WEBVTT
1
00:00:02.500 --> 00:00:11.080
Hello, everyone, and welcome to another episode of Contract Heroes, where we're not the heroes, our guests are. Today, we've got a great episode for you. The Contract Doctor is in.
2
00:00:11.320 --> 00:00:19.240
This is an episode we've been trying to get scheduled for quite some time now. Want to give a warm welcome to Karthik Rama. Karthik, thanks for joining us today.
3
00:00:19.260 --> 00:00:31.040
And before Pepe gives us, uh, kind of an overview of what we're gonna be chatting about, we'd love to get, uh, some more understanding on firstly, how you've come up with that name or, or gotten the name Procurement Doctor, and, uh, what you've been working on lately.
4
00:00:32.259 --> 00:00:42.960
Oh, wow. Uh, thank you so much for that, uh, question. And I, I'm always excited when someone asks me that question. So it lets me talk a little bit of, uh, what the Procurement Doctor is all about.
5
00:00:43.080 --> 00:00:48.560
Um, a- and I was- procurement includes contracts, and that's why we are here talking to each other.
6
00:00:48.680 --> 00:00:57.540
Uh, the Procurement Doctor, the name itself evolved, uh, because people were trying to understand what the heck I'm doing as a work, work type, right?
7
00:00:57.640 --> 00:01:11.180
And I was explaining that I usually go at a client, go to a client location, look at the current processes, look at the pain areas, I diagnose the issues, and then I give recommendations on how to go about it, right, uh, and how to fix.
8
00:01:11.360 --> 00:01:21.680
So it's basically, uh, my- one of my friends had suggested that, "Okay, you're like the doctor, but for procurement." And that kind of stuck to my, uh, head. And, uh, I thought, why not?
9
00:01:21.740 --> 00:01:40.740
Because I've created, uh, one of my previous companies, an entire, uh, diagnostic study, we call it the diagnostic study, and it was unintentionally even the cover letter of that, or the cover page of it, uh, had the doctor's, uh, what do you say, stethoscope and, like, a MRI thing and all that.
10
00:01:40.840 --> 00:01:48.280
So it was like, maybe it was in me way before that, uh, but this guy kind of got it out of me, and that's where the Procurement Doctor got started.
11
00:01:48.880 --> 00:01:58.020
And, uh, procurement, in procurement, there's a lot of facets, as you know, right? It's pretty broad. The reason I kept it broad is I just don't do contracts. I do, do a lot more than that.
12
00:01:58.560 --> 00:02:19.480
And, uh, basically, uh, contracts has been a bread and butter for me for a while, where people going through specific kind of pains, and I have, uh, thanks to my experience or the opportunities I've got, I work with, uh, multiple legal folks, uh, multiple, uh, contract administrators and multiple procurement organizations, and they have been fixing the contract database.
13
00:02:19.700 --> 00:02:31.160
Uh, the funny note on the side is my mom, uh, as a kid, like, you know, Indians are very ambitious. Either, once a kid is born, he either is tagged with a doctor or an engineer.
14
00:02:31.200 --> 00:02:41.780
That's why you see Indians producing- Right... so many doctors, so many engineers. And, uh, uh, and she was like, "What do you want to become, uh, once you get old?" And I was like, "I don't know.
15
00:02:41.940 --> 00:02:51.320
I'm a six-year-old kid," right? But, uh, it, then the doctor did come up. Um, and, uh, so this somewhere also ties back to that. We keep, I keep my mommy happy as well.
16
00:02:51.510 --> 00:03:01.560
[laughs] Even though she knows I'm not a real doctor, I can't operate on a human being. I can operate on a procurement, uh, organization or a contract, uh, management, uh, process as such.
17
00:03:01.620 --> 00:03:10.880
So that's what my speciality is. Surgery, I can do surgeries on [laughs] contract management tools or processes. [laughs] That's great, Karthik.
18
00:03:11.300 --> 00:03:20.859
And so there's a lot of things that we're gonna cover in, in this episode, especially, uh, where are, like, the main difference between, of course, you know, like the sales, uh, and procurement.
19
00:03:21.120 --> 00:03:30.160
Contracting or negotiation cycles are completely different. Of course- Mm-hmm... on the sales side, if you're inside a company, you want it to be quick because you, you wanna close the sale.
20
00:03:30.580 --> 00:03:42.760
On the procurement side, maybe you want it to get, like, more on the details because you don't want to, uh, because you are more risk adverse and, and you wanna be covered in case, uh, shit hit, hits the fan.
21
00:03:43.540 --> 00:03:58.290
But- Yeah... before we jump into those details, Karthik, I would like to know your opinion on why in general contract management needs, uh, attention on every organization. Oh, wow. That's a good question, Pepe.
22
00:03:58.460 --> 00:04:06.240
And, uh, I'll tell you why. I just made a post like five days ago on LinkedIn. I think even Mark had liked it, if I remember.
