Author Archives: thedoctor

Seal Software: Breaking the Seal to Identify Contract Value

Seal Software is a provider of contract discovery and contract analytics software that is different than your standard CLM (contract lifecycle management) module built into your e-Sourcing or e-Procurement suite (which is designed to negotiate and track contracts, awards, milestones, and related documents). And unlike many CLM providers that just focus on Procurement, Legal, or Sales, Seal Software is designed to support Legal, Procurement, Sales, M&A, and IT — making it a fuller enterprise CLM solution than many of its peers. In fact, in large organization with tens of thousands of contracts, Seal Software is often used in conjunction with a traditional CLM solution.

This is because Seal’s strengths of contract discovery and contract analytics are quite unique. Seal’s contract discovery capability can automatically locate existing contractual documents wherever they may reside, automatically extract key contractual terms and clauses, and automatically populate other corporate solutions including Customer Relationship Management (CRM) and Contract Lifecycle Management (CLM).

The discovery engine can handle multiple file format types (text, doc[x], PDF, jpg, etc.) and work across local hard drive, network drives, file shares, and even cloud-based repositories — anything with a UNC path or API is accessible. It then uses advanced semantics and machine learning to analyze the contracts and identify the clauses and critical information that the organization has deemed to be of interest.

It does this by comparing all files discovered to standard contract templates and identified organizational contracts to find contracts. It then determines the type, category, and whether or not it is a (potential) duplicate. Finally, it runs all (unique) contracts through descriptor templates that identify and extract the clauses, terms, and date elements of interest.

But the power of Seal only starts at discovery. Once the contracts and elements are identified, the analytics solution not only allows the user to access all contracts that meet a specification or search; filter down based on timeframe, search, or other elements of interest; and create reports, but to also identify all contracts that contain clauses or terms of interest that were not previously of interest. If all of a sudden a new regulation comes into effect and the organization now has to determine whether or not all of its contracts are compliant with a new privacy requirement or contain clauses to ensure compliance. All the organization has to do to find all contracts with a relevant clause, paragraph, etc. is find a few contracts with clauses and sentences of interest, define any additional phrases or terminology of interest, and tell the system to re-process all contracts and it will find all contracts, structured or otherwise, that contain associated phraseology. The semantic engine can learn from examples and key-phrase definitions.

And the analytics can be used during negotiation and review too. The platform allows for the definition of policies that will auto-detect clauses and phrases in suggested revisions that can alter the intended meaning of the actual contract and bring them to the attention of the reviewers. It can also highlight contract areas using non-standard language or language identified by legal to be (high) risk. And this review can be done in the contract creation platform of choice. Seal’s newly released Analyze this Now capability allows links to be embedded that send the contract to seal which sends back a marked-up highlighted docx file that highlights everything of interest and concern. (In Microsoft Word, it’s a simple plug-in.)

It’s a very powerful solution for large (global) organizations that often have well over 10,000 or even 100,000 contracts that need to be tracked, analyzed, maintained, and negotiated in accordance with a plethora of business rules and industry (and government) regulations. When you consider that even enterprises with revenues below $250M have an average of 8,000 Procurement contracts (as per Aberdeen Group), most of which are not in the e-Procurement system (and not effectively managed and tracked), the importance of discovery and analytics cannot be underestimated.

For a deeper dive on Seal Software, and its capabilities, see the recent Pro series by the doctor and the prophet over on Spend Matters (Part I, Part II, and Part III) [membership required].

Swegways for Smegheads this Valentine’s Day!

Despite the fact that more and more natural resources are becoming scarce, there are still quite a number of smegheads that haven’t adopted the 3Rs.

Up until now, it’s been quite perplexing as to how we can deal with this problem.

However, after catching up on the public defender‘s blog and reviewing “the 10 cautionary supply chain tales of christmas”, we think we have a solution!

Since these smegheads often feel entitled (after all, they are taking the environment for granted), play to that entitlement and give them a free Swegway hoverboard and tell them they deserve it, that they shouldn’t have to use their own two feet to get around. And when the Swegway goes up in smoke, chances are, one way or the other, they’ll get the message. 😉

the public defender’s five principles of sourcing … (Part II)

… and why you need to understand them if you want to source better.

Over on Spend Matters UK, the public defender recently gave us the fifth in his “Five Principles of Sourcing”. Designed to mimic the philosophies that underpin many of the biggest and best firms in the world, the public defender‘s five principles were designed to inform good practice that is fundamental to procurement success, regardless of vertical, region, or category.

Yesterday, we discussed the first three principles: Coherence, Openness, Rigour. Today we continue where we left off.

Alignment

Alignment covers both alignment to stakeholders and to the market. Sounds obvious, and there will be few procurement professionals (we hope) who don’t understand the need for stakeholders to be signed up to and involved in critical sourcing and procurement activities. But on the market side, how often do we try and source something that isn’t really what the market can best supply?

True success is not saving money, consolidating SKUS, consolidating the supply base, or increasing supplier performance measures — true success is meeting the needs of the stakeholders *while* doing all of the above. Remember, Supply Management’s job is to support the organizational goals, not it’s own … and true success is satisfying stakeholders (and helping them satisfy end customers).

Commerciality

Everything we do must come back to being “commercial” — looking to achieve benefits and competitive advantage for our organisations through putting in place and managing effective “commercial” deals.

