LIVE: Preventing Contract Revenue Leakage - Leandro Doca

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0:00You're listening to the Contract Heroes podcast, your one-stop shop for all things contract management. And now here are your hosts, Marc and Pepe. So welcome everybody to another episode of the Contract Heroes podcast. And this time we have our, our good friend Leandro Doca. He's the VP and head of CCM for Americas at Capgemini. Welcome to the show, Leandro. Thank you very much, Pepe. And, uh, thanks again for this opportunity, and, uh, it's a pleasure to be here with you guys. It's always a pleasure talking with you, Leandro. And, uh, we would like to start talking about, like, what's, how do you envision the CCM services market and how it look like for the 2023? Okay. So, uh, I think it's important just to contextualize. I'm gonna speak about the IT industry, okay? So I'm not speaking about engineering or, you know, other industries. So my industry that's in, as Capgemini, is, uh, IT.

0:56So my perspective is gonna be given related to that, uh, industry. I see that, um, CCM is becoming more and more strategic. So, uh, you know, that we had the pandemic, now we have the war, we have the instability from a geopolitical perspective. So, uh, you know, uh, ac- at the end, nobody knows exactly, you know, where we're goi- going to be next year. So that's why, you know, CCM becomes even more strategic for providing information, add value, you know, understand the, the behavior of the markets, the contracts, and, uh, really, you know, at the end, be a, a, a, a kind of co-pilots of the, you know, the main leadership, the CXOs to take the best decisions possible considering all this, uh, uncertainty, and then move forward. So I see CCM becoming more and more strategic. So the pandemic accelerated, uh, for sure, you know. And now we have to take benefit of this momentum and keep going, pushing hard, and really showing that CCM is here, uh, you know, to help and to, uh, be a very important, you know, strategic player in this ecosystem.

2:01Right. And what would you say are, like, the biggest pain points that enterprise are struggling with? So we've been dis- discussing a lot with some of our preview guests and here on the World CC, uh, Americas event, like procurement now. They want to have all the data flowing correctly from their ERP systems, or maybe sales, they, they want also, like, the, uh, from the, uh, CRM systems g- go out all the data flowing into the CLM, for example, so everybody can have the same data. They, they, they, they can follow the same re- re- reports, trying to avoid some of the human errors. But, like, in an enterprise-wide perspective, like, what would you say is, like, the biggest pain points that you have seen? Well, I, I, I, I would divide this response in two parts, okay? So obviously there is all this internal part that we need to improve, having a CLM, you know, a report, better reports or better governance and every, et cetera. Uh, you know, so, so this is more internal. The big s- the biggest thing in my industry is how to move, uh, in terms of, uh, you know, the way we contract with our clients from a time and material or capacity, uh, model to a more outcome-based model, you know?

3:11So how can we really, uh, you know, um, provide to our clients, you know, outcomes that would be value for them, that would be impactful for them? So, you know, our industry is pushing, pushing very hard on that direction, and CCM is a, a very key, uh, vehicle to support as a strategy, right? It's not easy to move the offerings. It's not easy to move the commercial models. It's not easy to understand, you know, what could be a outcome base, uh, at the end for the clients, you know? And, and so, so this shift is completely changing going forward from my perspective. And, uh, the complex of our agreements is also changing drastically, right? And there is a third layer related to, you know, the, the, the way we're gonna start contracting related to sustainability, right? So this is something that's coming. It's here already. So, uh, the commercial models we, we, we, we start seeing, you know, KPIs related to sustainability, how we can reduce, uh, you know, um, uh, green- greenhouse, uh, uh, effects and everything.

4:14So, uh, there will be commercial models going forward that are, that are going to be completely different from the way we are contracting right now, right? So I think, you know, there is the layer of the, again, the internal part that we need to keep improving, better CLM tools, better reports, better governance. There is the second layer which is, okay, moving from, uh, you know, less complex, um, commercial model, time material, capacity to a more outcome basis. And the third level, which is really the sustainability ESG, that's gonna be, you know, pivotal going forward. So I see really the trends and the challenges, uh, you know, going forward related to those three pieces. And, you know, as, as we're talking about all of this, right, and these multiple layers, I think that something that's involved at all of those points are the people. And, and you need to be able to put the right people in the right positions to, to, to have these, these different layers be successful.

