Strategies for Transforming Legal Functions with Mark Ross

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

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. We're still at the World CC America Summit here in Dallas, and we have a very special guest this time. We're talking with Mark Ross. He's a principal and co-leader at Deloitte Legal Business Services. Well, Mark, welcome, welcome to the show. Thank you for having me, Pepe. Great to be here. So before we jump out with the questions, like can you talk about a little bit what are, what are you doing right now in Deloitte and some of your, your projects? Of course. Happy to. And nice to see you as well, Marc, as well. Uh, so I help, uh, drive Deloitte's legal business services practice.

0:52Uh, we launched in the market approximately four years ago now, and a tremendous area of focus for LBS at Deloitte is helping large enterprises transform their legal functions, become more efficient, leveraging the appropriate blend of people, process, and technology. And I know we're here at WCC event today, you know, engrossed with all of the technological innovation all around us, but I do think it's, it's crucial that organizations who are embarking on that digitization journey, that they take a moment to actually take stock of the people that they employ, the processes that they leverage today. And legal business services at Deloitte is laser focused on helping our legal departments, you know, focus on those areas, and then of course, enjoy the benefits of that promised land of technological utopia as well.

1:58Right. Yeah. I mean, and we really wanna focus right now with your experience, especially being a, a Big Four company, it's, uh, it's Deloitte, you work with, uh, Forbes 500 companies, and I'm pretty sure, like, these huge companies, they have like very detailed and complex structures. And when you think about the CLM implementation, you gotta consider all of it, from the beginning, you know, like pre-signature, the whole process, negotiation, and then how you manage those contracts. I mean, right now we've been talking a lot... Yesterday, we, we, we were talking with, with Cami about the advancements of AI, generative AI- Yep... which is, like, huge. But like you said, companies need to s- like, have a step back and understand those processes because even if you, like, pay millions of dollars for a piece of technology that it's sharp, bright, clear, and shiny, if you don't have all those processes in place, it's not gonna work because of the people. It's not... They're just not gonna use it. So Mark, can you tell us, like, a little bit like how do you handle those contracts? Like, what, what would be, let's say, like, the customer journey with a big enterprise deal?

3:06It's a tremendous question, or rather questions. Lots to, lo- lots to unpack there, but a lot that I'm passionate about. So let me take a step back and, you know, reflect on the journey that I've been on personally. Yes, I've been at Deloitte for four years. You know, prior to that, I spent 13 years in what many would call the boutique alternative legal services provider space. And one of the tremendous benefits that I count my lucky stars I am fortunate enough to benefit from at Deloitte is when we are supporting huge enterprise clients on their contracting transformation, I'm able to draw on the multidisciplinary expertise that exists outside of the legal business services practice, but across the global behemoth firm that is Deloitte. And I'll give you some concrete examples. We often say that contracts are touched by everyone, but owned by no one.

4:15The ownership, whether it's owned by no one, conversation for another day, but touched by everyone is completely accurate. If you think about the importance of contracts for an organization, they could be tools for risk mitigation, tools for revenue generation, tools for the much needed purchase of goods and services. They can even be a testament to an organization's values, and almost an indirect PR for that organization. Are they easy to do business with? The point being is that contracts flow through every component of an organization, and when we are helping a Fortune 1000 organization transform its contracting function, it's an absolute imperative, an absolute imperative, that we can bring enterprise procurement expertise to the table. They need to bring the stakeholders. Of course. We need to understand the intersection between S/4HANA, SAP, Ariba, and the CLM technologies.

5:27We need to understand the interplay between Oracle and Workday with the CLM technologies. We need to h- be able to bring that expertise to the table. And fortunately, being at Deloitte, I'm able to draw on that expertise from across the globe, this multidisciplinary expertise. You also touched on while the promise of CLM technology, uh, or rather, you touched on wh- while the functionality of CLM technology, I would say, is finally catching up with the promise of the early years- Simply because the functional utility exists, and it does exists, to fast-track redlining, to expedite intake and triage, to integrate CLM with procure-to-pay, quote-to-cash systems. That technology exists and it works today, right now. That doesn't mean people will use it. Just- That's a different story. Yeah. So user adoption, again, is critical.

