A Community For Contracts - Sally Guyer & Paul Branch

Made with speech-to-text software, so a few words may be off.

0:00Welcome to another episode of Contract Heroes, the show where our guests and sometimes us provide best practice recommendations on all things related to contract management. Hello, everyone, and welcome to another episode of Contract Heroes, where we're not the heroes, our guests are. Uh, today we have two guests for you, Paul Branch and Sally Guyer. Uh, both are members and work at the World Commerce and Contracting organization. Uh, so before we jump in and Pepe lines up our first question, Sally, Paul, we'd love to, uh, get a little bit more on your background, uh, and get an understanding also about the World Commerce and Contracting. So thanks for joining us. It's a real pleasure to be here. Thank you so much. And yes, I am CEO of World Commerce and Contracting. Um, my, my background is, is very varied.

0:59I, I trained as a lawyer originally, but, uh, I actually ran for the hills. It-- I decided very quickly that it wasn't something that I wanted to do full time, and I landed somewhat accidentally, as so many of us do, in the world of commerce and contracting. Um, uh, I worked in the IT telecom sector for a long time, and I ran my own, uh, small consultancy for a while as well, supporting small to medium enterprise with their contracting commercial management challenges. I joined the association, which was then known as IACCM, the International Association for Contract and Commercial Management back in 2014. And the association is 22 years old now, founded by our now President, Tim Cummins.

1:48Uh, really with, uh, the recognition at the time that commercial management and contract management were i-increasingly important in organizations, yet there was no home for the people that were performing those roles, a-and no common body of knowledge for those people either. Uh, and really s- that was the, the foundation of the association. Now we have over 70,000 members around the world. Uh, one of the things that I am very passionate about is the diversity of our community. Diversity from a geographic perspective. Our members, uh, are represented in around 180 different countries around the world from an industry perspective as well, uh, and also from a functional perspective, because it, it is very clear that contracting is undertaken by a number of different, uh, professions and functions within an organization. It might be procurement, it might be legal, it might be contract management, it might be commercial management, it might be project management. Uh, the list goes on.

2:51So the diversity of our membership is something that's very important to us, uh, to us as an association with a vision of a world where all trading relationships deliver both social and economic benefit. Um, so with that, uh, Paul, perhaps I'll hand over to you and let you tell the world a little bit about yourself. Indeed. Indeed. Thank you, Sally, and hello, everyone. Yeah, Paul Branch. I'm the chief networking officer here at World Commerce and Contracting, and I like to consider myself a, a, a recovering commercial and contract management professional. Uh, I've over 30 ye-years of experience in complex IT outsourcing on both the buy and sell side. And it was my pleasure, uh, in my previous organization to focus extensively on the delivery of automation into our commercial and contracting processes, helping to set up centers of excellence and developing, um, talent within the organization to really, uh, move the dial on effective commercial and contract management. We are so lucky to be in this business at this time.

4:01It's a perfect storm, really, of improvements in process, improvements in people, and most importantly, dramatic improvements in technology, which can really dramatically change the work that we do as commercial and contract management professionals. So my engagement in that space over the last eight, nine years working in the application of artificial intelligence, particularly natural language processing and machine learning at the very beginning of the application of those technologies in this exciting commercial and contract space. So lots to say in that area, and, uh, hopefully I'm gonna have an opportunity to share some of my thoughts in that space just a little bit later on. Thank you. And we will. And we will, Paul. So it is incredible to have you guys in the show. Uh, as all our listeners know, uh, the focus of this show is to talk about contract management.

4:57And as you just said, Paul, this is, like, very important time, and that was one of the main reason that Marc and I decided to, uh, create this show so we can talk about the experience of people involved in this, um, in this, in this industry, in this activity. Because I think that a lot of industries are starting to know that there is an importance and they need to, uh, there-- I think there's a very big buzz, buzzword with automations. But before we start, start talking about automations, I, I, I really like one of the, uh, of the new projects of the World Commerce and Contracting, which is called the Contract Design Simplification, because I think there's a huge space of im- of improvement because I think it's a very bad mistake to jump straight to technology before you have all your processes, before you start simplifying your contracts.

