Today we are releasing the fifth episode of Icertis' new podcast series, "Contracts Over Coffee." This series brings together the most influential voices in the Icertis Contract Lifecycle Management (CLM) partner ecosystem to discuss all things related to contracting while enjoying a delicious coffee beverage.
In this episode, our senior director of partner marketing, Anne Baker, was joined by Eric Washer, vice president of product strategy at Workday. Eric focuses his efforts on Workday's spend management portfolio covering strategic sourcing, core procurement, inventory management, and overall supplier management processes.
Here are four key takeaways from their chat:
- Contract Silos Are a Major Challenge…
Anne: You've had a long background in procurement, spend management and sourcing, and all of that clearly involves contracts. So let's talk a little bit about what you think is the biggest challenge with contracting today.
Eric: Contracts can be very fragmented within large and medium-sized enterprises – mainly large enterprises where the complexity associated with the different types of contracts pulls them into a decentralized environment. This environment is very tightly intertwined with how salespeople build proposals, do quotes and move into landing a new client and establishing the contract terms for that client. This is drastically different—I call it a megaprocess—from the area that I was previously more accustomed to on the supplier side, where I was a professional buyer.And then you have corporate contracts, partnership contracts, employee contracts, joint venture contracts, all with their different megaprocesses, and this has created a lot of silos of contracts within organizations. So I think that has been, and continues to be, the biggest challenge for organizations: trying to get a hold of their contracts and manage them strategically.
- … But System Integrations Are Going to Change Everything
Anne: Trying to do contracts across all the disparate systems that are out there for finance, procurement, and sourcing really requires that centralized, enterprise-wide look across the business as a whole. So with all these silos, where do you think contracting is going?
Eric: Well, our contracts in the past—and I think in a lot of large enterprises—were paper-based and stored in filing cabinets, which have now turned into digital filing cabinets. Digital filing cabinets are not that much more valuable than a paper-based contract system, because they're not tied into the megaprocesses that derive value from contracts. For example:
- Because customer contracts are tightly intertwined with the proposal and the customer-management components of a supplier contract, the contract needs to be tied with the supplier relationship even after the contract has been executed.
- With partnership contracts, the partner maturity and the penalties or bonuses need to be taken into account.
- With intellectual property contracts, managing who owns what, associated with how the relationship's maturing are important elements to consider.
So these megaprocesses are where the big value propositions come into play—balancing that with a centralized contracting strategy, where you have centralized control over legal language, and centralized visibility and searching across all those types of contracts so you can really understand and quickly get the access you need. And that balance between centralization and decentralization, I think, is what has been the biggest challenge with contracts in the past.
But I think where the current technology environment is really going to address those challenges is with advanced federated searching capabilities, such as more mature APIs and REST-based APIs, so those systems can act as one. And Icertis has just completed a Workday Certified integration, which is a great example of using modern APIs to interconnect megaprocesses between contracts with Icertis and transaction activities with Workday. Machine learning, advanced searching, those types of things will be able to bring contracts more to life.
- Contracts are a Core System of Record in the Enterprise
Anne: You know, contracting doesn't sound like always the most exciting topic to talk about, but when you start getting into it, you'll find a lot of surprises and you'll see how much it just impacts all of the different areas of a business. So to that end, what do you think people would be surprised to know about contracting today?
Eric: Contracts are such an important, critical source of truth. And with these new technologies, organizations can make contracts come alive. Rather than a quiet document that's stored away and people only reference it when they need to, it can be something actively engaged with throughout a relationship. And I think what has always surprised me is that the market hasn't seen the contract as critical to build the intelligence, software and practices around it, until now.I think a good industry stamp of why that's changing is Gartner having its first Magic Quadrant series strictly focused on CLM. In the past years, analysts like Forrester, Gartner, etc. have contracts kind of embedded in broader megaprocesses, right? They'll profile and rank contract solutions as a part of the Configure, Price, and Quote analysis or part of the strategic sourcing analysis, but not stand alone on its own as an enterprise CLM solution. And Gartner has always been a leading voice, and rightly made the decision this past year to look at contracts as its own space and evaluate providers like Icertis. All signs show that the industry is moving in that direction now, which will be a testament to what Icertis and Workday are pioneering—to have organizations prioritize activities around the contract as a source of truth.
- Be Smart When Launching a CLM Initiative
Anne: What is one contracting tip you wish every person knew?
Eric: A tip to large enterprises that are looking to transform and get the next level of value out of their contracting solutions: Determine within your organization whether you can be aligned to achieve a centralized CLM strategy.Sales, legal, sourcing, procurement, even accounts payable: Who can truly be aligned in a centralized contract strategy? This is not an easy thing to do, so it just means you have to determine, OK, we're only going to have a centralized contracting strategy for supplier contracts, a different one for suppliers or customers, a different one for partners. But obviously you'd want to be challenging your organization to see—with leadership from legal, usually, as the central body—if you could stitch them all together to have one holistic enterprise contract strategy. And I think if you can do that, just be careful to prioritize the right features that you need. There's a lot of innovative, sophisticated capabilities out there to support contracting. You just need to nail down what's important for you as an enterprise and prioritize that as your first step in maturing your contracting process.
Make sure to listen to the full podcast to hear more about how technology leaders and organizations are working to help move the needle on troubling issues in our society.
Also, go to Workday.com and learn more about Workday's products and features, and visit the Workday experience page on the Icertis website or Workday Marketplace to learn more about our integration. Download the data sheet below to find out how our two companies and products work together to bring more value to enterprise customers worldwide.