The Future of Smart Contracting With Kraig Conrad

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. Well, Craig, thank you so much for joining us today. We're really excited to be chatting with you. I know we've been trying to get this on the books for a number of months now, so really appreciate you sitting down with us. I think, you know, before we flip things over to Pepe to give a, a bit of insight into what we're gonna be discussing today, we'd love if you could give our listeners a little bit more information on the NCMA and how this all kind of came to be and, and, and where it's heading. Certainly. So, well, thank you for the opportunity to be here. It's always great to hang out with the cool kids. Uh, you guys are awesome, and thank you for what you do to help support our community and bringing content to them. So NCMA, the National Contract Management Association, is a neutral forum of buyers and sellers in the US federal mission.

0:57So you may know that that mission is around the world, so we have members that are around the world, but they're very much focused on the practices and requirements and the missions that focus around US federal space. Now, that community has a ton of things with it. It has a network, whether it's, uh, through events or through local chapters. It has global online engagement, so they can come together in that format. But there's also learning and development certifications and, and a little bit of standards. That's the org- the community. We're roughly 20 to 25,000 members, almost 100,000 customers. We are a member-based organization, but, uh, we support everyone, whether they become members or just need to attend our events or consume our training. Awesome. So we have few really interesting points that we want to discuss with you, Craig, uh, especially, uh, how's, like, the profession evolving, a little bit on the contract management standard now that you mentioned, and of course, the partnership that you have with, uh, World Commerce and Contracting fee a few years ago.

2:04We're really close with them, Tim Tallies, so it's going to be, like, really interesting to see your point of view, especially on the federal side because I think we haven't had any- anybody in the podcast to talk about this, about federal contracting. So we're really curious about how it's evolving and how, especially AI now, it's everywhere. So we are really curious on how you're seeing things evolving and how you think things in the future. And, well, for the, for the people that don't know NCMA, it's, has played a major role in shaping the contract management pr- profession through these standards, a lot of certification, contract management body of knowledge. Maybe you can talk a little bit about it. But before we do that, in your perspective, how has the profession evolved over the past decade, and where do you see it heading next? Sort of put it in two parts. First, for the US perspective, the last decade saw a, sort of a very slow evolution and then a very quick change. That is what happened about a year ago.

3:08And the, this is all driven by, uh, US federal practice and what is expected of our acquisition system. That really changed again with the administration change here in the US, but what we're being asked to do is to really move away from a compliance-focused, very exquisite process to really focus on outcomes and ensuring that those outcomes are exquisite. Because we're going into a model where we have perpetual uncertainty, so going into it. It's been this way for quite a few years, but we have been on this journey to try to continue to press the practice forward, to deliver value, to make sure our profession in the federal construct is really becoming more powerful about how we use our brains rather than how we follow process. Do we do process well? The global perspective, and, and you mentioned World Commerce and Contracting, Tim and Sally, wonderful group. They're focused on the global trends, and you know, that is...

4:10You've had them on, you talk about that, but it has been important in how they are shaping the practice over the last 10 years. The moving away from a document management and compliance function to one that's seeking to shape outcomes quickly, get there fast, adapt in, in uncertainty, and really make sure that the relationships are being managed well, that relational contracting overall governance structure could be there. And, and Tim and Sally have been really shaping that incredibly well. But broadly, I think we really see this growing focus on ensuring that we define competencies, that we have repeatable processes, and we have a common language. We can't do any of this change if we're all using different terminologies. As you know, contracting, no matter where you go, the entire life cycle is often fragmented. It's not one department's responsibility. It touches many departments. So that is really what the movement is leading us to now, is to make sure that we do have those defined competencies. We do have a common language, so we can push forward.

5:18You mentioned the CMBOK, but I'll, I'll talk a little bit, and, and the standard as well, but I'll talk a little bit about that and its role because it is a way to get to common language, common standard, if you will, around what the job tasks are and those business processes are. So that has been really important. Delighted to say that the standard, which was developed by NCMA, is an American national standard. It is now part of the Commerce and Contract Management Institute's responsibilities. It's the steward. The goal is to be able to make this more globally accessible on our journey to ISO. So- A little bit about that and why it's important. Again, if we're going to be using repeatable business processes, standards, language, so no matter where you are in an organization, what function you have, where you are in a supply chain, we can get to that nirvana that we're all using that same language.