5:51So Sally, I would like to kick off our, uh, this chat so you can talk about the importance and relevance of contract design and simplification for every organization. Yes, absolutely delighted to, and I couldn't agree with you more that it is so important. Automation is, is critical, and organizations that are, uh, implementing technology successfully are really reaping the benefits. Uh, but it's absolutely true, and I'm sure Paul will talk about this, the importance of simplification, streamlining processes before you start trying to implement technology. But let's first start with the fact that contracts are all-pervasive. Trade and trading relationships are at the foundation of human society. They enable prosperity and they drive social benefit. You know, back in 2016 when Oliver Hart and Bengt Holmström won the Nobel Prize for economic science for their work on incomplete contract theory, the prize awarding committee in their press release highlighted the importance of contracts in the world.

6:59It's a quote that we frequently cite at World Commerce and Contracting, and it's, "Modern economies are held together by innumerable contracts." And let's face it, today many organizations are nothing more than an amalgam of contracts. Think of companies like Uber and Amazon. In many industries, external spend represents over 70% of an organization's revenue. Globally, governments spend 13 trillion US dollars a year on public contracts for goods, services, and works. So contracts are literally the lifeblood of business and society. Yet research that we carried out a few years ago now revealed that almost 90% of business people find contracts hard or impossible to understand, and that doesn't even begin to assess the experience of everyday consumers. Right. Those are big numbers. Big numbers indeed.

7:53And I think, you know, it's fair to say that in recent history, contracts have evolved into these voluminous tomes, you know, with this primary purpose of providing legal protection and remedies in the event of an inevitable dispute. And a really great quote came out of the EU Commission a number of years ago, actually, that contracts are designed by lawyers for lawyers in anticipation of litigation. So for over 10 years now at World Commerce and Contracting, we've been challenging this perception that contracts are just legal documents. They're not. They're core business critical economic instruments with a range of diverse purposes, and they need to be designed as operational guides. They need to be designed to support positive outcomes, not simply d- designed to be pulled out of a drawer when everything goes wrong. And if they are gonna be operational guides, then they have to be designed for the user. What's the point in having a contract if no one can understand it?

8:54Uh, and it's interesting, isn't it, because it's very rare that a lawyer, uh, very rare that a contract drafter is involved in the post-signature performance of a contract. That's very often the role of business and operational people. So we need to design contracts for those operational business people. Um, as we're drafting contracts, generally we need to pay far more attention to who the audience is and construct the contract accordingly. A- and I guess I'll just answer your question with, um, highlighting the significant number of organizations who are now starting to really embrace contract design and simplification. This is a thing now. It's a movement. Big household names like Shell and Unilever and HSBC, a- and there are many, many others. Uh, it's really positive and it's one that can only benefit business and society.

9:54Yeah, and, and Sally, I'm, you know, I, it's great, I think, in the past, I, I, you know, I've... As more people have been going remote over the past year or two, I, I think it's, it's great to see that I think some of this is actually starting to change, and organiz- organizations are really starting to adopt this. But why do you think there was so much pushback initially, you know, from a, a good amount of, of organizations and lawyers, uh, to not want or, or think they needed to, to kind of make this transition? Yeah. It's a really good question. And, and there is still plenty of barriers to this approach. I mean, I, I've already mentioned the legal profession has con- contributed to the nature of contracts today, and they want... And, and arguably they've been trained to use the contract to create certainty, to somehow anticipate every possible even- eventuality, which we know is a fruitless endeavor. Uh, and in that quest they've also embraced the complexity of legalese. You know, I once heard a private practice lawyer say that the art of a great lawyer is to make the simple complex.

11:00Um, but of course, that's not universal, and there are lots of very forward-thinking lawyers who themselves have and are leading design and simplification initiatives. But there are equally many who believe that this approach is somehow wrong. They even question the legality of the approach. Um, there are those who think that simplification of contracts is somehow dumbing down, that, you know, there is no other way to express content as accurately, um, uh, you know, the, those who believe that complex language as drafters is just a tool of their trade. I think, you know, there's other barriers which are quite interesting, is that there's a sense that it's rude to treat a reader as if they were a child or, or less educated than they actually are and explaining things in short words. But actually, our experience is quite the opposite. People are more often than not delighted when they're presented with clear information. Clarity is actually quite good manners.

