Service Contract Administration Case Study

This case study illustrates the depth and scope of Metavisio projects; it is not designed to deliver
the specific details of the project. The Client’s proprietary information, numbers specific to the
project, and all other project particulars are excluded.

Value
The Net Present Value savings from the Contract via Web (CW) project is, already well in excess
of $1 million dollars.

Objectives
Our client was interested in updating the way it manages contracts and decided to use the
Internet to simplify the process. The primary objective of the CW project is the creation of
processes and associated systems for the Order to Service space, which will:
• Dramatically increase productivity while assuring data integrity
• Dramatically increase capacity & scalability while maintaining level growth in work force
• Change the current paradigm of service delivery & customer order management
• Implement new global processes & systems in accordance with the company’s global
business framework

Overview
The CW project is a complex multi-faceted project that involves Sales, Contract Administration,
Finance, and Service organizations. Shortly after inception, the CW project was expanded in
scope to include the worldwide implementation of the new process. In order to properly manage
the project, the CW project was broken down into several development phases.

The current state for contract management can be summed up by this manager’s quote:
"Contract management processes (including requests, receipt of contract, schedule creation,
customer documents, and process exceptions) are currently unwieldy, and time consuming
to carry out. It currently takes many hours to complete a contract using the current
customized ConTRAK system, and quotes from the Sales quoting tool use a different
calculation routine than ConTRAK. Multiple contracts are required in many instances, due to
the lack of functionality and/or the complexity of system processes during the contract
schedule setup. The cost of contract administration is too high. Some services have
separate systems and processes that are done in duplicate with other steps."

The CW project was managed, coordinated, and developed from several different levels
within the company’s business organization. At the highest level, there was a steering
committee made up of process owners and high-level decision-makers. In addition to the CW
project, there are several ongoing projects that impact the Order to Service space. These
projects could have provided additional benefits and/or risks to the overall success of the CW
project depending on the specific project dependencies involved. The CW project is
comprised of a diverse, highly capable development team called the CW Central Team. The
CW Central Team is made up of subject matter experts from Sales, Contract Administration,
Information Technologies (IT), and Operations.

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Metavisio Case Study: Service Contract Administration

Project Structure
In order to tackle a project of this magnitude, the CW Central Team divided the entire project
into several large phases. The 5 phases of the CW Project are:
1. Current State Analysis
2. New Business Process Development
3. Implementation Planning
4. IT Development
5. Training & Roll-out

Deliverables
Here is a brief overview of some of the deliverables created for the completion of this project.

Flowcharts were created to illustrate the differences and similarities between the various
domestic and foreign organizations. They also aided in describing how the current process
actually works and provided a starting point for further analysis.

Information System Tables were useful for providing IT with accurate, up-to-date system
information that was specific enough to include details about the proper format of field-level
data within each given system. The IST was crucial in saving valuable development time as
database information was mapped to its resident system and to the field level.

Organizational Charts provided the basis for the project communication strategy. They also
helped us track down important information related to specific processes, procedures, and
systems.

Simulation Modeling (including process exceptions) aided immensely when it came to actual
micro/macro process understanding, since the model’s detail made inefficiencies easy to
identify.

Benchmark Data Collection was perhaps the most difficult and time-consuming task related to
the initial phase. It was also one of the most useful. The data obtained was useful in gaining
insight into the contract management process, building the Simulation Model, and providing the
numbers for the Return on Investment of the reengineered process.

Business Requirements Documentation defined what each division within the company was
expecting and what each required from the new process.

Business Requirements are a standard part of the IT development process. What is significant
about the BRD in this case is the strategic approach that was developed to reconcile the
sometimes-conflicting priorities of the business units.

Since there was a limited amount of new functionality that could be provided by each major
release, the Business was asked to prioritize its demands. Then the Business was asked to
quantify all exceptions. Each exception was then evaluated according to whether or not it was
required for use, the level of savings in man-hours & cost it produced, and how much IT
development time the exception would require.

Use Case Analysis defined all the paths and situations a user of the Contract via Web would be
expected to take. This analysis was fundamental in designing the CW Web site. It was
instrumental in modularizing CW functionality and in resolving complex user interaction issues.

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Metavisio Case Study: Service Contract Administration

ROI Decision Support Model was used to quantify improvement in bottom line dollars. The
Model was instrumental in prioritizing the development and inclusion of new functionality in the
CW Web site.

Survey of Current Initiatives apprised the CW Central Team of opportunities & challenges
associated with potential dependencies related to other projects. The CW project is just one
example of an order management project, within the order to service space.

Current State Analysis

The objective of this phase of work was to document all the processes for contract management
in such detail that there was “common global understanding”. The following deliverables were
created in order to document the current state of contract management:
• Flowcharts of processes
• Information systems tables for process steps
• Organizational charts for divisions involved- including foreign organizations
• Simulation models

New Business Process Development

After the current state analysis was completed, new business processes were developed. These
new processes involved three sub-projects:
• Suggest short-term process improvements
• Development of Contract via Web project
• Development of the ideal future-state of contract management

Short-Term Process Improvements

Short-term process improvements were designed to reduce the existing workload, improve
productivity, and pave the way for Contract via Web and the Ideal Future-State.