5:08So how, how do you suggest folks go about putting the correct people in, in the roles that, um, they should be in? Yeah. So the things that I'm doing in this exercise right now in my organization in Americas is really to assess your team, right? So I think that you, you have to, to kind of, you know, have an assessment of, uh, where your team, uh, or teams are positioned at based on some criteria. So this guy is good in doing, you know, commercials, these other guys that are doing contract management. This guy is more sp- specialize in some specific industry or in this kind of, uh, you know, offering. Uh, you know, so, so having an assessment of your team I think is step number one to understand where the team is as a whole, right? And then you may define, "Okay, so I need to give opportunity for these guys in these different, different roles. Uh, we need to hire people because we don't have anyone in our bench here to complete that role."

6:03So I think that, you know, first step is, is really, uh, as is, right? Where you are in terms of the team. And second, then you start defining the strategy going forward. And I think that's pivotal as well for your team because then you start giving them opportunities for growing, you know, having different experiences, moving them out of the comfort zone because that's the best way to, um, you know, grow. So, uh, that's the way I would recommend, right? Assess, define, and then push the- for the new opportunities. Nice. And like right now, I mean, we know that the CLM market is growing and, uh, more and more enterprises are looking for softwares. They're trying to automate all their processes that they're re- doing it right now manual. So, like, what can, what kind of tips can you give for an organization that goes from manual process to using a CLM tool to become more efficient and to automate, like, manual processes? Well, my experience is that you have to think big, but start, you know, small, right? So start defining really the, you know, that use cases that would give the first structure for what you need to do.

7:12So say, you know, document repository, you know, uh, maybe some, uh, extraction of obligations, some metadata. So we start really small, defining the use cases, and then you start moving up in the complexity and the, in the CLM, right? So I think that the, the, the big mistake that most of the companies do today as far, as far, uh, as I know in my experience, is that they, they, they want to implement everything at the same time or, you know, uh, kind of big bang, right? So, uh, I don't think that this is, uh, uh, the right approach. We know that contracts are touched by different functions, so you have CCM, legal, finance, delivery in my industry, right? Sales. I mean, there are so many stakeholders and obviously there will be a game of, uh, you know, power to, you know, who's gonna own the, the, the process at the end, right? And in the, and, and, and, uh, you know, in the perimeter, you have a lot of different systems. So we have SAPs, I mean, the ERP, ERPs. You have, say, um, uh, you know, the, the- CRMs... uh, exactly.

8:12So, uh, sales, um, uh, tools. Uh, I mean, so, so we, I mean, you're gonna have a ecosystem of systems that will compete naturally, uh, with, uh, you know, this plan. So the change management of this, uh, process should be really strong. So, uh, starting small, but, you know, having the mindset, okay, so, uh, we want to achieve that point is very important. But really defining specifically the use cases that w- you need to have, you know, and going, you know, and convincing people and applying the change management process, otherwise it's gonna be a failure, right? So I, I have seen many cases where, you know, uh, companies failed because they didn't have a proper change management. So at, at the end, I think that the most important component of it is really the change management because, I mean... and have a good partner, right? So select the right, uh, tool for, for, for your needs. I mean, you have plenty of tools today in the market.

9:06Um, Capgemini, by the way, is partnering with, uh, uh, Word CC, uh, to, you know, provide a tool to facilitate the selection of, you know, the, the CLM based on your necessities. So, uh, I mean, so, uh, having a good partner is step number one, right? And the, the partner should, you know, help you to define the use cases. Okay, so you don't need this right now. I mean, should be an advisor, right? And help you or help the, the company in this journey. But again, having the GPS turning on to, "I want you," or, you know, get there, but, uh, we'll start, you know, smoothly here and small. And are you, you know, when, when these projects are just taking off, um, do you suggest that you get as many stakeholders to come to the table to have conversations about what their needs are, even if those needs are maybe, you know, we're starting with a repository and maybe that's not in the, the sales or procurement department to begin with. Um, but, but if the end goal is to, to bring those departments into this conversation, integrate with their tools, how early should you be bringing them in for this conversation, you know, during the evaluation process?