12:01It's treating people fairly and frankly and with, with dignity. You know, there's a fabulous example around the development of The comic contract by an organization called Clem and Gold. Um, now, in, in that instance, Clem and Gold employs and c-continues to employ many farm workers in South Africa. Lots of those farm workers are illiterate or semi-literate at best. So what's the use of a 14-page text-filled employment contract to those individuals? Um, and indeed, their experience of using those text-filled agreements was a really negative one. The farm w- farm workers didn't understand their rights and obligations. They, they didn't understand what they were signing, so that resulted in a lot of performance issues, and this kind of environment of mistrust on all sides. Y- there were big questions raised about the legitimacy of these comic contracts. You know, were they really legal? And there were plenty of people who were arguing that they couldn't possibly be deemed to be contracts.

13:06But actually, Clem and Gold sought formal opinion and confirmed that the comic contracts were likely to be more enforceable than the previous traditional text contract, because there was clear evidence of creating accessibility and transparency. The farm workers couldn't be expected to understand the text contract, but they could be expected to understand the comic contracts. So I think there's always going to be skeptics, but the barriers that exist, they're driven around fear of the unknown, a sense of comfort in the traditional, but they're, they're really starting to crumble now as we see design and simplification really start to take hold and, and deliver tangible benefit. Right. I think, and that's one of the important reasons of crea- creating contracts using user design, right?

14:00Just go for plain language, organization of the data, uh, contract structure, of course, because some of the time they put all the commercial information in different parts, uh, or different clauses along the whole, uh, contract. Also, uh, graphics to help describe more complex elements of the contracts. This is going to be super useful for, uh, of course, the commercial part of the agreement, because at the end, the, all the economic value produced by every company, either if you're on the sell side or in the buy side, is this commercial relationship that you're having with external companies. And contracts are nothing more than manuals of those commercial relationships, where you're gonna have all the details. How much are you going to pay, uh, when, uh, any, any other things, all the obligations are clearly stated, well, must be clearly stated on the contract. So y- so the people in the, in the commercial department, they don't need lawyers to help them explain what it's, what does a clause mean, which is, it, it, it's going to make, uh, uh, this commercial re- relationship way more difficult.

15:05So Sally, and what do you think are the impacts of, uh, successful simplifications initiatives for an organization? Oh yeah, it's really interesting. Uh, and it's, it's actually the, there's an element of frustration here for me in the lack of measurement. So we've seen lots of organizations, um, implement design and simplification, but, but they're not really tracking, um, specifically the, the improvements. But, but we can certainly talk anecdotally, and perhaps I'll answer that question by starting with the complaints about the current way we contract. You know, let's, let's list some of those out. You're difficult to deal with. You're really slow to contract with. The contracts we use don't foster trust. We contract for the divorce rather than the marriage. Contracts are so full of legalese that they're impossible to understand. They're too complex to manage. You know, we, we hear these complaints time and time again.

16:00So it's somewhat obvious then to see the benefits and the impact of redesigning contracts. It demonstrates your commitment to ease of doing business. You want to be easy to do business with. You want to be transparent. Um, it, it certainly has sh- shown reduction in administrative time, in negotiating, and redlining, and rewording contracts. Certainly using design and simplification really encourages the use of contracts as a positive tool, uh, s- supporting far more collaborative relationships, reduction in disputes because there's greater clarity of the terms. Um, and it tackles the problem that difficult-to-understand contracts actually result in business risk. You know, when we don't understand what the contracts say, we're embedding risk in the project and in our organizations. Um, I wanted to actually highlight, uh, i- in terms of the impact of visualization, um, during her PhD, Stefania Pecera, who works with us at, at World CC and is arguably one of the world's leading experts in contract design and simplification.

