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Checklist #3: Tools as Value Driver to Create Double Digits Returns

In almost any article on the commercial & contract management innovation space, you read the following simple message; tools are boosting your sales or reducing your procurement spent.

However, we like to pass on the reality and the disclaimer, that this message is only true if you fixed the People and Process innovation first.

This is why our tools checklist is our last checklist in number and priority on the series of three on value drivers to create double digits returns.

We discussed in our initial blog, how successful companies invest in innovation with their people skills, processes and tools. The result: improved commercial excellence capability leading to higher operating profits.

So what has been changing for Tools in the last decade? The game has been changed in Sales and Procurement capabilities in three themes;

  1. From ERP to CLM systems (Contract Lifecycle Management)

Where in the past deals or contracts were recorded in ERP systems as an financial transaction with some limited obligation management functionality from a post-award prospective and in some cases a lot of functionality has been to manage the complexity of pre-award activity or the complexity on the post-award obligation management.

The innovation is that the ERP covers the Offer to Cash or Requisition to Pay backbone and the Best Breed CLM Systems fulfils the value gaps in covering the additional business needs, just to list a couple of examples; differentiated contract models, clauses, contract authoring functionality with version management, data and controls functionality, remote management, clause searching, optical terms identification metadata written on 3rdcontract party paper or e-mails, customer or supplier portals to share data and execute deals. The overarching driver is the efficiency here! Triggered by the competitiveness, affordability and increased compliance requirement such as the latest GDPR.

  1. From Opportunity Driven Valuation to a Structured Quantitative Valuation of Contract & Risk

Where in the past valuation was driven to valuate the bid for internal approval of the potential margin or cost. A biased approach in accounting for value, uncertainties/risks or opportunities, due to lack of knowledge management records.

The innovation is that the Deals/Contracts are valuated and accounted for risks in a structured and quantitative manner to compare apples with apples and providing a building block to manage contract portfolio(s) efficiently and unbiased. Leveraging knowledge management records and big data.

  1. From P&L Overview Towards Deals Oriented Portfolio Performance Management

Where in the past profitability tracking was backward looking P&L view and in some cases sophisticated approach on getting it most current by integrating sub-ledgers view.

The innovation is that the Deals/Contracts Portfolio’s are valuated and accounted for the portfolio risk and contract specific with a current and forward looking view. This functionality is built on the fundaments of the two previous themes. Integrating pre-award with post-award process steps.

Summarised, Tools – Smoother and Intelligent commercial transactions processing has been moved from ERP to Best Breed Systems to manage better the pre- and post-award Commercial & Contract processesare leading to higher operating profits.

Interested to get more about this? Read our upcoming Blogs.

If impatience or interested to know, what this means for your company? Give us a call to provide you support in this game-changing journey and stay in sync.

We from have experience in how to make this work for you successfully, if you want to know give us a call.