6:42And of course, within our practice at legal business services, we have lawyers, we have technologists, we have data scientists, we have process specialists, we have change management specialists. But you know what I can also lean on if I need to? If we're in a multi-year transformation of a Fortune 500 enterprise contracting function, I can call on my colleagues in Deloitte Consulting, who may have implemented a end-to-end procurement system of that organization. They have the, not only the expert knowledge in the tools, in procurement, in sales, in commercial, they have the institutional knowledge of that particular client, what makes that client tick. Will that client's employees respond to, um, office hour training, videos, frequently asked questions? What is gonna get that user adoption up? Because that more than anything else is gonna demonstrate return on investment, that journey to value on that investment quicker than, candidly, whether the actual technology does what it says it's supposed to do. Right. Right.

8:00And I, and I think, I mean, you touched on something earlier when we were talking about, you know, contracts, they touch everyone, right? In the organization. Yeah. So how, let's say there's a, a legal team out there that's at a large organization, how can they make sure that that first step to get those stakeholders involved in those other departments and, and start to have these conversations to make sure that they understand what their requirements are before they start to go evaluate tools? Because I feel like often folks do this backwards. I couldn't agree more. And you will have heard the term CLM readiness many, many times. It's become something of a sound bite, but it is completely necessary. But even before I think you take the steps necessary in a CLM readiness endeavor, whether you, you know, engage an organization like Deloitte to help you on that, or whether you do it yourselves, I think a lot of organizations don't even take the pre-readiness step of really understanding what the mission is. What is the problem statement that they're trying to solve for?

9:09Is it that they cannot locate their supplier agreements? Is it that legal is viewed as a bottleneck? You know, tongue in cheek, I remember once speaking on a panel many, many years ago where one of my co-panelists said that in his organization, legal was somewhat jokingly referred to as the sales prevention department. What is the problem? 'Cause it's not the same in every organization. Yeah. Is it speed to execution? Is it a revenue generation issue? Is it a risk avoidance? Has this organization been the unfortunate beneficiary of multiple pr- multiple fines for data privacy breaches 'cause they've not incorporated appropriate terms in their contracts? Okay. So we work out, first of all, what's the mission? What's the problem statement? What are we looking to solve? And then of course, readiness is getting buy-in for the program, understanding what your legacy contract portfolio looks like, understanding the map of your template library.

10:18Do you have 55 versions of a master services agreement for indirect procurement? Understanding your current workflows, how are contract requests received today? What exists in your tool, you know, what exists in your existing technology stack today? Do you have playbooks? Do you have preferred positions, fallback positions, fallback position number two, never in a month of Sunday would we agree to that positions? All of those activities and more form the basis of a CLM readiness. Only once you've done that, candidly, only once you've done that could you even quantify what the cost of a CLM implementation would be. If you think about the various building blocks for quantifying how much it's gonna cost to implement any of these enterprise CLM technologies- Mm...

11:20you need to know how many workflows, how many templates, how many contracts to migrate, what are the approvals gonna look like. All of that information you need before you could even understand how much this is gonna cost you. And if you don't know how much it's gonna cost you, how could you even quantify the return on investment? All of that forms part of CLM readiness. Right. And I think when you think about it in a broader way, right, in a broad, in the long run, I think the CLM readiness is like the foundation of every implementation because first of all, you bring the stakeholders. What are their problems? Because as you said, like, contracts are not owned, like, by legal. They're owned by the business side. It's just like a formal way in putting them on paper what needs to go on, right? It's like a manual of the commercial relationship, even if you're on the buy side or in the sell side. And when you do that and you understand, first of all, y- like you say, like, processes, the templates, what are the contract types that they got, workflows, approval, whatever, it's easier for then take a next step, which is building the scope of work.

