Archive: June, 2006

Aberdeen Does Sales Contracts

What better time than end of quarter to reflect on the fun of writing sales contracts in a mad rush. The sales team wants to close the deal. They don’t want to wait two weeks for legal and miss their quarter-end target. They want their bonuses. Can’t we just delete that pesky clause and sign?

Such are the challenges of sales contract management, on which the Aberdeen Group recently had this to say:

Political Sole-Sourcing

In what appears to be a classic case of local vendor bias, Canadian transport manufacturer Bombardier, Inc. has found itself in hot water over sole-source contracts with two separate municipal authorities. Both deals are political, with Bombardier’s promise of local jobs seeming to influence the decision not to go out to public tender.

One contract involves the supply of 234 new subway cars to the Toronto Transit Commission, with rival Siemens claiming it could do the job C$100M cheaper by manufacturing offshore.

Paperclips Are Like, So Last Year

That’s right. A career in procurement no longer means you’re “in charge of paperclips”. In somewhat provocative terms, the Financial Times (subscription required) reckons that procurement has undergone a revolution. It’s no longer a career dead-end. No longer a mere support service. The modern procurement department is experienced, professional and respected, and it’s being unleashed on an ever wider array of goods, and services. Not just stationery, furniture and laptops, but lawyers, accountants and consultants.

But at the same time as procurement spreads its wings to tackle services, it’s also getting more sophisticated. The best procurement teams know that a good deal on services is not just about getting the lowest price. Sure, price matters. But in services, relationships matter too. As Gartner VP Mark Hollands writes for CIO, “the relationship will determine the success or failure of a deal, not how little you managed to pay.” His advice to CIOs: don’t screw your supplier too hard to the floor – it can be a career limiting move in the medium to long term.