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Decreasing Risk and Increasing Odds of Success in Contract Management
Why are contracts so essential to running a business? They define our relationships with customers, partners, and vendors. Without proper contract management, all aspects of requirements, entitlements and parameters of new and existing contracts are left to chance. And as we all know, when you try your luck at winning games of chance (no matter how you play), the odds are stacked against you. Proactive contract management puts processes first, helping you efficiently manage your relationships with less risk.
Bringing a new vendor into your organization requires a series of activities. Most companies have a checklist of items they require (NDA, W-9, Certificate of Insurance…) before they can do business together. The process is manual and prone to errors or incomplete documentation. We thought it should be easier and made it as simple as a click of a button.
Department: Vendor Management/Compliance
Challenge: Bring new vendors into your organization with complete documentation, in a consistent process, and with minimal effort.
Solution: From a click of a button (Send Vendor Information Form), an email is sent to the new vendor. The email explains your vendor on-boarding process and in order to do business together they need to click the link and complete Vendor Information Form. The Vendor Information Form is a list of all due diligence questions that are required (Description of Service, DUNS #, Insurance Requirements, Supplier Diversity…) and provides an “Attach Documents” area to add the supplemental documentation (W-9, D&B Report, COI…). Once the details are completed and documents attached, the new vendor simply hits submit. The data is automatically updated within the Poseidon vendor record, the documents are attached, and the Vendor Manager is notified that the process is complete.
Benefit: The same set of complete data and documentation is collected from every new vendor. Audit readiness, compliance, and significant time savings are the primary benefits.
Over the past 10+ years, Trident’s end-to-end contract management offering has helped hundreds of clients solve internal vendor/contract management challenges. A majority of these projects have focused on centralizing information and allowing technology to help them proactively manage their internal processes. That is still the core of our business but there have been so many interesting projects that I thought it was time I shared a few of them with you. I will do my best to post a new and exciting project that we are working on every month.
Challenge: To receive consistent responses from Contract Owners during the maintenance, warranty, and lease review and renewal processes
Solution: Trident worked with the client to auto-generate an email to Contract Owners 90 days in advance of the maintenance, warranty, or lease expiration dates. The email contained a link to an eForm that the Contract Owner could complete (i.e. Yes/No – need ongoing maintenance, Increase/Decrease number of licenses, and all the other questions they were manually emailing). The Procurement team would receive an email with a PDF version of the responses as well as automatically update the fields within the vendor/manufacturer record. If the Contract Owner did not respond, a series of escalating emails was scheduled to go out until a response is received.
Benefit: The Procurement team spends no time generating contract renewal information requests to Contract Owners, receives a significantly higher response rate from Contract Owners, receives responses in a consistent format, and tracks results based on the amount of additional time they had to work with their vendors.
Perhaps my favorite thing about working at Trident is helping clients of all sizes and across all industries try and tackle an age-old issue – vendor/contract management. Although the stories of prior failed attempts by our clients are vastly different in range and scope, they are all remarkably common in one area – they all became overly complicated.
Just because you can integrate 637 systems, track 781 data fields, and involve a stadium of people in the development process doesn’t mean you should. Vendor/Contract Management should not require NASA’s command center involvement; don’t try and make it something that it isn’t.
Instead, try this approach – start simple and stay simple.
Pretend you are only allowed to track five (5) data fields.
Pretend you are only allowed to solve one (1) goal.
Pretend you are the only person (1) responsible for the ongoing data entry efforts.
If you are just too pressed for time for “Pretend” games here is an example to get you started:
Five (5) Fields
Contract End Date – could be Lease, Warranty, Agreement, etc.
Contract Owner – who is responsible for review/renewal process
One (1) Goal
Proactive vendor/contract management via automated notification reminders and reports
One (1) Person
Use fields that drive efficiency and consistency (look-up fields, pick lists, calendar fields, currency fields)
Viola! You just created a vendor/contract management solution that is up and running in 10 minutes, can be maintained with minimal ongoing effort, and is built to last. As you grow you can always add complexity; however, the first step of any worthy endeavor is often the most difficult.