Some of the CW Central Team Recommendations ~ Here are some of the recommendations
related to making short-term process improvements:
• Quality Controls ~ There are several places within the current process where simple
quality controls could be added, greatly reducing errors and WIP.
• Focus on Resellers ~ By catering to the largest resellers, the company can reduce its
workload while dramatically improving quality and productivity.
• Workload Management ~ It may be possible to make significant productivity gains by
having someone route and assign work to the contract administrators.
• Ongoing Training ~ The order management system is complex. A careful evaluation of
how contract administrators are trained could improve productivity.
• Sales Goal Setting ~ We recommend that the goal setting process be amended in such a
way that Sales would have incentive to send accurate and complete contract information
to Contract Administration. While this recommendation may be difficult to implement,
the potential benefits are tremendous.
• Change Management Procedures ~ We recommend that management change procedures
be implemented. These procedures would encourage communication between the
Business Units. They would encourage foresight and proper planning before changes are
made.

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© 2001 Metavisio Incorporated, All Rights Reserved
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Metavisio Case Study: Service Contract Administration

Contract via Web

The primary goal of the Contract via Web project is to automate non-value added steps in
contract management processes. In addition to the deliverables listed above, the CW Central
Team utilized Use Case Analysis and Business Requirements Documentation to guide the
development process.

CW Central Team Recommendations ~ Here are some of the recommendations that relate to the
CW Web site:

• Data Integrity ~ Improve data integrity through replacement, via new validated contract
fields.
• Online Quote Generation ~ Automatic Online Quote Generation could be used to simplify
reseller relationships. Whenever a Contract Owner wants a new service quote, they
would be able to obtain it via the Internet.
• Automate Manual Processes ~ There were several non-value added processes that were
automated. We also made recommendations that simplified complete sub-system
procedures.
• Automatic Renewal of Specific Contracts ~ After a careful analysis of contract types and
properties, we determined that some high-volume low-dollar contract types could be set
to auto-renew. This reduces total volume and conserves time to focus on high-dollar
value contracts.
• Contact Information Management ~ By allowing contract owners to control, manage and
modify service request contact information, the accuracy of contact information would
improve, it would be easier for customers to request service, and the order management
workload would be reduced.

Ideal Future-State
The goal of the Ideal Future-State project is to change the paradigm of service delivery and
customer order management. For the Future-State project, we took an objective look at the
current contract management system and made several “outside -the-box” recommendations.

CW Central Team Recommendations ~ Here are some of the recommendations related to

inventing the Ideal Future-State of service delivery and customer order management:

• Eliminate Traditional Contracts ~ The Traditional Contract is the sum of the value-added
contract data. We recommend eliminating the print version completely and instead
replacing it with complete electronic verification.
• Simplify Terms & Conditions ~ Terms & Conditions are legal documents that spell out the
legal restrictions on service contracts and service delivery. We recommended simplifying
the Terms & Conditions across contract types and throughout the world.
• On-Site Contract Management ~ The current system requires 3 people to create one
contract, and the actual contract creator is quite distanced from the negotiation
discussions. We recommend training the Sales Assistant to use CW Web functionality
and sending the Sales Assistant with the Sales Representative to meet with the
customer. In this way, the contract can be renegotiated and renewed immediately.
• Web to Telephone Contract Management ~ We recommend transferring all reasonable
contract management responsibilities to the Contract Owner. In the event that a
contract owner needs assistance, we recommend having them use the TeleSales Force.
The TeleSales Force is a contract administrator who remotely interacts with contract
owners and immediately meets their needs.

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Metavisio Case Study: Service Contract Administration

• One Time Data Entry for All Resellers ~ Allowing resellers that have their own system in
place to directly upload contracts and do most of the contract administration work, would
increase productivity and improve contract accuracy.
• Merge Sales and Contract Administration ~ Several current problems with quality and
data integrity are generated from split ownership of the contract management process.
We recommend merging Sales and Contract Administration. One benefit of unified
ownership would be that management could assign responsibility for the success of the
contract management process.
• Streamline the Process and the Business Units ~ There are many complex exceptions to
the current process. Each of these workarounds is an opportunity for error. We
recommend streamlining the contract management process. A thorough review of each
exception and its value-add is in order. Through a change management procedure and
an understanding of why the Business creates exceptions, fewer non-value-added
exceptions would be created and the contract management process would become more
manageable and more profitable.
• New Contract Management System ~ Sometime in the future, the company will decide to
replace its existing contract management system. We recommend a thorough, well-
coordinated review of how the Ideal Future-State will evolve and be implemented. It is
imperative that the company researches its future contract management system today.

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