10:12Well, uh, one of the things that normally I see as a, a mistake that companies do is, uh, to, I mean, to propose something to resolve a, a, a problem that I think that another function has, right? I think that you should work e- exactly the opposite. You, you should apply a lot, a lot of, a lot of design thinking process, right? So where we're gonna start hearing from, you know, the other stakeholders, what are their problems from, from their perspective, and then you may suggest something be- you know, on what they are suggesting, right? And not trying to impose or, okay, so this is the way I view your problems. But tell me about your problems. You, you invert the logic, right? So applying the design thinking concept in this, uh, journey is very important. And obviously, the more you hear, the more you involve, involve people, I think that's, it's gonna be, you know, very difficult for them to move out, you know, because they're gonna be part of your journey at the end, right? So bring people together, bring people close to you, listen to them, and then, you know, you grow, you grow together, and then it's gonna be much easier for, for your project. Right. And can you give us like a very short walkthrough on how an assessment looks like? For example, uh, li- like I told you, we've been talking a lot about procurement, right?

11:26P- procurement right now I, I, I would say is like one of the hardest trends that they want to automate and how they can communicate better with the legal team, and they can have all the data flowing correctly. Like, how does it look when they approach to you and they say like, "Okay, maybe we have some leakage in our contracts." Like, how that assessment looks like. Like, do you talk with the people involved and then, uh, you make some recommendations? So when, when I talk about design thinking, there is a method for that, right? Okay. There are phases where you, you, you know, you, you first hear, define, refine, and then, and, you know, and, and move forward. So you define it, the, the, the, the, the use case, you test the results. So, so there is a path that you should follow. But basically the first conversation would be a kind of workshop, right? To understand and to assess the problems. What are the pain points, right? Try to define and to, you know, organize in a whiteboard, you know. What are the main- Pain points that, you know, the function or the area has today, and then you start from there to understand, okay, so, so for this point, I understand that your problem is this one. Is that right?

12:25So you confirm, and then you suggest something, right? And then you follow the methodology, because then you're gonna have, you know, the ideas. I mean, the i- the, the ideation- Mm-hmm. Yeah... if you will. And then you're gonna, you know, propose use cases, you're gonna test the use case, and then you're gonna see the results, so you move. Um, but the first step is really to, to here, right? So, uh, I mean, if a, a procurement team come to me and say, "Look, you know, uh, you are dealing with clients, but, you know, at the same time, we have our suppliers, our partners, you know, and many times we have third parties in, you know, in our agreement, so... And we see that there are some leakages, right? So, uh, how can we do in order to be, uh, to have a better, you know, back-to-back agreement between the contracts that we have with our clients and our third parties in order to avoid those leakage," right? And then it starts new.

13:13Okay, so we identify that there are some gaps here in the, let's say, in the, in the flow, and then you start, you know, okay, so, uh, we don't have any tool here, so maybe we can, you know, uh, develop something here. We maybe, we, we, we may have some, uh, you know, supply, uh, uh, uh, chain, uh- Right... management tool supporting our CLM or whatever. But I mean, really identifying within the flow what are the main gaps, and then you start from there, you know? So, uh, that would be my recommendation. Right. And what do you think about the importance of having, like, reasonable terms in your contract templates? Like, we, we know now that, like, the processes of course is gonna be important, but, like, the substance inside the contracts. Uh, do, do you also work, uh, with your, with your customers on that? Well, it depends. So, um, we, we have, let's say, two types of, uh, clients, right?

14:06Clients that normally they, they hire, uh, third party, uh, advisors, you know, to support them in the journey of launching their, defining their RFP, launching their RFP, running the process of the RFP, negotiating the agreement. So those, those guys, they have the, um, their, their framework, and then it's difficult for, you know, changing much, right? Of the, the architecture that they have. Um, and then we also have the clients that do not use those guys, and then th- they negotiate themselves, right? Maybe we, we may have a third group, which is, uh, which are clients that they hire external legal, uh, uh, firms to support them in the, in the journey, but th- they, they are different from the third party advisors. Uh, and obviously, you know, uh, I would say my, my preference would be to, to go directly with the client, because then I think it's, uh, we have more flexibility. You know, we may find some, some better terms for, for the parties.

15:02I think that, again, the contract is something, um, you know, uh, it's not, you know, a legal document, but it's a business document, and at the end, it's a market document, right? So I, I, I, we try to, uh, have clauses flexible enough to be, to be easy to make business with us. You know, we want that our clients, uh, recognize that we are easy to be, to have business with, right? So, uh, we try to, you know, uh, have terms that are flexible enough to facilitate the journey. And not from a transaction perspective, because we want to have long, uh, uh, relationships with them, right? So, uh, we are trying to, you know, draft and have our, uh, positions or, you know, our playbook in terms of, uh, you know, uh, what is acceptable, what is not acceptable. I mean, fr- from a, more and more to be more flexible to, you know, the uncert- uncertainty, because, you know, we have the uncertainty for us, and also the clients for them, right? So how we can build together.