12:27Because you have to align the expectations to what are you going to deliver, because that's some of the friction that will goes on during the implementation. Like, "Hey, I was thinking about we were going to get this." Like, "Nah, this is out of scope," and you gotta issue a change order. That's, like, some of the frictions. But after that, let's say everything goes smoothly, there was no change order, it was everything on the scope of work. Having that CLM readiness part will also help you with the people and the adoption, because you brought the stakeholders from the beginning, so they know why they need it. It's not like, you know, procurement, "Oh, what the hell? Again? Training for another new software?" It's supposed to be legal team doing this, the contract account, not the one for doing the contracts. But when they see the benefits, like the turnover time is gonna be less, the, they can, for sales, they can close a deal faster. Like, when you have all those KPIs, like, if you see, like, they're all connected, and it's because you talk with the important persons since the beginning, and that will give you, like, the blueprint of what's going on.

13:30Yeah, I, I couldn't agree more, and it goes to the heart of what I was saying previously about even before you're quantifying what the legacy portfolio looks like, even before you're doing an assessment of the template library, you are defining what the problem is, and by defining what the problem is, you're attempting to quantify what the potential benefits might be. Now, I think about the benefits of a contracting transformation, and again, I'm using those terms deliberately to mean more than just the CLM technology- Right... implementation. You could really bucket those value drivers into three categories. Number one would be process efficiencies. Yeah. So you're getting to executed contracts quicker. Simple as that. So for the buy side, you are facilitating the running of the business by buying much needed goods and services quicker than you were previously. It's a process efficiency.

14:31On the revenue side, obviously, you're generating revenue faster. Then you've got, again, what you hear a lot of at WCC, the lost value in ineffective contract management, and the study that Deloitte did recently in conjunction with WCC showed that there had been some modest improvement over the years, but still 8.6% is the average value lost through ineffective contract management. It's a very minor improvement, because it was, like, a couple of years ago, it was like 9.3. 9.3%. 9.3. So there's a lot of work still to do. A lot of work still to do. And then the third bucket, which candidly is the most difficult to quantify, is savings from risk avoidance. How do you put a dollar amount on avoiding something that might not happen? So I'm talking here about contract compliance with legislation, regulations.

15:32Think about the fines that are out there in the ether for organizations that don't comply, say, with GDPR, and the appropriate model clauses in their contracts. They're not giving appropriate data privacy provisions. But that's a cost avoidance that may not ever happen to an organization. But if you think through those three values and you've got a baseline, and again, this comes from your CLM readiness, you've got a baseline of how long does it take you today to get to executed contracts? What is the total value that you have in indirect procurement under management today? Once you've got that baseline data, then you can track the efficiencies, the value saved, and even potentially the risk avoidance dollars from implementing a contracting transformation program. Right. And I love the, the kind of analogy, the three different places that you can focus, right?

16:32And, and I think that folks that are out there maybe going through this process or starting this process, they need to understand that you can't do everything at once. It does need to be a deliberate focus on your, your major issues to start, and go from there and, and take a phased approach when you're implementing not only CLM, but, but all these new processes that we're talking about across an organization. I agree. It's incredibly rare, I'm not gonna say never, but incredibly rare that we would recommend a big bang. It's typically, you know, even if it is a multi-year enterprise transformation across the buy side and the sell side, it would typically be starting with a select bucket of contract types. Right. It might start with a select geography or business unit. Demonstrate success.

17:27Get some internal champions who will advocate for the process efficiencies that you've realized, the value that you've created through closing some of the loopholes. And then expand. So typically, our approach would be a multi-phased approach. Right. I, I mean, even it makes way more sense for finance, right? It's like if you're gonna spend a million dollars, it's better to build first an MVP, and now you have, like, validated product or a service. It's like- And, and in particular, in particularly, Pepe, in this economy as well, beyond just legal business services in the world of CLM, you know, again, this is where my practice, we have the ability of learning and benefiting- From the relationships and the expertise that exists across the, the breadth of, of Deloitte. But, you know, one of the trends that, you know, that we see, you know, in digitization and automation initiatives across the enterprise is the MVP and the multi-phased approach, demonstrating value at every step of the journey.

