The "Contract-Management" Domain includes the supervision of contractual negotiations between client and contractor, implementation of contracts and making contract amendments for technical, scheduling, personnel or financial reasons.
In our case it is a deal-approval process, as every larger company selling complex solutions to customers has. The process has several levels depending on the deal size and a few other parameters, such as very low margins etc.
The purpose of the process is that offers are checked internally before they go to the customer, whether the solution offered is okay, whether the price and also the margin is right, whether we have a chance to get the order from the customer, what we have to do to increase this chance, whether project risks are well covered or at least financially covered, etc.
Depending on the the deal size there are different approvers on different hierarchical levels (5 levels, see "Task 1").
Who is the customer of your process?
A company who sends a request for a deal that has to be approved by different Rainbow-stakeholders.
The Rainbow-stakeholders consists of: approver, account manager, finance department, contract lawyer, rainbow manager and rainbow-team.
What is the result (service or product) of your process?
If approval is successful, a final offer is provided for the customer as a result. The process accompanies the contract management process, facilitates the analysis and processing of risks linked to the contract management life cycle. Provides relevant checks, helps spread best practices, draw lessons from experience.
Which resources (humans, information systems, machines) participate in the process?
Humans (Customer and Rainbow-stakeholders)
Which resource represents a role that is carried out by one of 5 different individuals per workflow instance?
Rainbow-Manager – see Task 1 description for the selection strategy.
What are the most important activities in the process?
deal size estimation, strategy development, solution engineering, offer placement, contractualisation
Which technology shall be applied to innovate the process?
Business Process Reengineering (BPR) – Fundamentally rethinking how the deal-approval process in that company has to be done: This is accomplished by complete digitalization and geographical decentralization, i. e. defining clear tasks and roles for the persons involved and the possibility to perform the process geographically distributed through the newly introduced Workflow Management System. Additionally, after approval, a part of the process (deal-size < $500k) gets completely automated by an algorithm via advanced analytical methods which are used in risk analysis, cost estimation and profitability estimation to make the process more efficient.
Which exception shall be handled in the process?
Cancellation – either by the Rainbow stakeholders or by the customer.
Which task is performed by group members with a certain strategy to resolve who is doing the task?
Task 1 – Deal Size Estimation:
- Resource: Customer, Approver
- Implementation by: tba
This task is intended to give a general rough estimate of whether the potential deal
is profitable and whether it is accepted or rejected. Depending on the estimated project volume approver of different levels get assigned to the project. There are Rainbow-Manager from level 1 to level 5, where 5 is the lowest level with the smallest deal volume and level 1 the level with the largest deal volume.
The task starts with the receipt of a customer request. Thereupon the scope is estimated and based on this the basic feasibility is estimated. At this point the customer request may also be rejected. In both cases the customer is informed.
The Approver must then assign the appropriate Rainbow Manager, who is qualified to make a decision in the matter. This mostly depends on the estimated deal size.
The breakdown is as follows:
- Level 5 Automatic approval (standard project under 500K)
- Level 4 Rainbow Manager: below 500K and deviations from the standard
- Level 3 Rainbow Manager: between 500K and 5 M
- Level 2 Rainbow Manager: between 5M and 50M
- Level 1 Rainbow Manager: over 50M
Task 2 – Strategy Development:
- Resource: Account Manager, Rainbow Manager, Rainbow Team
- Implementation by: tba
This tasks involves developing a strategy for satisfying the customer request. After a positive rentability check by the account manager, the required areas of competence are identified by the Rainbow-Manager and a team is formed. Subsequently a workshop is held to analyze the customer and eventually develop the implementation strategy. Further reviews and possibly replanning workshops follow before the strategy document is finalized containing all important facts and figures of the strategy.
A final approval needs to be given by the account manager. The outcome is either that the strategy is approved, additional rework by the team is required or that the strategy will not be implemented. In the last case the process will be terminated early and the customer will be notified.
Task 3 – Solution Engineering:
- Resource: Rainbow Manager, Customer
- Implementation by: tba
This task aims to generate a final solution based on the previously developed strategy. After a solution is developed, the Rainbow Manager calculates the cost and analyses the risk, which can lead to changes of the solution or cancellation. If everything is fine, the solution will be finalized. In case of cancellation, the customer will be informed.
Task 4 – Offer Placement:
- Resource: Rainbow Manager, Finance Department
- Implementation by: tba
The Offer is created in this process. After the Rainbow-manager finalises the Solution-design in the Task/Process above the first version of the offer is created. After that, the finance-department double checks the expected expenses and profitability of the contract. Before the offer is handed over to the customer, it is packaged in a formal Contract by the contract-lawyer of the company (Task 5).
Task 5 – Contractualisation:
- Resource: Account Manager, Contract Lawyer, Customer
- Implementation by: tba
This process is about finalising the contract.
The offer is presented from the account manager to the customer by the RESM-Document (= Rainbow Executive Summary Memorandum). After the presentation, the customer can cancel the process or give some feedback. If the received customer feedback is with objections the offer is corrected (price and/or offer conditions will be renewed). If the offer is in the desired form, the according contract is sent to the customer.
Which are the three Key Process Indicators (KPIs) that you will monitor for your process?
Cancellation rate, TTC - Time To Contract, expected profit rate (average)
How will your customers be identified in your process?
By their company name + unique process ID. (For the purpose of the course, we will also ask for their matriculation number to track participation.)
Selected Modeling Tool:
"Cawemo" from the Camunda stack for collaborative BPMN process modelling.
https://camunda.com/de/products/cawemo/