6:19This change that we're talking about that we've seen over the last 10 years is going to materialize. But the standard was developed through a global panel of practitioners, that it is a cross-section of jurisdictions, of sectors, of types of contracting that you do, the categories that are covered. That is all put through a consensus-based standard, which means kind of everyone has to agree that this is in fact what we do around the world. So that is the standard. The CMBOK is based on that standard, so the Contract Management Body of Knowledge is based on that framework that is the standard. And the advantage of this is that other things that are based on that as well, for example, for the CMBOK, we have the CPCM, which is really that federal practice pinnacle for buyers and sellers of a professional certification. Anytime the standard updates, all of these other things update. So that ensures an agile way that we're pushing forward in this chain and ensuring that people are prepared.

7:31Now, I know we're gonna talk a little bit about AI. That is an incredible opportunity for our profession and our practice to start to harmonize, to start to find ways to spend more time on that generating value and the outcome side of the equation, rather than s- over-focus on time on the process side of that. But we're really basing everything we do on that standard, whether it's, uh, the tools from the institute that are really research-based and practical in how you do the job, no matter what sector you are, no matter what jurisdiction you're in, all the way through to the standard certifications and content that you read. Again, it's all backed by that framework to stay agile. Correct. And we always discuss this conversation and also with our customers that before you jump into tech, you have to define your processes. Very important homework, because otherwise- Mm...

8:28you'll be only automating broken processes, and that's not gonna be any useful at all. So going back into the contract management standards, uh, we love a lot of our, of our conversation in, in Chicago last year. But can you give us just, like, an example? Like, think about it, like a, a company, they have their own contract management, their department, they're still struggling with their processes. Like, can you give us a- an example on how a company have implemented the CMS, and how it helped them to improve their performance and reduce the risk in contract management or, and any advice on what would be, like, the good first steps for a company looking to do this? Well, certainly. And you hit it importantly, uh, that, that nail on the head, so to speak, uh, that these processes need to be known and, and to some degree codified. I know that sounds like it's heavy and burdensome, but the, the point and value of the, the organizations that have adopted and implemented the standards is that... And first off, the standard is free.

9:33You can do anything you want with it except for plug it into a new software, then you need to talk to us. But everyone can use it. It's a free public good anywhere in the world to apply it. So how a lot of the leading organizations are using it and, and some of those case studies is that, number one, throughout their organization, they now have a document to be able to say, "This is what contracting does." And it's ir- it doesn't matter where contracting reports. If it reports into legal, if it reports into an operations or finance function, it is a lot easier to be able to bring in a standard, and a standard that is being adopted by many trainers and universities to now say, "Hey, this is the language we're going to use. These are the processes that we're going to include. Yes, we can add to these. We can modify it, but we now have something in place."

10:26So what that means is, again, legal, procurement, program, finance, suppliers now have a common convert way to talk about what they do, and they can share this document to do that. How they im- implement, how they bring it in, many are bringing it into how they define the job tasks and job functions of their organizations. Now, these are job tasks and functions and job descriptions. Remember we talked about AI, there are AI bots that essentially have job descriptions, if you will. They can use that to im- implement it, whether it's for humans to do it or a machine is doing it. So that is one area that they focus on. The other advantage is particularly for organizations with supply chains that have varying maturities in their contracting functions within those, their partners, is they can share it with them to say, "Hey, this is our language. This is how we think about the world," and that's what they're doing.

11:27That helps them, particularly when you have a lot of small businesses there that they may not have the capabilities to mature their, their contracting processes quickly. "Here you go. This is how we think. This is how we talk. Think about where you are in the life cycle. Understand how we, we shape things." The final area where they're implementing it is how they assess gaps in the capability of their, of their teams, and there's a, a powerful tool, a, a skills assessment tool that is work- uh, going to become part of the institute from WorldCC that is based on the contract management standard. But what that does for these implementers, these groups that are using it- Is they now can assess gaps in a common way to think about it wherever the contracting function happens. Remember, it's fragmented. There could be post-award folks that are not in anywhere near the contract. There might be an element of pre-award that, that we don't even see.

