Enterprise Contract Management

A Practical Guide to Successfully Implementing an ECM Solution

Anuj Saxena

• Publisher: J. Ross Publishing
• Year: 2008
• Print ISBN: 9781932159905
• eBook ISBN: 9781604276572
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

Globalization, increased economic and geopolitical uncertainty, technological advancements, and a rise in the number of regulations and legislations have led to a significant rise in the importance, volume, and complexity of modern contractual agreements. Yet, in spite of these profound changes, many organizations still manage the contracting process in a fragmented, manual, and ad-hoc manner, resulting in poor contract visibility, ineffective monitoring and management of contract compliance, and inadequate analysis of contract performance. The net effect of this has been a heightened interest in re-engineering and automation of Enterprise Contract Management (ECM) processes across industry sectors and geographies. Enterprise Contract Management: A Practical Guide to Successfully Implementing an ECM Solution addresses all the questions surrounding ECM, ECM solutions, and the project management, change management, and risk management considerations to ensure its successful implementation. This concise text will help your organization manage the challenges of the contract life cycle and the key success factors and pitfalls in a typical ECM solution. It is a must read for corporate executives, buyers, procurement and strategic sourcing specialists, contract administrators and procurement managers. There is currently no other book available on ECM solutions. All existing books on contract management focus on the legal aspects of contracts, but none describe the functions, features, and capabilities of technology solutions that support ECM, nor do they explain the key considerations for ensuring a successful ECM solution implementation.

SECTION II.
IMPLEMENTATION

IMPLEMENTATION METHODOLOGIES

IN THIS CHAPTER:

Six Sigma

Should ECM Implementation Be a Six Sigma Project?

The ECM Solution Implementation Road Map Using Six Sigma

Alternate ECM Solution Implementation Methodologies

6.1 OVERVIEW

In the previous chapters of this book, a compelling case for Enterprise Contract Management (ECM) solutions was presented. ECM solutions—when properly deployed—offer a number of core capabilities that enable organizations to meet a wide range of challenges, both within and beyond the contract life cycle. In addition to their positive impact on compliance and the bottom line, ECM solutions provide an essential road map to ensure that modern organizations remain in control of their contractual futures.

The process of implementing a major ECM solution in an existing organization may seem daunting on first consideration. In point of fact, this process is a fundamental one in which the very legal fabric of an organization is affected. The sheer depth and nature of ECM solution implementation suggest its power to bring about positive and lasting change within an organization. Many implementation methodologies have been utilized for ECM solution implementations in the past. However, it is the opinion of the author that Six Sigma methodologies and principles offer a superior approach and present the maximum probability for a successful ECM solution implementation, one that is both comprehensive and sustainable. The combined use of the traditional Six Sigma DMAIC methodology and the relatively newer DFSS methodology offers the best prospects for maximizing the potential benefits for ECM solution implementation.

At the outset of this chapter, however, it is important to clear the air about the applicability of Six Sigma methodologies for ECM solution implementation initiatives. In today’s complex and dynamically changing business community, the use of Six Sigma approaches has taken on a multitude of varied forms and applications, oftentimes resulting in multiple Six Sigma projects being undertaken simultaneously within a single large organization. This might lead some to presume that the use of Six Sigma methodology for ECM implementation might require some preexisting frame of reference or context into which it would need to fit in order to be of true value to an organization. Fortunately—and especially for many small to medium-size organizations, this is not the case. The Six Sigma approach is equally applicable on a large-scale integrated basis (as described above) or on a freestanding basis for use solely to assist in ensuring maximum benefits from ECM implementation.

In this chapter, we will explore how the principles and concepts of Six Sigma can be applied to ensure success in an ECM solution implementation initiative. A road map for implementing an ECM solution using Six Sigma concepts will be provided and compared with ECM solution implementation road maps using two alternate implementation methodologies. However, before delving into the details of how a Six Sigma initiative might be of true value in ECM solution implementation, it may be useful to first review the origin, basic concepts, and methodologies of Six Sigma.

6.2 SIX SIGMA

6.2.1 Origin of Six Sigma

Contrary to popular belief, Six Sigma is not just about quality. It is true that the origin of Six Sigma was in the field of quality control. The quest to achieve Six Sigma began at Motorola in 1979 when the company launched a Total Quality Management (TQM) initiative to improve the quality of its products. At a time when most American organizations believed that quality costs money, Motorola realized through its TQM initiative that, if done correctly, the improvement of quality could actually reduce costs. In 1985, Bill Smith, an engineer at Motorola, presented a paper that concluded that if a product was found to be defective and corrected during the production process, other defects were inevitably missed and found later by the customer during early use of the product. However, if a product was manufactured error-free, it rarely failed during early use by the customer. Smith’s findings were greeted with skepticism, but they ignited a fierce debate within Motorola because customer dissatisfaction with products that failed shortly after purchase was very real.

Through further research, Motorola realized that if hidden defects caused a product to fail shortly after purchase, something needed to be done to improve the manufacturing process. Thus began the quest to improve quality and simultaneously reduce production time and costs by focusing on the design and development of a product. This link between higher quality and lower cost led to the development of Six Sigma—an initiative headed by Bob Galvin, Motorola’s CEO at the time. This initiative first focused on improving quality through the use of exact measurements to anticipate problem areas, not just react to them. Essentially, Six Sigma would allow a business leader to be proactive, rather than reactive, in addressing quality-related issues.¹

By 1986 Six Sigma had become the major business process methodology at Motorola, and in 1988 Motorola received the first Malcolm Baldrige National Quality Award from the U.S. government for its improvement record based on its Six Sigma program. Within four years, Six Sigma had saved Motorola $2.2 billion. Six Sigma methodology began to quickly spread to other organizations, such as IBM, Texas Instruments, and Kodak, across industry sectors and beyond manufacturing. General Electric embraced Six Sigma in 1995, when Jack Welch, GE’s CEO at the time, became enthusiastic about Six Sigma and decreed that 40% of every senior manager’s bonus would depend on his or her achieving Six Sigma results. Welch was determined to show customers that Six Sigma was making GE products better and mandated that 70% of all GE Six Sigma projects must be in nonmanufacturing areas. This mandate led GE to work hard toward developing concepts that would make Six Sigma useful outside engineering and operational domains. It is a well-known fact that GE profited by about $7 to $10 billion from Six Sigma over a period of five years.

Over the last decade, organizations that have ad...

Table of contents

• COVER
• READ THE REVIEWS
• TITLE
• COPYRIGHT
• CONTENTS
• LIST OF TABLES
• LIST OF FIGURES
• FOREWORD
• PREFACE
• ACKNOWLEDGMENTS
• ABOUT THE AUTHOR
• ABOUT IACCM
• WEB ADDED VALUE
• SECTION I BASIC CONCEPTS, FUNDAMENTALS, AND THEORY
• SECTION II IMPLEMENTATION
• APPENDICES
• LIST OF ABBREVIATIONS
• BIBLIOGRAPHY