A featured contribution from Leadership Perspectives: a curated forum reserved for leaders nominated by our subscribers and vetted by the Construction Tech Review Advisory Board.
BMO Financial Group
A Holistic Approach to Contract Management
In recent years, the contract management landscape has become increasingly complex. Regulatory considerations are in flux, digital transformations have accelerated the pace of business, and contracts have become more involved and intricate. With a widespread global pandemic, the role of strong partnerships has been crucial in enabling a work from anywhere environment while maintaining consistency and reliability in service delivery. With the various dynamics at play, it is crucial to ensure that a company’s contract management strategy evolves to keep pace with these changes while also maintaining an acute focus on its core values when creating and sustaining its partnerships.
From Lower Prices to Stronger Outcomes
In managing and measuring the value of vendor partnerships, many resort to the price point as the primary default consideration. But in fact, most companies are paying too high of a price if their Key Performance Indicators (KPIs) are strictly around cost as opposed to quality and alignment of outcomes. The key is to maintain a competitive balance by bringing in the best talent at the lowest cost across vendors. And with changes in the landscape, it is more effective to consider outcome-based performance measures rather than traditional operational metrics.
A Digital-first Ecosystem
Technology transformations have been game changers around working with partners in an integrated technology ecosystem. We are at an inflection point as companies become more digital first, making it critical to maintain even stronger partner and vendor relationships. With the acceleration of technology driving enhanced collaboration, this has also signaled a shift in how we work with our partners through an integrated ecosystem.Though companies are still accountable and manage vendor and contractor relationships, this is now done through contracts where there is less control on the end-to-end process lifecycle and more dependency on suppliers as intermediaries.
In a digital-first landscape, there is also a tendency for vendors and partners to gravitate towards doing business with companies that are equally focused on a digital-first agenda. Therefore, building digital capabilities is crucial to operate in this new technology ecosystem and work in lockstep with like-minded partners.
Common Values and Culture
As we shift to a digital-first ecosystem and outcomes-based approach, where there is greater dependency on partners and vendors, a key consideration for a company is to aim for common values and a cultural fit. A company does not simply buy a service from a vendor - they are investing in a vendor as an extension of the company and what it represents. This is why self reflection about a company’s clear values is essential. For example, Diversity, Equity and Inclusion (DE&I), as well as Environment, Sustainability and Governance (ESG) are playing an even greater role in a company’s brand and identity, and therefore aligned agendas and investments in common values and culture can have a major influence over the choice of partners. For companies that embody a strong culture and values, there is a responsibility to ensure a consistent effort for their priorities to be upheld end to end, including in their choice of partners who share common interests.
We are at an inflection point as companies become more digital first, making it critical to maintain even stronger partner and vendor relationships
Working from Anywhere
When the pandemic forced thousands of BMO employees to work from home, we worked closely and in tandem with our partners to make sure that they were able to do the same thing. As with our employees, the priority to set our global resources and contractors up for success in their virtual environment in record time was key to ensuring we could serve our customers without any disruptions when they needed us most. To this end, we streamlined processes for contracting and on-boarding them, making it easier and faster to engage. Enabling them also made it imperative for consistency in the legal requirements for our working from anywhere model, the supplier governance framework and the security considerations and protocols in place.
We are at an inflection point as companies become more digital first, making it critical to maintain even stronger partner and vendor relationships
Sound Governance
There has also been greater emphasis put on sound governance. Executives are more accountable and integrated with partner and vendor relationships in such a way that they have greater involvement in the delivery of initiatives. Incorporating sound governance through accountable executive representation, direct communication with vendors, and end-to-end management of the services across the enterprise allows for a clear sense of roadmaps, strategy and next steps to ensure greater accountability and thus a more tight-knit, effective and efficient partnership.
Working in societies and communities where we support people through our financial services, a bank’s regulatory considerations are greatly focused on sourcing, procurement and contracting, because anything that is disrupted in the value chain and ecosystem will cause an impact to our clients. For this reason, as always but more than ever before, it is imperative that ensuring strong outcomes, investing in a digital-first mindset, aligning on culture and values, accommodating to a mobile workforce, and ensuring sound governance are the necessary ingredients for a solid contract and vendor management strategy.