12:23It's the design phase that's, we don't necessarily get brought into all the time. They now have a way to assess across the enterprise anything that's touching that contract management life cycle in a common understood way, and that's the final area. Now you can train to that. You can understand your gaps. You have a common way to say that, "Yeah, we're losing value in post-award, and this is why. We're not doing any of these steps. We've missed all of the things that are meant to, uh, either inform the next cycle or help close out and help contracting reach... the contract reach its ex- its accepted value or expected value." So that's just an example of how people are implementing it. Uh, there are a ton of implementers or adopters, as we like to call them, that have implemented it. I've mentioned universities. There are global organizations.

13:18The US federal government is adopter of the Contract Management Standard. It is the basis of their hiring and training framework. Our goal is that everyone in the world is using this on our journey to ISO so that it becomes easier. It is a easier to be able to get that in play because we all know the same language. Yeah, and I... And, you know, it's, it's interesting to, to kind of take a look at this, right? When we talk about supporting and standardizing across, right, these different industries. And as we look into the future, I think it's exciting to watch the, the maturity of the space and, and be able to see a glimpse into the future on, you know, where things are heading. And I guess that's, you know, that's, that's my next question, Craig, is, you know, when we look into the future, how do you see these kind of standardizations being able to almost, it seems like, support, you know, better and faster decision-making as, as well as better and faster hiring processes? Is that part of the, the goal here? It certainly is.

14:16So the goal of standardizing some of that, and in agile way, the way in which we are doing it through the Contract, Commerce and Contract Management Institute, is that it, it will quickly help organizations understand where they are. It hopefully, and we're starting to see that from some of the adopters now, is to help make contract data and contract processes more visible because it, they can talk about it in the same way. So that is going to continue to elevate and bring all of the processes that might be falling down in getting data into this whole life cycle. You look at research from the institute, there could be up to 30 different systems that an organization has data that talk about the contract or the relationship or that performance. If we could at least standardize the way we think about that, about the life cycle, we can then start organizing data in that format so that we're all thinking the same way. So that is the intent. That is the goal.

15:19It is also our goal that as we continue to expand research on how we get value out of contracting data, how the role of AI is changing our ability to do what our goal is, create greater value for our organizations, create commercial value. We will have a whole tool set that matches to that, and it's not just NCMA or WorldCC's or the institute's tool set. It's the world's tool set, the universities, consulting organizations. So everyone is using that same model. It makes it so much easier to have systems harmonized, particularly internal systems harmonized, about where those fragmented processes are and where that fragmented data is throughout the life cycle. So that's the goal. That's the intent.

16:09And well, now that, that you mentioned that, there's a lot of systems inside, especially big corporations, and one of the biggest problems is that when they act as silos because they don't communicate, they don't share that information. And that happens a lot, especially CLMs have been here for a really long time. Integration with other system, still a big pain because you need to have very well structured, right? And in order to use AI tools, you first need to have structured data. Even though everybody tells you AI data is going to structure unstructured data, if you don't have that information, like, well organized inside a repository, it's going to be really hard to get specific information or to make it work well. So now that we're jumping into technology, I want to ask you, like, what are, like, the pain points, the main pain points in contract management groups or in corporations as a whole?

17:10Do you think that AI can help in during the process, right? Let's think about it like they already have their data structured, right? Okay, now what can they do with that data, and how can they apply some of the AI tools? And maybe at the end we can talk a lot, a little bit on the outcome based contracting that, uh, NCMA just released an article there. And I think that, in my opinion, AI is gonna help a lot because that happens, like, especially with these type of contracts that you have a lot of points of contract during the term of the agreement. And how do you see the AI technology helping the organizations there? So I think that there are pain points and, and the institute, Commerce and Contract Management Institute, and certainly WorldCC and NCMA, and we have a ton of research out there that talk about the maturity of it. So, you know, if you can think about, we just did a, a, a webinar yesterday with our global partnership with Ibracont, which is the Brazil, uh, construction, contract management construction group.

18:17Tim mentioned a really amazing way of thinking about this, Tim Cummins. If you think about engineering, they have digital twins of what they're trying to create. They can go through processes and see them often in 3D structures, like buildings as well, and understand them before they actually do something, before they actually commit to make something happen. That's the promise to some degree of AI, that we can create a digital twin or a way that i- i- is not just to envision what we do, that the digital twin actually becomes the operator. It, it becomes that, that, that operator. So many of the pain points right now, and it depends on the overall organization's interest in the technology and its application. Now we see commercial sector moving faster, of course. The public sector and US federal being in that space, they're moving.

