Community service based organization implements an enterprise-CLM strategy
Stimulating $1 billion dollars of economic activity
A 137+ year old, not–for–profit, agricultural society that markets unequaled exhibition/sports facilities and event services helps drive the economic engine of a large region, by managing more than $355 million in direct spending and directly and indirectly stimulating over $1 billion dollars of economic activity in this region. Hosting over 550 events and 3 million visitors a year at exhibitions, rodeos, fairs, horse racing, festivals, concerts, and trade shows, The not for profit organization ranks as major tourist attraction.
Identifying the problems
The organization manages events at 3 different venues with 20 core business units staffed by approximately 300 full–time team members and a host of volunteers and event staff. Their leadership team observed a lack of alignment between end-state contracts and sourcing and procurement strategies. Contract management was a part of a quasi-centralized purchasing function and team that had no internal legal counsel and varying levels of maturity in contracting skills. Additionally, there was a significant absence of direction for creating systems and processes to support Centers of Excellence within the organization.
The leadership team knew they were failing to negotiate the best contracts and had no systems in place to realize the full value of existing contracts. There were no CLM or ERP systems and no central repository to provide visibility to contract obligations and entitlements. Participants at multiple phases in the procurement process were forced to operate without knowledge of basic contract requirements.
Even a small misalignment from the original sourcing strategy resulted in a trajectory of increasingly misaligned procurement decisions that ultimately resulted in significant loss of value. The speed, dynamic nature, and complexity of the business afforded minimal opportunities to assess or correct the trajectory after it began faltering. Contracts do not fit into a one-strategy-fits-all system. From a buy-side perspective, supplier relationships and contracts can be divided into two main categories:
- General venue and day-to-day business unit operations contracts
- Hosted and in-house developed events contracts
The first category of contracts tends to be entrenched, long-term relationships while the second category changes with each event.
The 3-step transformation plan
The implementation process consisted of 3 major steps.
- Acquire and build management and leadership resources for the procurement and legal departments and establish those organizations as shared service
- Create a procurement policy that encapsulates contracting strategy
- Incorporate technologies and systems to provide contract visibility and support for contract lifecycle management processes.
Determine CLM enables the evolution of contract management
The organization’s CFO understood that you could only manage what you can see. With the transformation in the procurement and contracting model to the center-led and the fast-moving nature of the business, individual users could systematically, efficiently, and effectively manage the creation, execution, and analysis of contracts.
- Within a year of implementation, Determine delivered the following capabilities to their users:
- Single point of entry and engagement with contracts for all stakeholders and practitioners
- Clear workflow path and lifecycle that were designed to match existing process, business rules and approval management
- Manage the contracts from request all the way through renewals
- Single source of truth
- New business process standard: e-signature with Adobe
Results: “A Transformative Evolution”
In 12 months, Determine CLM helped make it possible for the organization to achieve the following key performance indicators:
- Increased visibility of contracts by 640% – Procurement Services went from being able to see 13 contracts to 835 contracts in just six months
- Reduced administrative process burden and enabled the reinvestment of time in more valued-added activities – sourcing support, contract collaboration and negotiation, and supplier performance management – by nearly eliminating the chasing of signatures, scanning and storage of documentation, and printing of contracts
- Reduced paper usage by an estimated 16k pages with a subsequent reduction in decentralized print fleet costs
- Achieved approx. $3 million in savings due to alignment of procurement and legal resources to support key sourcing and contracting projects;
- Reduced operational, legal, financial and reputational risk by eliminating rogue contracting.
Advice for organizations planning a contract management transformation
When asked what advice he would give to organizations planning a contract management transformation, their Senior Manager of Procurement said:
Don’t try to boil the ocean! [We were] able to achieve the success by employing a phased approach based on the Pareto principal. We tackled areas that would solve 80% of our problems first.”