowest tax rates (for corporate and personal taxes)
Enacted a law that makes running a deficit a criminal offence
First provincial/state government in North America to roll out a
province/state-wide high speed internet infrastructure
Embrace Technology
Objectives for embracing technology
•
•
•
Reduce operating costs
Increase service levels to constituents
Increase service levels from suppliers
Needed to get a solid handle on:
•
•
•
•
•
Contractual obligations
Compliance
Performance measures
Risk management and
Governance
Business Situation and Major Goals

Bring purchasing and administrative costs in line

Manage contractual obligations
•
•

Compliance
Performance measures within each department and across departments
Replace and minimize the cost of managing thousands of vendor contracts
Decided to Take Action

Identified Contract Management as a key area that impacted these areas and
that needed to be addressed in order to drive improvement

Also noted the deployment of a CLM solution was fundamental to monitor the
delivery performance of contracted services and products
The Requirements
Contract creation
Contract management
•
•
•
•
Infrastructure construction and maintenance,
Social services,
Information technology,
and all other types of contracts and business relationships
Contract Reporting
The Process

Committee
•
•
identify and rationalize the requirements of all 24 departments
prioritize these into


mandatory and
desirable needs

Each department considered its’ requirements to be more
important than the rest – so the rationalization task was tricky

The CIO for the GOA mandated
•
•
all departments were to use one centralized solution
would be one standard set of requirements for the entire GOA
Ingredients for Success

Senior level sponsorship and mandate
•
•
•

Well staffed project team
•
•
•

Members from all business areas
Ensure all scenarios were being analyzed and addressed
Minimal disruption to the organization
External Project Manager
•

CIO of GOA
Deputy Minister
CFO
Sole responsibility to manage the GOA project resources, the project plan and all
deliverables
Pilot approach – One department at a time
•
Limited exposure to risk and substantially increased chances for success
Ingredients for Success cont..

Detailed GAP Analysis and product walkthrough
•
•
2 months conducting a detailed GAP Analysis
All departments were involved


Zero Product Customizations
•

Message from top management, based on lessons learned from past large-scale
software implementations
Integration with Corporate ERP system
•

felt that they were adding true value to the process - improved buy-in
To leverage and enhance the large investment already made in the PeopleSoft ERP
system
Full Fledged Training
•
Qualified trainers to address the needs of all departments
Challenges and more Challenges..

24 departments, 24 different ways
•

Harmonizing the requirement, based on a best practice approach
Paradigm shift – Old proven way vs new process
•
•
Change management was critical
Users played with the system early in the implementation phase



Sun-setting on existing systems
•
•
•

Able to see the benefits first hand
More willing to embrace the system
Identify these systems
Determine the data present
How to convert the valid and valuable data
Data conversation and cleansing
Scope of Deployment

24 departments in a phased rollout

Range of hundreds to over one thousand users in each
department

Different contract types and contracting processes in each
department

Central management with widely distributed users in the field
Benefits

Improved contract efficiency and reduced operational costs
•
•

Reduced procurement costs of goods and services
•

Streamlined operations, reduced and eliminated manual processes
Reduced contract lifecycle time by more then 30%
Contract consolidation, contract compliance, leverage discounts properly, accurate billing and strategic
sourcing
Regulate contract templates and enforce standardization
•
Reduced templates by more then 70%

Improved audit controls and compliance to legislation

Reduced ‘maverick’ contracts

Support for unique processes in different business units

Improved contract visibility and the related delivery of contracted goods and
services
•
•
Consolidated contract repository
Increased visibility by 100%
Benefits cont…

Improved stakeholder involvement

Streamlined reporting time by more then 90%

Monitor and manage compliance, performance and risk more effectively and efficiently

Integrates with the government’s supply chain management strategy

Improved financial tracking of contract-based transactions

Staff redistributed to other much needed areas, making better use of their time

Provides faster more accurate response to stakeholders
•

Integrates to Financial systems and processes
•

staff, customers and suppliers
to ensure compliance of incoming and outgoing invoices
Streamlined contract request processing
•
automates the contract request process for field and non-contract savvy staff
Current Levels of Visibility
You can’t change what you can’t manage
You can’t manage what you can’t measure
You can’t measure what you don’t know
Viewpoints
Take action on Contract Lifecycle Management now……
“Contract management is where finance was 30 years ago” - Oracle
“Organisations that don’t manage their contracts
effectively will be at a tremendous competitive
disadvantage.” - Tim Cummins, Director
IACCM
“In the business world, the rearview mirror is always
clearer than the windshield.” - Warren Buffett
“…the most concerning of all findings was the level of immaturity in the
entire area of post-award contracts management, control and
administration, arguably the highest risk area within contracting for most
organizations” – Protiviti 2007
….so start now by getting enterprise-wide visibility into your
organisational contracts/agreements and commitments
Questions and Answers
Questions?
Mail:
[email protected]
Websites:
www.cylon.co.za
www.upsidesoft.com
www.iaccm.com