Who among us actually enjoys reworking the processes for which we complete our work? We are often asked to do more with less and tend to follow process based on these demands. Sure – we’d all like to revamp the entire cycle of how work gets completed in our offices, but who has the time? It’s a classic catch-22: continue to complete our work simply accepting existing flaws in our workflow or take significant time to completely rework the process to eliminate or minimize those things that slow us down. As much as we’d like to do the latter, most of us continue on with the former, regardless of whether we consciously make the choice.
However, fixing the problems in our processes does not have to involve big, sweeping changes that greatly disrupt our current operations. In reality, the best changes are most often small tweaks in existing processes that, by themselves, make relatively pronounced improvements. Once the first small change is made, we can evaluate the effectiveness of this adjustment and either continue along with the new path or, if no discernible benefit is realized, revert back to the “old” way of doing things. Assuming the change was indeed for the better, we are now a little more efficient at doing our jobs. Continue this cycle of small improvements and within a relatively short period of time, we will have drastically improved the overall process without ever having to completely rehaul the whole system in one fell swoop.
This whole concept has been around for decades. It has often been referred to as “Continuous Improvement” or by the Japanese term “kaizen”, the latter of which became famous as Toyota implemented this methodology on a grand scale in their production facilities. As our small illustration above proved, continuous improvement can be implemented in nearly every process, big or small, with minimal disruption. The message is clear, however: we should never be satisfied with the status quo and always strive to make everything we do just a little better every day. The old way of doing things aren’t necessarily the best simply because that’s the way it’s always been done. In fact, quite the opposite is most often true. Continuous improvement works in part because our challenges are always changing. We are not making changes for change’s sake; rather, we are constantly adapting our ways of doing things to most efficiently stay on top of the game.
At Trident, we embrace the concept of continuous improvement in everything we do. Our Poseidon contract management portal is built on an SaaS platform to allow for near-instant updates as well as affording us the ability to quickly tailor-make solutions for our customers, especially as their challenges continue to change. There is no software, updates or patches to install and when a change needs to be made, all it takes is a call to Trident for us to build exactly what you need, when you need it, at a price that is usually a fraction of the cost of other less robust offerings.
More than likely, you are keenly familiar with those challenges and process inefficiencies you face as an organization. Reach out to us to collaboratively design a solution that precisely fits your needs. As your needs inevitably change over time, we stay with you along the way to make adjustments and/or build new functionality as the need arises. As many of our clients can attest to, we have become one of their favorite partners for these very reasons (you can read testimonials from a handful of our clients on our Work+Results page). We are in it for the long-haul and our mission is to deliver solutions that are right for you, big or small, even as those needs evolve.
It really is that simple. Continuous improvement with Trident as your partner. Let us show you how Trident can simplify your workload using our best-of-breed technology that can be fully integrated into the systems and processes you already use.
We are all familiar with the many ways cloud computing has revolutionized our use of technology in the office, at home, and on the go. Whether it’s using Trident’s Poseidon portal (built on the Salesforce.com platform), streaming movies and television shows at home via Netflix, or Apple’s iCloud services on your iPhone or iPad, cloud computing has infused itself into nearly every aspect of our day-to-day lives. The underlying concept has existed for decades, but it came to prominence with the widespread expansion of high-speed internet in the early 2000s. However, the most fascinating aspects of cloud computing do not lie in its history, but rather in what lies on the horizon.
This summer, North Bridge Venture Partners released its annual survey on the future of cloud computing. North Bridge surveyed nearly 800 people at 39 well-known information technology companies (including Amazon, SAP, VMware, and Citrix, along others) to gather their insights and opinions on what’s to come in the realm of cloud computing. The full results of the survey can be viewed here.
The overarching conclusion was straightforward: the cloud is changing software. While that may seem obvious to most of us, the devil is most certainly in the details. More than 50% of the respondents believe that most categories of today’s software will be disrupted by the cloud, with “big data”, CRM, and e-commerce at the top of the list. At Trident, we have already witnessed sizeable cloud-driven initiatives at many of our customers (one of which is their use of our online Poseidon portal) and we expect this trend to accelerate as the cloud continues to mature.
As evidence of this, spending on Software as a Service (“SaaS”), perhaps the most well-known cloud computing service model, is expected to grow at six times the rate of all other types of software, with 55% CIOs planning to increase spending on SaaS in the next twelve months. According to the respondents, the main driver of this growth is surprisingly not cost; rather, scalability is the top reason for switching to the cloud (with business agility as a close second).