17:17And during her PhD, she, uh, undertook a specific study to assess the impacts of visualization on participants. And she was able to demonstrate through statisti- statistical analysis, I'll get that word out, um, that using the visual version of the contract caused much more people to reply correctly to more questions and more quickly. Uh, and I think what was even more interesting was that she also demonstrated that cognitive style, level of education, and having a background in law had absolutely no impact whatsoever on comprehension, speed, and accuracy. So effectively, the conclusion was that even highly educated people and jurists who frankly should be very skilled in processing textual information and legalese actually performed better with a visual contract. So, you know, what can I say in terms of the impact? You know, ultimately, well-crafted contracts provide organizations with a competitive edge.

18:25They're business enablers, and they're tools for collaboration and successful business outcomes, which I think any organization, particularly in our environment now, is really desirous of. Right. And also in our experience, it will make implementing automating tools so much easier, right, Marc? Yeah. Yeah, exactly, Pepe, and, and I think that's a, a great transition into, you know, a, a couple of questions that I, I think, um, we have for Paul. So, uh, and Paul, let- let's start out with a couple of things that, that Sally mentioned there, and, and these are some of the things that I think pop up when organizations are starting to, to look to technology to help with their processes. So, you know, they... Maybe internally they realize that they're slow to negotiate or sign documents, that, that they've, uh, you know, outside parties are saying they're difficult to deal with, that their, their processes are too complex.

19:19And, and, y- you know, if, if organizations are starting to do this self-evaluation and they're starting to realize that they maybe do need to look to technology, that they've done everything that they possibly could with the processes that they have in place, where would you recommend that organizations start, uh, when they want to look to automate some of these internal tasks, uh, throughout the organization? Great. Great question. Uh, I, I think we already heard that jumping straight, straight to that system solution is probably not the smartest thing to do. I- in, certainly in my experience, you really do need to start with that contract and process simplification. Really understand what the business needs from its commercial and contracting function. Um, and not just what it has been done historically, what's been done in the past, but also what does the future hold? Um, as, as the contracting models that are being deployed change, so too do the, the, the approaches and the processes that are put in place to support those new contracting frameworks.

20:25So to, to answer your question, I would start there. The, the work that Sally's just, just shared about simplification of the contracting form, absolutely critical. Apply the same sort of logic and process, uh, to improving those business processes. Um, understanding the, the business needs, um, uh, engaging with your key stakeholders, bringing them around a table. You know, the, drawing the, drawing the process out, either, either physically in a room with Post-it notes on the, on, on a, on a process chart, or virtually now. There's some great tools out there that really facilitate this process re-engineering. Bringing the guys who are at the coalface, who really understand the intri- intricacies of how it's done today, and indeed then their, their, their stakeholders to, to understand indeed how that process might be improved in the future. But that's just one part of it. It really is this com- To be successful, it has to be this combination of process re-engineering, honing that process to be the best it can be.

21:34Looking at the, the, the pieces of the process that we need people. You know, there are, there are tasks that machines can do much more reliably, repeatably, and, and without error than people can. But where you get to the relationship management people to people, or, or where you get to where there's a drive for innovative creative thinking, machines are nowhere good, no, no, no use at that whatsoever. So that's where you wanna have your people. So, um, from that point, you can then say, "Do, do the people that we have have the right skills and capabilities to be effective in this process?" Typically, we see that there are material skill gaps. And so you then bring on, uh, resources with those skill capabilities, or indeed you, you raise the bar of the current capabilities that you have within those functions.

22:29There are some great training programs, professional development opportunities, and certifications. Um, we have a whole series in World CC that the, w- that can be used to do that very thing, to raise the, the capability of the resources you have performing the job. And then once you've done that, then it's the time to start looking at, at the system capability and approaching it across the corporation as a culture change. If you, if you just jump to the system deployment, um, you're going to miss those important preliminary steps, particularly around engaging your stakeholders. And then you're going to have a sub-optimized solution. Doesn't mean to say that you have to do, to, to, to do everything at once. In fact, my recommendation is you start small, but, but move fast. So you don't do a two-year requirements capture, because by the time you've done that, the requirements are no longer relevant because the world's moved on.