19:12We have, in the US, we have a very strong directive from our president that, that we're gonna use it, we're gonna find ways to bring value to it. So the pain points will vary, but a lot-- You've mentioned some of the key things. Data, where it lives, how is it accessible, and is it in a format that's going to be able to give you an answer? The promise is that, uh, not just to get an answer, but that in an agentic model, that an action can happen, right? You don't have... Right now you think about it, the robot isn't as useful if it goes and does a task and stops and waits for the human to go check on it. It's better that that robot can then take an action that might trigger other robots to do work. But that is gonna require the next level of maturity that does integrate the data, that makes sure that these systems are coming together, that they're using the same tags. I mean, those 29, 30 different systems that are, are disparate right now, they're probably using different coding mechanism, different ways of tagging that data for the same exact thing.

20:16It's just one system did it this way, the next system did it that way. AI might be able to bridge and, and harmonize and communicate, but it isn't going to be as effective if those systems aren't actually using the same language. The standard, hopefully our goal, we believe in its mission and, and, and what its capability is, is that it would be able to start this journey to harmonize the way we talk about it, to harmonize where that data lives. I think the next step in AI as well, and the pain points, is recognizing the outcome of what we're trying to get to, right? I think a lot of folks are pulling back and saying, "What's AI doing to my job and to my world?" That isn't the way to think about it. The way to think about it is, what do I need to do to create greater value in my work stream, my, my profession, my practice, my function? How can AI assist that? So that's a gap right now because a lot of studies show that, you know, are we actually going to do that and think forward and take the, the advantage of the time we now have because AI can take away some of the transactional, or are we gonna just let the machine do everything and we're not going to step into our next level?

21:35That seems esoteric, it seems existential, but the reality is, are we culturally shifting? Um, that's one of those challenges to organizations that will take advantage of the technology, will constantly be adapting and be ready for what that tool can do to change and reformat and, and reform how each of the practice areas, not just contracting, pick one, to ensure that it is in fact delivering value for what's intended to do. So that culture bit is, I think, one of the biggest stressor points and one of the biggest difficulties for folks implementing AI. Yeah, no, and, and Craig, I think this is, I hope this has hit home for, for, uh, many folks out there that are part of, of contracting processes across the, the life cycle. And I, you know, I think to, to wrap up, I know before we started recording, right, we were talking about the, the conference that's gonna be taking place down in Orlando here in a couple of months.

22:31But maybe, you know, we'd love to give our listeners a bit more information on what that event is all about, how, how they can join us and your team down here in, in Florida. So, uh, maybe we can touch on that to wrap up. Certainly. So we are in Orlando or near Orlando, the, the Swan Dolphin Hotel, for what's called World Congress. It is traditionally focused on US federal. We do have commercial organizations coming in, our pure business to business organizations coming in. It's an exciting time. It's buyers and sellers coming together. There's a lot of workshops and active AI work, like gonna sit down and work together to solve problems and apply AI and other tools there. It is the 26th to the 29th of July, again, in the Orlando area. Pepe mentioned a little bit about outcome-based contracting. It's a huge conversation everywhere in the world right now, particularly with public sector.

23:27We will have a deep dive into some of the content that was just released from the Institute on Outcome-Based Contracting. Uh, there are gonna be more deep dives to how do you really put this in practice? How do you really focus on getting outcomes, not just being focused on what performance means, but truly delivering outcomes. Awesome. Awesome. That's great. And I, I think, you know, we're so excited to, to obviously see the team down there in person and, and hopefully, you know, some of our listeners will, uh, will be able to join us as well. But, uh, Craig, we really appreciate you, you joining us for a couple minutes to talk shop. Uh, if folks wanna connect with you or, or learn more about the NCMA, where's, uh, the best place to do that? Best place is to go to ncmahq.org, and for the institute, the Commerce and Contract Management Institute, that's ccm.institute. Awesome. Well, thank you so much again, and we appreciate everybody listening to another episode of Contract Heroes. Thank you, guys. This episode of the Contract Heroes is sponsored by Koho Consulting.

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