1 Reply Latest reply on Sep 7, 2010 5:42 PM by Patrick Lewis

    Quantifying Value of Contract Management Automation

    Ken Miklos Master
      Given the fact that both hard and soft benefits exist, how many have gone through the effort of quantifying the value of their contract management automation initiative?  Why or why not?  For any who have, what areas have you focused on?  (compliance, faster cycle times, cost efficiencies, etc.)
        • Re: Quantifying Value of Contract Management Automation
          Patrick Lewis Journeyman

          We are not looking to prove any hard dollar savings (or even soft dollars) while migrating to an automated process using Ariba. Instead, we will be implementing data collection through a monitor and measure process so that future improvements can be quantified for hard dollar savings.

          Why?

          There are quite a few obstacles in showing hard dollar savings when switching over from a manual process to an automated process. Lack of reliable data is probably the most significant factor. Manual processes commonly rely on manual data collection. For example, we recently did a comparison of our manually recorded cycle time to like-data manually captured by the departments we work with. A typical discrepancy ranged from -3 to +3 days. In at least one case, the wrong year was “fat fingered.”

          Another roadblock is the “apples to oranges” comparison inherent in a manual to automated process change. One might be able to show a cycle-time reduction by comparing hours worked per contract before-and-after. On the other hand, cost-savings and quality (long-term contract survivability) require a wealth of long-term data. Even using an automated process, cost-savings and quality data-sets are challenging to collect, properly analyze, and quantify.

          Our finance department scrutinizes the analysis methods used to show any hard dollar savings (as they should). Combine that with the questionable reliability of data from the manual process and it is unlikely hard dollar savings would be approved.

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