23:32Agility in that, in that front end of the process is hugely important. But don't, don't forget the prize. Based on our research at World Commerce and Contracting, we've, uh, we've demonstrated through our research that businesses typically leave 9.2% of value on the table every year as a consequence of ineffective commercial and contract management. Now, for capital-intensive businesses, the percentage is even higher. So where you have a lot of uncertainty in your delivery and deliverable, oil and gas, IT services, the place where I came from, the, the am- the, the amount of value erosion that's down to ineffective commercial and contract management is north of that 9.2%. So that's the prize, that's the opportunity that's out there if we can get this people, process, tools, and systems, um, uh, three-legged stool to actually deliver and start removing the friction from those points within the contract life cycle management, uh, uh, pr- process so that we have an efficient and effective delivery.

24:46Yeah. A- and I think, you know, something you touched on there at the end is, is to reduce that friction it, it's great to take a phased approach, like you said. Mm-hmm. You know, sm- start small. Get some of those processes that you know are the real big pain points in the organization, you know, focus on those first. Um, a- and then start to bring in other users or different processes to keep user adoption high a- and make sure that people just aren't going to go back to their old ways and, and disregard any type of technology that you, you bring in to use. Absolutely. And, and you start small. You know, it doesn't have to be, um... It, it could be a particular contracting framework. Mm. It could be a particular region, or it could be a particular product set, whatever it might be. But start small, because it's so important to gain, you know, the momentum, to see positive results coming as a consequence of this agile approach to delivery. Um, these, these, these days of, uh, of, you know, year-long, two-year deployment cycles, they are over.

25:44You need to be able to, to deploy in 60 to 90 days the core elements of a contract life cycle management capability. Um, yeah, and then start building in additional functions and features for sure, but it's that sort of deployment cycle that the business demands now. Yeah. And to do that, you do it in, in incremental chunks. Totally agree. Yeah. Yeah, no, I, I think that's a great approach to take. And, you know, I- let, let's say that there is a couple organizations out there or somebody that's listening and they have done this evaluation. They, they understand where the gaps in their processes are and, and what they- Mm... wanna focus on first. What suggestions would you have for organizations that are starting to look at, uh, pieces of technology? I mean, let's specifically talk CLM. Um, where would... Uh, there's so many vendors out there now. A- and, and how, how do you suggest that folks, you know, go out there and really figure out and understand which tool is going to be best for them? That's a great question.

26:44I mean, I, I often joke that, you know, if you, if you can't find a CLM vendor to meet your requirements, you haven't looked hard enough. 'Cause as you say, there are stacks and stacks and stacks of vendors out there. Um, you can, you can, um, use the tools that are out there. At World Commerce and Contracting, we have a great tool. We call it the Software Comparison Tool, at software.worldcc.com. You can go out there and you can, you can use that tool, um, and, and put in your business requirements at quite a high level, and then it will, it will identify a series of vendors. Um, it, it's a partnership that we've, that we've run with Capgemini. Um, and so it's a, it's a, uh, an, an honest, i- in, you know, it's brokered view of, of the capabilities of tho- of those tools. You can, based on business requirement, you can highlight those tools that have specific things that you need.

27:46So for example, if you're w- if you're working, um, very few corporations can work, um, from a greenfield site. So they may have significant investments in CRM or EA- ERP systems. So tools, CLM tools that have, um, well-established open APIs which enable interconnection into these other corporate systems are really an important... That's a, an important requirement that you would need to, to look for. Um, o- other, other clients that I work with, um, they, they may be a sh- uh, um, heavily invested in, uh, sh- in Microsoft, um, Teams and, and SharePoint technologies. So a CLM tool that builds on Microsoft's, um, collaboration technologies would be the, would be a sensible next step. Um, so, so those sorts of things will, will enable you to refine and cut down on that complexity in the market. Um, another criteria that's, that I think is becoming increasingly important is the agility in these tools.

28:54Some tools are now, um, great agility in terms of changing workflow and changing the, the user experience, um, in dashboards and that sort of thing. Many are moving into that, into that space. Some are much further progressed than others. So agility in these tools is also something that's really, really important to look for. Right. And I will also recommend another resource from the World Commerce and Contracted that was made also with Elevate Services, and it's the, the Contract Management Maturity Test. Mm-hmm. That would be, like, a very good resource for people looking into, uh, automating tools, because this is more like a phase zero step, right? Phase zero, this is a term, it's not mine, it's from another global council member called Tom Fuchs, and, uh, that we are going to talk with, uh, next week. And this is like, okay, so you, you know you, you have a problem, but then let's start by looking and having, like, a blueprint on where are you standing right now.

