Contract Compliance and Optimization

The legal department must be aligned with the Group’s strategy. When the Capgemini Group communicated its “Industrialization/Intimacy/Innovation” pro­gram a few years ago, the Group General Counsel announced that the legal department would contribute to the growth strategy, and this led to the creation of a dedicated service line named “Contract Compliance & Optimization” or, CCO.

The idea was to assist all stakeholders with a consistent reading and understand­ing of contractual terms, to follow and track contracts, and to ensure they are properly amended when the scope of the services evolves. It led to the creation of a contract retention program in which contracts brought to CCO are kept and encoded according to a specific taxonomy that allows searching and data mining.

Although contracts are the basis of every relationship between clients, vendors, or alliance partners, and in spite of their key role in the business chain, they are often one of the least protected assets in a company. Companies routinely allocate significant resources, costing time and money, to negotiate, assess and approve contracts. Unfortunately, despite this massive upfront investment, once the contract is signed, it is too often kept in a closet, not properly leveraged, and not retrieved unless a litigation starts. It was therefore decided to create the CCO service line in order to offer a turnkey solution allowing effective execution and management of contracts, securing maximum financial returns and operational effectiveness.

Visibility Contracts are increasingly complex and in many cases extremely volu­minous. Typical IT contracts may contain between 300 and 1000 individual obligations or requirements. Contracts contain clauses, terms, conditions, commitments and milestones that must be tracked and managed over the contract’s life to maximize business benefits and minimize associated costs and risks. Without a systematic approach to extracting, monitoring, auctioning and reporting on these obligations, the company faces delivery and reputational risks, as well as the risk of cost overruns. CCO provides key stakeholders with a crystal-clear view of contracts, and a tool for the effective management of large, complex contracts from signature to change orders and renewals. It is not just a reporting system, but a way to categorize and prioritize the contracts’ important features and tie them to the drivers of the desired business outcome. It also allows the preparation of reports and recommendations to continually optimize the contract’s monitoring and performance.

Control CCO monitors contracts in real time with commitment reminders sent in advance to mitigate the risk of non-compliance. These reminders put parties to the contract on par, minimizes the waste of management time, and enhances the relationship with clients as it support compliance with contractual terms. CCO tracks buy- and sell-side obligations and milestones while leveraging discounts, bonuses and performance credits and earn-backs. This tracking provides for tangi­ble, quantifiable results, e.g., a reduction in contract cycle time, review resources, and cost. CCO also addresses scope evolutions by putting in place a process to systematically initiate and draft contractual amendments (so called “Change Order Management”), including collecting approvals to signing and archiving contracts. It also proactively handles price adjustments, preserving margins, and freeing up resources for other business areas. In addition, the CCO team can respond to ad-hoc queries and prepare contract summaries.

Value Significant profitability can be gained by simply exerting control of existing contracts. Enterprise-wide accessibility allows every employee to minimize con­tract deficiencies and enhance decision-making capabilities. New opportunities are not missed, and if the possibility of dispute arises, Capgemini can readily have a clear view of its contractual obligations. Greater compliance with contractual terms generates substantial revenue over time, and contracts delivered exactly as negotiated deliver better value. CCO also facilitates the production of powerful data analytics and reports, because once contracts are entered into the contract management tools, it provides useful management tools such as comparisons, effective research and benchmarks. In addition, CCO improves client satisfaction by enhancing compliance with contractual terms and adapting the contract to client’s evolving needs or requests.

CCO is led by a multinational team of experts, delivering profitable performance through proactive operational and contractual monitoring. The CCO team is today headed by the senior lawyer who contributed to launch the initiative. All members of the legal department are encouraged to work closely with the CCO team and to assess the type of work to be externalized to CCO. The services are available in six languages: English, French, German, Spanish, Portuguese, and Dutch. For Capgemini’s Legal it was a key initiative leading to the visible creation of value for the Group internally and it also proved that the legal department should be seen as a business creator and not only a cost center.

This service line was so successful internally, that responding to several external clients’ demands, Capgemini now offers a dedicated CCO service to help them manage vendors, partners or any issue within the full contract lifecycle.

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