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In Pace with Progress

Trends of Contract & Commercial Management


Author: Reinhard Wagner     Source: IPMA
Business environment continues to change at a rapid pace and many of those changes are of direct and immediate relevance to contracting and commercial management. Thus, the International Association for Contract & Commercial Management (IACCM) has published an interesting report on future role and directions for the profession, drawing from IACCM´s extensive body of research and engagement with its more than 50.000 members worldwide. Key findings are summarized below.

Contract and commercial managers stand at a cross-roads. Many traditional tasks will erode and disappear, outsourced or automated. That does not mean an inevitable route to nowhere; new technologies elevate both roles from largely operational to increasingly strategic, from jobs that have limited influence to jobs that drive substantial business value…

In general, many of today’s transactional, repetitive activities are vulnerable to change – either through low-cost outsourcing, or through automation. High performing contracts and commercial teams are therefore actively extracting themselves from such tasks to ensure they are free to engage in high value activities – for example, using data analytics to drive commercial change and innovation; undertaking market and competitive research; identifying commercial implications and managing implementation of new contract offerings or systems; working with product or service development teams to ensure appropriate commercial offerings with suppliers and for customers to support launch or maintain competitiveness; engaging earlier with the business to influence and structure complex relationships or sustain / grow existing relationships and financial returns…

Today’s trends suggest that contract and commercial management will become ever more critical as business competencies. To deliver improved results, contracting should be recognized as a life-cycle discipline, with performance measurements that motivate its impact on revenues and the bottom line…

The report highlights that two distinct types of a contract or commercial manager are emerging. A majority will perform a role focused on transactional support, typically reactive to changes that affect those transactions and in the operational environment within which they work. Due to high volatility and uncertainty of today’s markets the operational workload for the role will increase and the ability to undertake improvement programs – that would increase efficiency and effectiveness – will reduce. For a minority, the contract management role has become far more strategic and proactive. It focuses on business enablement and creating a more efficient and effective environment for tactical operations. In this role, the contract or commercial manager is both an adviser/ change agent to executives and responsible for implementing organizational goals…

The strategic contract manager ensures that contracts and contracting procedures are used to execute business strategies – for example, via more relational or collaborative forms of agreement with trading partners. This role also informs management about trends or issues, drawing on more thorough analysis of the market and contract performance, for example, pin-pointing the different types and severities of risks and in which they are occurring? What are the market and competitive trends with regard to the sort of commitments expected by customers or resisted by suppliers? How can the business overall be empowered to exercise better commercial judgment and to reduce regulatory, reputational or margin risks? …

However, while the role itself has the opportunity to become more highly valued, the numbers bearing the title may over time start to reduce. Those that remain will be more highly paid, have greater status and – of course – will be endowed with skills and knowledge that go beyond the traditional role of a ‘contract manager’…

About IACCM: As the world’s only association dedicated to contract and commercial management, IACCM is the source of research and benchmarking for the public and private sector. It provides both generally available and commissioned reports to assist organizations in testing capabilities, comparing with market, analyzing competitiveness and exploring new approaches. It offers extensive training programs, ranging from commercial awareness to apprenticeships, to formal certifications. These are available on-line, through blended learning and in classroom environments. Learning and development is sustained through extensive on-going professional development offerings, many of which are available free of charge to members. Finally, IACCM provides extensive networking opportunities, ranging from on-line forums and communities to its regular member meetings and formal conferences.

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