16:02And we, we are seeing that clients are, are willing to, uh, you know, um, to be flexible as well. Obviously, you know, when you go to the legal terms, uh, limitation of liability, damage, you know, that we were discussing the other day here in the, in the, in the, um- The workshop... in the workshop, uh, there is still a struggle. So cybersecurity, you know, data privacy. So these, these terms, they, they are, you know, is still more difficult, and they are, you know, the clients is, uh, they are pushing more, they're pushing harder to have more, uh, you know, to transfer more of the risk to, to, to us, right? The, the suppliers. But at the same time, when you go to the business model with the commercial models, you know, which are basically what we have, you know, in our daily basis when we are executing agreement, then I, I see that, you know, more and more we're trying to find flexibility. And when we move, again, taking the second layer that I mentioned before to the outcome basis model, I mean, uh, it's a, it's a joint, uh, wor- uh, joint execution.

17:04I mean, so there is a lot of, there are a lot of dependencies from the client as well to generate that, uh, outcome basis, uh, model, right? So, uh, we start sharing the, the, the project in our case, right? So, so, so the goal is not only Capgemini's goal to deliver, but also the client to deliver to Capgemini their part, you know, in order to achieve that model, right? So, um- Right... uh, that's, that's the, the thing, and, uh, we have very nice examples so far in Capgemini where, you know, we have big clients here in North America and, uh, you know, uh, we, we, um, for instance, we, we have a big client where we, um, we had an outcome-based model where we helped them with their digital, uh, transformation, and they start having, you know, their clients consuming through the app, and their revenue, uh, grew from 6% to 30, 35% in, in the six months. Uh, can you imagine the impact that we created to the client?

17:59So this is the kind of agreements that we w- w- that we are moving from a just time, material, capacity, you know, waterfall or whatever it is, the, the, the fixed price, to much more outcome basis. Because at the end, the benefit that we add to the client is completely different. It's not only a project that we are delivering. We are delivering value to the client. I mean, we are trying to align with their KPIs, what they need From a business per- perspective, and that's where, you know, I think that we should go to. And then the commercial models will follow, right? So the terms and condition, they should follow this, this journey, and, and this is a game changer in the way we, we contract, you know? Awesome. And so Leandro, what would be, like, the number one takeaway to improve their contract management process that our audience should remember? Well, so, uh, contract management helps you to make money, right? So I think that that's the mentality that everybody should know and, uh, work. So, uh, you know, uh, really try to select the correct battles because you have a lot of things, you know, in the daily basis.

19:04So try to focus. So focus is very important. Have the right team, so assessing the team, understanding what they're, they are s- strong on, what are their weakness, and then trying to train them or to bring people to reinforce your position. So having the right team is important. It's like the World Cup, right? So we're gonna have the Wo- World Cup, Soccer World Cup now. I'm Brazilian. So, uh, you know, having the, you know, the right people, the right team is, is important to win the World Cup, right? Yeah. So I think the mentality should be the same. You know, having the team, having the focus, and really, uh, communicating the best way possible internally, because the better you communicate, the better you engage, I mean, your stakeholders, and then it's gonna be easier to, I mean, the journey's gonna be much easier. So, uh, you know, focus, select your battles, have the right team, and, uh, have the mentality that we are here to help the, the, the companies to make money. And at the end, you know, we're gonna have a, you know, a, a pleasure, uh, journey to, um, you know, uh, contribute in, in that, uh, on that perspective. Yeah, people, process, and outcome.

20:07You know, I, I think it really revolves- Exactly... around that. Well, Leandro, this has been a, a great conversation. We really appreciate you coming by and having a conversation with us. Uh, if folks wanna learn more about you or Capgemini, where's the, the best place to connect? Well, find me in LinkedIn, right? So, and push me a, a, a message there. I'd be happy to, to engage. And, uh, thank you again for invite me to this conversation. Always a pleasure. This is the third probably conversation we are having, right? Yeah. It's, it's, uh, it's the third one. Yeah. So, uh- It was more in Spanish. This is the first one in English. Okay. And, uh, so appreciate again. Thanks for, and congratulations for this program. Great. Thanks to you. Thanks, Leandro.