Implementation and Use of a Contract Management Methodology Introduction to contract management processes and to the fundamental aspects of contract management roles Practical experiences from contract management methodology implementations Ole Horsfeldt oho@gorrissenfederspiel.com

Introduction Contract and vendor management at the core of the (outsourced) enterprise VISION A clear vision and strategy on what it takes to be an outsourced enterprise HR STRATEGY Knowledge retention and appropriate HR strategy covering skills and incentives PROCESSES Ability and processes that link business technology with business strategy in an proactive manner CONTRACT MANAGEMENT A formal contract management implementation with clear roles and task descriptions integrated with contract manuals/playbooks Use of a common contracting platform (templates) for all types of outsourcing contracts Implementation of a service agnostic risk management system

When implementing a contract and vendor management methodology, we face two main challenges… Contract management is in reality performed in a cross organisational manner but contract management is most often organised in a silo Most organisations don’t have a clear understanding of which informal processes they actually use and which processes would serve contract management purposes well and Contract management procurement Delivery and obligations tracking Issue management D&O reporting Escalation, negotiation Performance management legal finance Issue qualification – is there a dispute? Service management Dispute management Recipient/user Incident management Dispute resolution processes Domain experts

Having responded we were then asked: Please implement your ideas.…. In 2014 a client asked us: How to do you see contract management – what is contract management to you? Having responded we were then asked: Please implement your ideas.…. This presentation tells our journey from inventing and designing a role based contract and vendor management methodology to implementing it with a variety of buyer organisations Explain the importance to GSS

The core of our philosophy Introduction to Gorrissen Federspiel’s contract management methodology The core of our philosophy Contract management is about: use of well structured know how in a Consistent manner and taking appropriate discretionary decisions in other words decisions taken by well-trained people applying years of accumulated knowhow ) based on Contracts understanding of the organisational attributes of your own and the supplier’s organisation the involved personal dynamics and relationships The core ability to do contract management is not about automation, storage of contracts, and software solutions but can benefit greatly from being supported by such systems Contract management is done by individuals and groups of individuals collaborating in a coordinated manner with distinct responsibilities

The framework - Gorrissen Federspiel’s contract management methodology The philosophy Each person must understand her role – that requires detailed role and task descriptions and work flows

The framework - Gorrissen Federspiel’s contract management methodology The philosophy …and you must add training and easy-to-use event based playbooks that double as contract manuals …thereby giving your contract managers an understanding of details of their specific task and role and where they fit into the overall picture

The Contract and Vendor Management Framework The framework - Gorrissen Federspiel’s contract management methodology The Contract and Vendor Management Framework Service and contract generic contract specific or agnostic Tasks for roles Workflows between roles Playbooks/contract manuals Roles Processes

The 6 contract management processes The framework - Gorrissen Federspiel’s contract management methodology The 6 contract management processes Performance management Financial management Optimization management Compliance management Dispute management Time management To ensure performance of the services and to enable enforcement of such performance Financial control, budget compliance and foreseeability and to avoid over-payments and value leakages and to use financial incentives to drive behavior To extract value the parties contracted for and to optimize the value beyond the original expectation To enable the Customer to remain compliant with legal requirements relevant to its business So that disputes and disagreements are dealt with efficiently and quickly without a detrimental effect on the relationship between the parties So become aware of and use the rights and strategic opportunities that apply at particular intervals

Workflows between roles The service and contract generic – or agnostic - roles and role descriptions Tasks for roles Workflows between roles Roles Processes

The 6 contract management processes The service and contract generic – or agnostic - roles and role descriptions The 6 contract management processes Performance management Financial management Optimization management Compliance management Dispute management Time management Lead manager Lead manager Lead manager Lead manager Lead manager Lead manager 1 lead manager and other general managers. 1. We assigned roles to each of these 6 contract management areas who together have the responsibility for managing that area 2. Roles are allocated to people 3. One person can have several roles

The service and contract generic – or agnostic - roles and role descriptions Role description – setting out overall/general responsibilities for that role PROACTIVE TASKS and REACTIVE EVENT-BASED The 6 contract management processes Performance management Financial management Optimization management Compliance management Dispute management Time management Lead Manager Transition Manager Performance Manager Multiple Vendor Manager Change Manager Risk and Security Manager Technical Architecture and Policies Manager Retransfer Manager Lead Manager Budget Control Manager Financial Change Manager Audit Manager Benchmarking Manager Lead Manager Innovation Manager Relationship Manager Contract Information Manager Lead Manager Data Protection Manager Regulatory, Policies and Confidentiality Manager Lead Manager Dispute Manager Lead Manager Time Manager