29:53And then you, you can start looking for different kind of softwares. And then once you made your selection, Paul, so you're, there's, uh, many, uh, CLM tools right now. Uh, let's say, uh, this organization already made their decision. What, how would you go about implementing it? What, what do you think, or what are the pitfalls to avoid, Paul? Right. Right. I, I think we've, we've touched on some of them already, but I, I always think back to the, to the, um, crawl, walk- Run approach. So this goes back to the starting small. Um, crawl first. Deploy some, some core functionality, be it a document repository in a particular segment. Get that working. And move on then to, to bolting on some of the more capable, um, searching and analytics capabilities. Work then into the, um, the back office so that you can start pulling together this business intelligence into your dashboards.

30:58Look at the a- the, the more complex analytics that are possible in terms of, um, you know, the application of natural language and machine learning. So, um, incremental steps. Um, the other, the other key to me is, it goes back to what I said earlier about stakeholder engagement. If you've, if you've done your work in the, the, the, the areas that Sally was talking about in contract simplification, you've engaged your stakeholder in that proc- process redesign, they are already your best resource to help in an implementation. My experience is that if you find, um, a, a skeptic who you can sit down and train into the capability of the CLM tool and convert that skeptic into an evangelist, those resources are your best friends in terms of implementation, because they are going to communicate to their colleagues, their other, their stakeholders, the benefits of, of this deployment of technology, um, and recognize that it's actually making life easier rather than just being a, um, something else to do on a Friday afternoon. Very, very often, particularly when we start delivering things into the, into the community that enable the automation of contracts, so you don't have to go through the legal process of, of, uh, of contract review and amendment, you can do the contract, uh, within a framework, you know, within controls.

32:28But you can do the contract auto-generation and not have to then wait for the contract to arrive. Drives huge increases in productivity in s- in, uh, in, in sales velocity or in the, the, the, the, the procurement space. So these sorts of things can, can really help in that implementation cycle. Um, and do it, um, particularly where there's any degree of uncertainty. Um, do it in, use an agile method. Um, so, you know, uh, the, the concept of sh- short sprints where you deliver a piece of functionality, review the capability, and then you move on to the next piece. Um, those, uh, that method, uh, is much more efficient, we've found, and it can be, can be applied quite well in this, uh, CLM deployment space. But it's not just CLM, though. There's, there's a huge amount of energy around the application of artificial intelligence, and that's, uh, that's a fast-moving, um, topic that is going, going to be, in fact, is now transforming the way that many corporations do business.

33:40Yeah, and, and I think that we could probably sit here for at least another 30 minutes just talking about AI and, and, uh, how it's evolved and what it is now, especially in the, the legal space. Um- Absolutely... but yeah, that, we'll, we'll save that conversation for another day, Paul. I think that would be a- Maybe that's another podcast... great follow-up. Hey, but we are coming up on time here, so Sally, Paul, first off we wanna thank you for, for joining us and taking some time out to discuss. Um, I think some closing remarks. You know, if people wanna learn more about World CC and, you know, what it's about, how to get involved, w- where's the, the best place to, uh, to get more information? So I, I would recommend head straight to the website, worldcc.com. Uh, there's lots and lots of information there, and ways to contact us as a team. Uh, we're a, we're a globally distributed team, so there's probably gonna be someone in your region somewhere for you to talk to.

34:33Um, but we look forward to welcoming many, as we are, thousands of new members every month, and, uh, we look forward to m- welcoming many, many more. Indeed. Great. Great. Thanks. And, and definitely, you know, I think a lot of our listeners will get some value out of that, so guys, go, go check that out. And, uh, thanks, thanks for giving this a listen. I can't believe we're over 20 episodes in. This is pretty crazy that we've been doing this for that long. But if you haven't, uh, liked, comment, or subscribed, please do so. And thanks again, Sally and Paul, for joining us. We'll see you next time on Contract Heroes. See you, guys. Thanks.