Even non-profit organizations are in business to generate “profit”. The only difference is “profit” is defined as excess revenue (beyond what is needed to cover expenses) that can be put towards the intended purpose of the noon-profit (such as researching a cure, sheltering the homeless, or spreading the word). Thus, the end goal of the event is to minimize the cost necessary to achieve the stakeholder goals and have money left at the end of the day to do “more”, whatever “more” may be. That’s how competitive advantage is achieved, more value for less outlay.

In other words, if you fail to embed one of these principles in your sourcing event, you are not going to extract the value you should … and may even do worse than just spot buying on the open market or leaving every organizational user to fend for herself. For example:

If the process is not coherent, you might get the best possible deal on ink cartridges, but not realize that IT has included free replacements of all the inkjet printers with laser printers as part of their big server buy that they did internally because your team just didn’t have the technical chops to digest the overly convoluted specs provided by the potential vendors.

If the process is not open, you might save 2% on the same old, same old steel parts buy, but not realize that 40% of the cost is in the overhead because the supplier is still using bending and punching and not new laser cutting techniques that the supplier down the street is using to reduce overhead to 20%, which means that 1/5 of the cost is up for negotiation!

If the process is not rigourous, incumbents can be allowed to negotiate away awards that were fairly awarded to new suppliers in return for shady promises of cost reductions on future events, free trips to vendor learning days, and so on. This takes you down a slippery slope that not only puts your ethics in questions, but the value you delivered, as maybe the incumbent lost because they were charging more for what has become an inferior product or service (as competitor offerings improved since you first picked the incumbent).

If the process is not aligned, then you’ll get a great deal on a great product and deliver a huge value … no one wants. As a result, the stakeholders will just buy off contract at higher market prices because there will be inflated demand (as a result of contracts not being adhered to which reserve inventory). Without alignment, no one wins. Ever.

If the process is not commercial, you’re missing the point. Supply Management is about more stakeholder value for less outlay than would otherwise be made without Supply Management. (Not necessarily less than last time. If market prices increased 10% but Supply Management kept increases to 5%, that’s less outlay than the org. unit would have done without Supply Management’s involvement if it was historically buying at market.)

In other words, heed the five principles well. And download the public defender‘s white papers on Trade Extensions (registration required) for more insight.

  • Coherence and Alignment
  • Rigour and Openness
  • Commerciality

the public defender’s five principles of sourcing … (Part I)

… and why you need to understand them if you want to source better.

Over on Spend Matters UK, the public defender recently gave us the fifth in his “Five Principles of Sourcing”. Designed to mimic the philosophies that underpin many of the biggest and best firms in the world, the public defender‘s five principles were designed to inform good practice that is fundamental to procurement success, regardless of vertical, region, or category.

In this post we are going to review the five principles, discuss how they are relevant, and explain why you need to adopt them as a foundation of your n-step sourcing process, whatever n may be.

The five principles are:

  • Coherence
  • Openness
  • Rigour
  • Alignment
  • Commerciality

Coherence

In the words of the public defender, coherence means applying an end to end logic and consistency to the whole sourcing process. That means understanding the aims and goals before you even start engaging the market, and having that “thread” running through all the stages of the process, including critical elements such as the evaluation methodology and process.

This is a key to sourcing success. If you haven’t figured out the desired end state, you shouldn’t even issue the first RFX. You need to figure out the products you need, the services you need, the specifics of the provision, and any other requirements from the supplier. Only then can you define the initial RFI where you ask questions to weed out suppliers you wouldn’t do business with (due to sustainability practices, lack thereof, financial stability, and so on). That can be followed by a detailed RFP which focusses in on product/service/solution requirements, and only then will an RFQ be issued to the remaining subset of suppliers that should be good-to-go should they win.

Openness

This is perhaps the most obvious of the principles. Being open to new suppliers, new ideas and new solutions is fundamental to the concept of generating competitive advantage for the organisation through our procurement and sourcing activities. Openness is key; working on the principle of sticking to what we know is simply a guarantee that a competitor will in time do it better. That openness means not just seeking out new suppliers, but allowing suppliers (new or existing) to express their preferences, innovative ideas or options, rather than the buyer dictating to them.

Remember that insanity has been defined as doing the same thing over and over again and expecting different results. If you always invite the same suppliers, ask for bids on the same products, and don’t change any service requirements, then why should the bid for this event be any different from the last? The only way to get new, better, results is to open the event up to potential new suppliers, potential new products, new service offerings, and so on. Openness is a fundamental requirement of success.

Rigour

Rigour is about treating the sourcing process with respect, applying diligent and rigorous planning, appropriate processes and analysis to it. Rigour means having a focus on the professionalism of the sourcing process, which for most organisations also reflects on the professionalism of the procurement or sourcing function, team and individuals.

Simply put, rigour means making a plan and sticking to it. No results will materialize unless the sourcing plan is adhered to. No allowing a supplier to the next stage if they fail the first stage. No skipping a stage. No negotiations outside of the defined negotiation window. No negotiations outside of the negotiation team. No picking the incumbent unless they win with the agreed upon ranking system. The only way to truly get results is to make a plan, share it, and stick to it — no matter what happens.

Come back tomorrow for Part II where we continue where we left off.