Table of Contents

Introduction 2 Benefits of ECM 3 Quantitative Savings 4 Evaluation Criteria 5 Costs, Who to Involve, Process 6

Introduction

Public Works and Government Services Canada, i.e., public service
(http://www.tpsgc-pwgsc.gc.ca/)
Compliance is rapidly emerging as one of the most important factors in contract management. Information management is at the heart of compliance management. If Public Works has ECM, we can manage and control our information in compliance oriented framework are best positioned to avoid problems and remain competitive.
Issues Currently Experienced by Public Works * “Maverick” (unsupervised) spending by buyers. Some studies estimate that this activity occurs in 17% - 27% of purchases. * Overcharging by suppliers (deliberate or inadvertent). In some studies, 10% of transactions involved price discrepancies. * Unwanted/Unnecessary automatic renewal of products and services. Studies indicate that 10% of contracts renew automatically. * Inability to verify if payments and deliverables are accurate and timely. * Inability to analyze “actual” against “planned” or “contracted” spending. * Inability to track Accounts Payable. This includes inability to enforce discounts and dealing with time consuming and complex rebate calculations. * Inability to monitory effectiveness of contract management in terms of cycle time and contract quality (e.g., deliverables against plan, profitability, competitiveness). * Lack of insight into supplier performance vis-à-vis contractual obligations. * Inability to enforce supplier contract performance, or to enforce consequences for policy and regulatory violations. * Significant losses in time and resources due to inefficient contract authoring, editing, negotiating, and monitoring.

Benefits of ECM

1. Enhanced visibility: An organization’s need for contract visibility presents a serious challenge—an organization’s contracts must be simultaneously secure and accessible. ECM allows for improved visibility without compromising security, permitting improved communications among stakeholders from internal staff and management to customers and suppliers. Enhanced visibility into an organization’s contracts leads to contract convergence and leveraging which helps the organization consolidate spend and drive better prices with its suppliers and other business partners. It also enables contract administrators to view deviations from negotiated terms and conditions proactively and therefore undertake remedial actions before minor issues turn into show-stoppers. 2. Increase revenue (reduced costs): The strong contract authoring and collaboration capabilities of ECM solutions enable contracting professionals to focus their time and efforts on negotiating better contracts for an organization and identify an increased number of up-selling and cross-selling opportunities. Automated reminders, notifications, and alerts enable accounts receivable personnel within an organization to invoice for all services rendered and collect penalties and charges where applicable and appropriate. 3. Reduce costs: An effective ECM solution can reduce costs for an organization in a wide variety of ways. As organizations begin consolidating their procurement contracts from different divisions or business units scattered across multiple regions within and across continents into a single repository within an ECM solution, they invariably find opportunities to convergence of contracts and leverage global pricing and discounts. This leads to direct cost savings as better prices are negotiated with suppliers. The capabilities of an ECM solution to pre-flag automated renewals, automatically notify appropriate personnel in case of deviations from agreed terms and conditions help an organization in avoiding overpayment to vendors and reducing hidden costs and penalties. By providing an audit trail of critical business transactions within the contracting processes and strong reporting capabilities, ECM solutions assist an organization in reducing the overall cost of audits as well as the risk of regulatory penalties from non-compliance. 4. Streamline processes and improve efficiency: The net effect of an effective ECM solution is to simplify and streamline the communications process among and between all parties—internal as well as external to the organization. This leads to more accurate and timely exchange between employees and business partners, improved coordination of activities and resource allocations, and reduction of waste and duplication of effort. For example, an ECM solution leads to more efficient and effective use of an organization’s legal resources, who can review contracts on an exception basis versus reviewing all contracts. Such solutions eliminate duplication of contracts and the need for shadow systems and tracking mechanisms.

Quantitative Savings

According to AMR Research, "Automating purchasing contracts delivers significant ROI… Companies are implementing targeted projects in two to three months that deliver a 150% to 200% payback within a year." Also, Aberdeen Group has recently reported that “the ROI for an organization with $750 million in annual revenue and $200 million in annual spend from an ECM implementation is more than 3X in the first year!” 7 Table 3 (on the next page) provides Aberdeen Group’s quantitative view of the benefit realized by ECM solution implementations. While the estimates vary by organization and by industry, it is evident that research groups and organizations agree that implementation of an ECM solution, if done correctly, can help reduce costs, maximize revenues minimize risks, and in general, improve business insight for any organization. Improvement Area | Performance Impact | Compliance Management | Improve compliance by 55% | Rebate/Discount Management | Improve 25% - 30% | Material/Service Costs | Reduce 2% - 7% | Revenues | Improve 1% - 2% | Evergreen Contracts | Eliminate auto-renewal terms | Contracting Cycles | Cut contracting cycles in half | Documentation and Reporting | Cut reporting cycles from days to minutes | Contract Analysis | Analyze and maximize performance | Administrative Costs | Reduce 25% - 30% |

Evaluation Criteria

ECM- Nice to have in ECM systems:

1. Content and document management capabilities, including access control, workflow, change management, audit trail, and version management. * Public Works has a lot of employees, so it is very important to keep track of who makes what changes. 2. Collaborative contract development capabilities that provide support for contract development process and workflow. * Everyone at Public Works will be able to access same templates, follow the same review process. 3. Contract configuration capabilities , including clause template library, wizard functionality to automatically create contract framework based on a user’s responses to a set of questions related to the contract 4. Resource planning capabilities , including capability to plan, schedule, and control all tasks associated to a contract, capability to track actual time and cost incurred in managing a contract 5. Capability to reconcile terms and conditions , including capability to negotiate online or via email with trading partners 6. Performance and compliance management capabilities , including capability to monitor and report on performance of contracting partner against the contract, track compliance against terms negotiated as part of the contract 7. Comprehensive integration capabilities, including integration to transactional systems such as ERP, SRM, CRM, BW, Document Management etc. on an enterprise-wide basis.

Costs, Who to Involve, Process

How much does it costs? Who needs to be involved in the discussion?
What strategy will we be going to market with? https://buyandsell.gc.ca/
Process:
* RFI first * Lead to RFP
Whose involve and evaluate criteria:
(2 representatives from each department) * Senior Management * Departmental Manager * Legal Counsel * Risk * Fairness Committee * IT * Executive Team * Finance * Strategic Sourcing * End User, contract manager , Project manager (??)