Even if you haven’t yet made the decision to employ cloud-based applications in your environment, it is very likely that you will in the near future. According to research by Goldman Sachs, 84% of new software will be SaaS. This shouldn’t be surprising, as cloud computing has provided:
ease of maintenance,
lower maintenance costs,
reduced capital expenditures,
straight-forward subscription pricing models,
resiliency and redundancy,
and faster deployment.
The survey also details a rapidly declining trend in the cloud’s perceived concerns. Only 12% of respondents believe the cloud still needs to mature, down from 26% in 2011, and a scant 3% consider it too risky, down from 10% in 2011. Perhaps most surprising is that 50% have complete confidence in the technology, up from only 13% one year ago. It will be interesting to see how these numbers change as more and more of us take the step to leverage the amazing advances in cloud computing in the months and years to come.
To learn more about how Trident can help simplify the management of your software, hardware, and data, please contact Todd Steiner at email@example.com or (608) 276-1909 or visit our website at www.trident-it.com.
Temple’s Trivia: It’s Friday afternoon, and Boss #12 comes to your office wanting to know the status of that report… And did you take care of this contract with the customer from that company? Do you:
Explain that you sent that information out last week and you’re still waiting for responses from several key respondents.
Say, “I was just finishing an email to you about that,” then feign leprosy or Ebola exposure so you can be excused for the afternoon to catch a baseball game, hoping Boss #12 forgets the question.
Start calling coworkers, vendors, contractors, or more and ask the exact same question in hopes that someone, somewhere has a copy of an email on something.
The question is not asked at all since Boss #12 logged into Trident’s Poseidon portal and had the answer 10 minutes ago.
It’s a tricky call. On the one hand, option B could allow you to have an incredible day off (think Ferris Bueller). On the other hand, trying to get a day’s work done can be difficult if work keeps getting in the way!
Who has the time to spend hours or even days tracking down assets, contracts, vendors or related information? Ideally, option D would be the answer every time. In fact, I find that a successful employee is able to retire before anyone learns their name. Why? Because they are so efficient, no one needs to track them down and ask them questions. Alright, so that isn’t really true, but if you have access to the information at your fingertips, why contact that employee?
One of the great things about Trident’s Poseidon system is its ability to be something helpful/useful/valuable to everyone as a central repository to hold all the data. Thanks to an overwhelming need for option D, we have an end to end solution for administration, document and workflow management. It’s an exciting time at Trident.
The expansion of Trident’s development team has allowed for enhanced catering to individual client’s needs. In fact, recently we launched a new landing page for several of our clients in Poseidon. Now, when logging in, they can see a dashboard of their most pressing Maintenance or Contract Renewals. We call this the “stoplight page” because it breaks down renewals coming due into red, yellow, and green categories based on their renewal date. Every day we strive to add cost effective elements for our clients that takes the work out of their workday. This particular innovative view increases the speed in which a question can be answered. It also allows other users to log in and view the same information, so they too have a real time view of what is happening.
Ingenious! Now you can answer questions before they get asked. With all that work getting done, you will have a lot more free time at work to … uhhhm … work.
Perhaps the only consistency regarding sales tax is its inconsistency. Each and every state has nuanced rules when it comes to what sales are taxable and at what rate. Some municipalities add another layer on top of what the state already levies. In today’s economic climate, the state and local tax men are leaving no stone unturned in their attempt to balance their budgets and fund programs while taxpayers are reviewing expenses to find ways to save.
In its most basic form, sales tax is an amount levied by state and local governments on the sale of goods and services to individuals or businesses located within their jurisdiction, usually calculated by applying a percentage rate to the gross sale amount. Sales tax is collected by the seller at the point of sale, whereas use tax is self-assessed by the buyer when no sales tax was collected by the seller on a taxable purchase. State laws vary wildly in terms of what goods and services are taxable.
In the IT realm, especially with respect to software licenses and maintenance contracts, things can get pretty complicated. In the state of Illinois, for example, there are many rules and tests that may apply to determine whether software and any related maintenance contracts are considered taxable. Below is a basic framework for determining the taxability of software purchases in Illinois.