The service and contract generic – or agnostic - roles and role descriptions Role description – setting out overall/general responsibilities for that role PROACTIVE TASKS and REACTIVE EVENT-BASED The 6 contract management processes Performance management Financial management Optimization management Compliance management Dispute management Time management Lead Manager Transition Manager Performance Manager Multiple Vendor Manager Change Manager Risk and Security Manager Technical Architecture and Policies Manager Retransfer Manager Lead Manager Budget Control Manager Financial Change Manager Audit Manager Benchmarking Manager Lead Manager Innovation Manager Relationship Manager Contract Information Manager Lead Manager Data Protection Manager Regulatory, Policies and Confidentiality Manager Lead Manager Dispute Manager Lead Manager Time Manager

The service and contract generic – or agnostic - roles and role descriptions Example of role description for a Performance Manager under Performance Management

The service and contract generic – or agnostic - roles and role descriptions Example workflow

The implementation project

Let’s be clear about the challenges! The implementation project Let’s be clear about the challenges! ‘What management will think What management needs to understand Everyone who interacts through personal interaction or through email with the supplier is a contract manager You never need a system before you have the knowhow and the right people Contract management is done across the organisation by the ITSM organisation, by finance and internal audit, by legal, and by vendor management: you’re one team We need one contract manager We have a vendor management organisation, they can run our contracts We need to buy a system Explain the table and what happens if an agreement is not well managed. Implementation is easy, just get it done quickly Implementation is a fundamental change project that needs to be driven from top down

The two implementation models The implementation project The two implementation models Organisational approach: a group of dedicated contract managers handle many contracts and fulfil a specialist role (typically just one role) in relation to many contracts Contract approach: The separate team per contract approach where dedicated individuals manage only one contract and each individual will have multiple roles Apply to all relevant major contracts Add playbook/contract manual for each new contract No matter the model, the key is resolving the cross organisational riddle and the assigning of persons to roles

The implementation project The organisation approach recommended: Large company with many business critical outsourcing contracts (this is an outsourced company) Performance management Financial management Optimization management Compliance management Dispute management Time management Lead Manager Transition Manager Performance Manager Multiple Vendor Manager Change Manager Risk and Security Manager Technical Architecture and Policies Manager Retransfer Manager Lead Manager Budget Control Manager Financial Change Manager Audit Manager Benchmarking Manager Lead Manager Evolution and Innovation Gain Sharing Manager Relationship Manager Contract Information Manager Lead Manager Data Protection Manager Regulatory, Policies and Confidentiality Manager Lead Manager Dispute Manager Lead Manager Time Manager One person per lead manager role Groups of persons for each manager role – a person can have main responsibility in relation to a particular contract or domain of contracts Implemented across many contracts ITSM or similar roles mainly manned by separate organisation 1 lead manager and other general managers.

Streamlined roles with essentials The implementation project Both implementation models recommended: Medium sized company with one major outsourcing contract and additional outsourcing contracts Performance management Financial management Optimization management Compliance management Dispute management Time management Lead Manager Transition Manager Performance Manager Multiple Vendor Manager Change Manager Risk and Security Manager Technical Architecture and Policies Manager Retransfer Manager Lead Manager Budget Control Manager Financial Change Manager Audit Manager Benchmarking Manager Lead Manager Evolution and Innovation Gain Sharing Manager Relationship Manager Contract Information Manager Lead Manager Data Protection Manager Regulatory, Policies and Confidentiality Manager Lead Manager Dispute Manager Lead Manager Time Manager 1 lead manager and other general managers. Streamlined roles with essentials Lead manager can have other roles within that area One person can have more than one role SMEs will possess contract manager roles

One common lead manager The implementation project Contract approach recommended: Smaller companies with one business critical outsourcing agreement Performance management Financial management Time and Optimization management Compliance and Dispute management One common lead manager 1 lead manager and other general managers. Several processes collapsed into fewer processes One or a small team per contract area One person can have more than one role

The implementation project Existing delivery/services processes are connected to the contract management processes through process maps – This is an essential part because this is where the “end to end” process is created that enables efficient contract management

The implementation project Example of the performance manager role mapped into a RACI chart for incident manage R=Responsible A =Accountable (Approver) C= Consulted I= Informed Responsibility User/Customer Service Desk ITSI Vendor Contract Management Performance Manager Create Incident R   Provide Info Resolution confirmation Analyze Incident C I Resolve front-end issues I, A Responsible for S2-S4 issues A Forward back-end issues to vendor Inform customer, Service Line and ITSI Close incident Incident follow up Responsible for S1 issues R, A War-room creation Escalation (If SLA not met) Create change or problem Reporting Analyze incident Solve incident

Recap and time for questions

The 6 contract management processes Recap and time for questions The 6 contract management processes Performance management Financial management Optimization management Compliance management Dispute management Time management Processes Roles Tasks for roles Workflows between roles