18:32Organizations are, are more keen than ever before to take the benefit of the promised land of technological utopia, but they want to be able to... No, I'm gonna change that. They have to be able to demonstrate value at every step of the process. Right. And what would be your, which lessons ha- have you learned, especially talking about MVP? Because we've seen, maybe not with the huge enterprise deals, but even, like, medium-sized projects, the company, of course, all the business goes around their ERP system. Yep. Right? And one of the main requirements is, like, it gotta work and integrate with our ERP system. But maybe the integration, that's, like, the... I would say in my experience, that's, like, the hard part of an implementation because you need... I mean, Deloitte has a really good advantage because you're, you're the ones who built the ERP system. But when you're working with a third party, it's kinda hard because you gotta understand that maybe that, you know, it's harder to coordinate times and to understand all their processes.

19:34And what are, like, some of the requirements that you've seen, like, in big enterprise deal, like, why they need to integrate, like, with, with, I don't know, with SAP or with Oracle? Uh, with Ariba, I mean, it's kinda, you know, it's because of the sourcing part. Yeah. But especially with the ERP systems, like, what have you seen there? So there isn't a standard blueprint. Yeah. I would say that, first of all, every organization can be different. You know, typically speaking, you will want to do some standard integrations- Mm... in phase one. That might be single sign-on. Docusign. It could, it could be with your e-signature tool. E-signature. Whether it's the, you know, Adobe Sign, DocuSign, whichever one. So that is typically what we'll see in a, in a phase one. And then in a phase two you may get your procure to pay, quote to cash, your Ariba, your Salesforce, your S/4HANA, your Coupa, your Workday, your Oracle integrations. Now, the caveat being is that there may well be engagements where the client stakeholders have advocated as part of their ROI presentation to their bosses for budget- Mm...

20:44that, you know, we will be able to, within six months, close a value leakage loophole. To be able to do that, you might need to integrate, say, with Ariba in phase one. So again, you look at the value proposition that the client is looking to achieve, we look at what they've proposed, and then, again, you can provide that candid feedback. Other things that I think you absolutely have to do straight from the get-go is not boil the ocean. And again, I'm always conscious when I'm using soundbites, but soundbites typically exist because there's some degree of veracity in that, particularly in the world of contracting. And we've said it several times already, touched by everyone, owned by no one. The problem being is everyone's going to have an opinion. There will be something that is important to absolutely every stakeholder in the organization when it comes to contracting. And it's really important that there is a final arbiter. It doesn't have to be legal.

21:56Maybe it's procurement, maybe it's commercial, but there is a final arbiter, and that you're able to support your client through that journey of determination as to what is absolutely necessary must-have in phase one, phase two, phase three, versus nice to have, versus this could wait until a subsequent phase. You know, you've obviously talked to others about the promise of AI. You know, do we really need, in phase one, to be able to switch on our AI-enabled redlining functionality? Again, maybe that is the biggest thing for that given client. But I would posit that more often than not, that would be in the, the run phase of the crawl, walk, run journey. Mm-hmm. Yeah. No, I, I think that's, you know, a big focus, you know, like we've been saying, right? Focus on where you, you think or, or where you know your business needs the most help and where it's gonna be impacted the most.

22:53But Mark, this has been a, a fantastic conversation. Thanks so much for, for joining us. My absolute pleasure. Really appreciate you guys taking the time to speak to me today. Absolutely. All right, thanks everybody for listening to another episode of Contract Heroes. Thank you. Thank you. This episode of The Contract Heroes is sponsored by Koho Consulting. Koho helps organizations of all shapes and sizes find, implement, and manage their chosen CLM tool. Whether your project is buy or sell side led, Koho can help you navigate the waters of the CLM space to make sure that you're getting a product that's going to fit like a glove for years to come. If you'd like to learn more about Koho, visit their website at C-O-H-O consulting dot com.