(1) Types of Software:
Canned (“off the shelf”) is prewritten or substantially prewritten and is considered taxable
Canned computer software is considered taxable tangible personal property regardless of the form in which it is transferred or transmitted
Customized software is not taxable, but the definition of customized software is murky at best
(2) Ownership (a five-part test exists to determine the following):
Ownership of or title to software is transferred to buyer – taxable
Ownership of or title to software is not transferred to buyer (i.e., software is licensed or leased for a predetermined time period) – non-taxable
The taxability of software maintenance, however, follows a somewhat different set of rules:
(1) Underlying software is non-taxable – related maintenance is most likely also non-taxable
(2) Underlying software is taxable (based on the framework above):
If maintenance is mandatory component of the software usage or if maintenance includes patches and updates for the software – taxable
If maintenance is optional and does not include patches and updates for the software – non-taxable
While it is likely your tax department’s responsibility to complete the analysis and make the determinations regarding the taxability of any purchase, they are certainly not the only players in the game. For example, your IT folks typically decide what is needed and your procurement team may handle how everything is ordered. Working independently in an attempt to address their responsibilities in the transaction can have unintended consequences. Without a well-mapped procedure in place, these responsibilities can overlap or countermand each other and create delays, increase the risk of penalties, denied service, noncompliance, and denial of access to the software itself.
At Trident, these are issues we address on a daily basis. These issues require careful coordination between your requestors (i.e., the IT staff), purchasing department, and your tax team. Who is authorized to make the determination with regards to the taxability of any particular purchase? Is this decided before a purchase order is issued or is it challenged after an invoice is received? If you wait until an invoice is received to dispute any sales tax charged, how many times does each party in this transaction have to get involved before payment can finally be authorized?
Recently, one of Trident’s Illinois customers came to us with this very issue. Our team at Trident immediately saw this as an opportunity to do what we do best: proactively manage our clients’ information flow to help save them time, money, and resources. Our client asserted that their software maintenance purchases were exempt from sales tax, but this claim was made well after the invoices for these purchases were received. The internal process lacked a standardized method for proactively communicating their exemption claim to vendors. Further, claiming this exemption after the orders were issued resulted in payment delays, exposure to late fees and denied support or entitlements, to say nothing of the tension created in what were otherwise extremely positive vendor relationships. At the same time, the vendors were indifferent as to the claim (other than collecting proper documentation) but concerned with the delays and confusion that ensued.
To streamline the process of claiming this exemption, Trident’s development team worked with our customer’s purchasing department to integrate verbiage into all of their purchase orders to claim a specific Illinois exemption for all software and software maintenance purchases. The result is all valid software and software maintenance invoices will be received without sales tax and can, in turn, be paid within terms. The tax department can review whether or not the transaction properly meets the exemption standard and remit use tax if appropriate. Every role can now complete their function without disrupting the defined desired outcome. By doing so, we drove operational process efficiencies while acknowledging the nuances of the underlying tax matters. At Trident, we believe that optimal solutions are rarely as complicated as the issues themselves. Developing straightforward and repeatable procedures are at the heart of reducing complexity and risk within any organization.
We are always looking into innovative ways of assisting your teams with all sorts of challenges. Feel free to connect with Trident (firstname.lastname@example.org or 608-276-1901) if you have questions about how we can help with the intricacies of your IT procurement processes.
There are a number of reasons why a company acquires another business (market growth, intellectual property, vertical integration, etc.). Whatever that reason, the difference between a successful acquisition and a costly mistake is in the execution. Management has told you what needs to be done, so all you have to do is get it done. What could possibly go wrong?!
Successful integration is a time sensitive matter and there is often an awkward handoff between the M&A team and the operations team. The deal is done and the champagne has been corked but the work is not over. How does the operational team successfully integrate the newly acquired business? A good place to start is to get an understanding of what vendor/supplier/manufacturer contracts the newly acquired company has in place. After all, if this is an equity deal then most likely their payment obligations are now your payment obligations! Start with the due diligence documents collected (to determine a price at a point in time), if you have access, as due diligence attempts to determine the benefits, risks, rights and obligations that might be acquired along with the company. However, your team will also need to gather additional details regarding your new assets, obligations, and vendors. This will require compiling data from each department. The best sources of data are usually the following:
Current and previous year’s financial/budget reports: This should give you an idea what dollars have been spent and with whom.
Spreadsheets: This will give you a glimpse into when contracts may be coming due.
