How can you manage contracts across different business units or departments?

Yes. If management wishes to implement a strong vendor management program across all the departments/functional units, the sense of ownership has to be uniformly transmitted among all. The roles and responsibilities of a Vendor Program Manager should define having control over the program not getting engaged into the daily tasks, periodic reviews and assessing risks of each single vendor. A strong program requires a strong sense of ownership among all. It requires adequate training, constant monitoring ensuring compliance by all the sponsors/department owners. It is not easy to get it transpired from top to bottom. Management has to be very keen for efficient implementations with the help of a qualified Vendor Program Manager.

Master Contract- Identify common set of contract clauses that are relevant across the Business Units. Some examples of such clauses include General Compliance with Laws including Child/Forced Labor, Publicity, etc. Prepare a Master Contract template with such clauses and execulte the same with your vendors. Business Unit specific contracts- Have BU specific contracts with BU specific clauses and reference the same with the Master contract. This will ensure the Master contract governs the BU specific contracts and also increases process efficiency by removing the requirement of negotiating same set of clauses with every BU contract. If there are any deviations between Master Contract and BU specific contract call out the same here.

Implement a centralized contract management system accessible to all units. Clearly define roles and responsibilities for contract oversight. Standardize contract templates and processes for consistency. Conduct regular training on contract management protocols. Foster open communication and collaboration among departments for streamlined contract execution and compliance.

A centralized Procurement team manages cross departmental contracts very efficiently. Often, one LOB will be sourcing a product/service with a vendor while another LOB is sourcing with the same vendor for a different product/service. Procurement will schedule a call with the internal stakeholders to see if there is synergy in negotiations of the products and services. Usually, a master contract will be signed but different Addendums, Scopes of Work, Orders, etc. added to the master contract for each LOB to meet their particular needs. Procurement is one of the few departments that crosses all lines of business. Procurement centralizes contract negotiations to leverage the total spend for lower prices for each LOB.

To manage contracts across different business units or departments, use a centralized system, standardized processes, and clear communication. Establish cross-functional teams, provide training, and leverage technology for automation. Regular audits, risk management, and legal oversight ensure consistency and compliance.

Scope definition is critical and often elusive. Clearly outlining every level of effort, nuance and variability of scope at the start of a contract would take much more time and foresight than most organizations have. Instead of trying to capture every potential scope detail, build in clear and agreed change management criteria measurements. This protects both parties when the inevitable changes do occur. Focus on the user experience and the features outlined in the contracted scope. Changes to the features - either in the form of more granular LOE or building out a new feature/user experience based on lessons learned and experience - logically organize the changes and drives prioritization and roadmap visibility and delivery.

It’s common for creative services contracts to remain relatively unchanged year to year. This represents a significant opportunity due to rapidly changing team bandwidth and capabilities on both sides. With the rise of AI solutions, all workflows should be evaluated to ensure relevance in 2024 and beyond.

Contract team must have a standard template for all types of contracts, to be drawn based on experience, industry, business environment, economic conditions etc. Team must review them periodically with changing business and economic conditions and constraints. Best practices across the industries must be considered and adopted as per industry and company needs. For example- most crucial item of a contract is Payment Terms. Because, after all said and done, it's the money which drives the whole business. Contract management is most critical for business survival. The essence of business lies in contract framework. New businesses must formalise contracts through experts. Make it a point, A Contract make or break the business.