File Cabinets/Desk Drawers: This should help you understand what you own and your obligations.
Once you start gathering this information you are going to need a common repository for all the details and supporting documentation you find. A common spreadsheet may get the job done, but it is certainly not the most effective means of managing this information long-term. I would recommend an online contract management portal. You can customize the fields you want to track/manage, attach all supporting documentation, build automated reporting, build notification reminders for when action is required, and much more. If you do not adopt a contract management system you may end up recreating your work each time someone asks a question rather than augmenting the data captured from the last request.
It is important to note that your initial goal is not to start making decisions about contracts you would like to transfer, renew, or cancel. It is to get everything into one spot so you can tackle each decision when the time is appropriate. Some contracts you unearth may be coming due within 30 days and require immediate attention. Others may be active for another year or two and can be addressed down the road. Integrating your people and processes will be a challenge in and of itself; don’t let your contractual information go back into the file cabinets.
Feel free to connect with Trident (email@example.com or 608-276-1909) if you have questions or need help making sure your next acquisition goes smoothly from a contract management perspective.
Oracle is often portrayed as the big bully on the block. Difficult to work with, your contacts never remain the same, there are hidden layers of “approvers” for any deal negotiation with your sales representative, and their pricing model is complex and nontransparent. But, don’t forget that Oracle provides powerful tools in terms of database, ERP, and other applications and they are acquiring new companies with strong technology all the time (there is a reason why your company has invested significant resources into Oracle). Oracle is not going away so it is best to prepare to work with them for many years to come.
Here are the steps to begin managing your Oracle licensing compliance and managing your Oracle relationship:
1. Identify all the Oracle licenses your organization owns. Gather all purchased license history. Specifically, collect all original order documents and signed agreements with Oracle. Go to your file cabinets, check your shared drives, and try to find someone at Oracle to help you get some of the documents you are missing. It has been our experience that Oracle will often find some (but rarely all) the pertinent documents. (Remember it is your responsibility not Oracle’s to keep track of your order documents and agreements.)
Going forward, your organization should capture all the necessary the information at the time of purchase and make it readily available to your IT staff and the team you are putting together to work with Oracle.
2. Create a purchasing spreadsheet; or better yet, start populating this information into a central repository to enhance the active license management of your Oracle environment.
Centralizing this information provides several benefits, including:
a. A single source of license information, contracts, order documents, SLAs, and related purchase orders;
b. A reduction of lost licenses that are bought but not in production;
c. The ability to identify and deploy old licenses at locations or for functions that do not require the latest version;
d. Purchase updates for existing licenses rather than purchasing a new full license; and
e. Allow you to create a pool of licenses that are owned but not deployed.
3. Identify the entitlements associated with these licenses. What are your rights and restrictions for each license? Do not assume that an email or conversation with the sales representative is correct or enforceable. Stated another way – never assume a license usage right.
4. Identify your current license inventory, including where and how it is deployed. Collect data that includes license usage, underlying hardware architecture and supported application(s) usage. Identify the usage metrics from the purchasing data collected earlier to determine the specific usage data to collect. For example, with Oracle Database you will need to work with the DBA personnel to determine the optimal way to identify these details. Measurement must be taken during a period of maximum usage (“high water mark”). The high water mark is not an average of the count taken during the measurement period, but rather the highest number of concurrent devices measured during the period. Measurements should be taken at peak usage levels to account for seasonal, or cyclical fluctuations.
5. Match your owned licenses (with identified entitlements) to your deployed count or inventory to confirm that each license in use is purchased and that its entitlements match its current and expected use. Are you using the licenses you bought? Are you using the licenses in the correct manner based on the entitlements?
6. Determine whether you are essentially in compliance right now. In other words, determine the adequacy of your owned licenses in use. (This step should be completed more than once a year.)
7. Set your short and long term goals and vision for your Oracle environment.
8. Determine if your existing license mix meets your needs for the foreseeable future by comparing expected usage against the usage metrics or the usage rights/restrictions set by Oracle.
With your desired outcomes identified and proper information at hand, you are ready to map out a successful strategy for working with Oracle. Feel free to connect with Trident (firstname.lastname@example.org or 608-276-1909) if you need help figuring out where to start or help defining your options and achievable outcomes with Oracle.