23
00:04:06.900 --> 00:04:18.740
And, uh, it was a, a post with, with regards to contract management, and in five days, I received close to 10,000 views and 140 likes on it. Okay? Wow. And I'll tell you what the post is about.
24
00:04:19.160 --> 00:04:31.380
The post is a picture of, uh, uh, the movie Hangover. Okay. It has Stu and everyone in the middle of the desert, out of fuel in their car, and they're tired, and they're sitting down like that, laying down, right?
25
00:04:31.560 --> 00:04:42.920
Uh, the entire, uh, the three, three actors. And I said, uh, "Someone asked for a old contract, and this is what happened," right? [laughs] They tried, they couldn't find a old contract, and this is what happened.
26
00:04:42.960 --> 00:04:51.300
And, and the, the epitome of it is you see that there's so many people. You know, procurement is a small world. It's not like sales, right? Uh- Right...
27
00:04:51.340 --> 00:04:59.900
but you could see the traction that it gave and the pain that so many people are, uh, they find it funny is because they're going through that pain day in and day out.
28
00:05:00.440 --> 00:05:08.540
And that, that's what struck to my mind a- as soon as I- I, I didn't even expect that to blow out of proportion, right? Uh, it was just a plain joke on a Friday.
29
00:05:09.040 --> 00:05:16.480
And then you could see so many people, uh, there were at least, like, 50 people who commented on it. "Why is this the case? Why can't we manage a contract?
30
00:05:16.960 --> 00:05:27.060
Uh, why is it even though we have a tool, uh, we don't know what the heck is happening with the contract?" or things like that. Uh, and, uh, that is one simple example which I could correlate from last week.
31
00:05:27.620 --> 00:05:43.480
But essentially, if you look at it, uh, contract, whether it's sales, procurement, real estate, employee contracts, whatever may be the contract, right, it is like your, uh, your bloodline of your entire organization, even though people don't think of it that way.
32
00:05:43.960 --> 00:05:54.060
If you, if there, if there's something wrong in your blood report, it's high cholesterol or high sh- uh, high sugar, I'm talking from the doctor's standpoint, right, immediately it affects your entire body.
33
00:05:54.550 --> 00:05:56.540
And it's basically the same thing.
34
00:05:56.740 --> 00:06:10.764
And if, if you're looking at it at a, as a human anatomy or entire body structure, that the body is your company And contracts are the, like the blood stream that need to be [laughs] monitored at all times, managed the right way.
35
00:06:10.804 --> 00:06:12.244
You've got to be fit, right?
36
00:06:12.364 --> 00:06:25.124
And you need to ensure where, what is, how, how, uh, fit you are as a contract management process to ensure you're living without stress, because I see a lot of people in stress just because of contracts. It may...
37
00:06:25.384 --> 00:06:31.224
And it's not to do all with tool, Pepe. It could be also just a very strong business process.
38
00:06:31.284 --> 00:06:40.464
You need to at least have, uh, the, the willingness to adopt a business process that is helpful for everyone, and then maybe you could look at a tool.
39
00:06:41.004 --> 00:06:48.804
And, uh, that- that's why I think it's really, uh, important to have, uh, uh, a good... Attention needs to be given to contract management tool.
40
00:06:49.284 --> 00:06:58.404
And I'll tell you, on the procurement side of things, what I've seen is like, like you spoke in the beginning, right? Right. Sales, you're getting, getting in the moolah. The money's coming in the bank.
41
00:06:58.664 --> 00:07:09.404
Here, the money's going out. You want it fast. [laughs] You, you want to hold it as long as you can, right? [laughs] Right. Or you're not sure, uh, that, uh, you're buying something, something gets messed up.
42
00:07:09.463 --> 00:07:23.584
There's risk-averse-ness, right? So all of that kind of plays in, uh, comes into play. And, uh, th- that, and that's why I see that there is a definite need to have, uh, much more attention towards contracts in specific.
43
00:07:24.564 --> 00:07:35.624
Right. And, and that's a really good analogy because, uh, what happens in most of the companies is that they don't see this in, like, in their contracts because, I, I mean,
44
00:07:37.004 --> 00:07:46.194
most of the companies, they just think about contracts because it's just, like, a very form- formal way that you have in order to, uh, close a commercial relationship.
45
00:07:46.464 --> 00:07:55.494
And once you go through all these negotiation process, you sign the contract and put it on the file, and that's it, and you're n- and you're never going to see it. Yeah.
46
00:07:55.504 --> 00:08:09.184
However, the information that it's inside those contracts is exactly that. It's the blood streams. How are you going to get those services and deliver those services or products, and how are you going to get paid?
47
00:08:09.524 --> 00:08:16.454
And what's happened, and, and, and, and what can happen when something goes wrong in the middle, right? Absolutely.
48
00:08:16.454 --> 00:08:34.344
So, uh, I would say, like, that's, that, that's one of, of the main reason why companies most, uh, pay more attention into their contracts, because it's the manual of those commercial relationship that at the end is the ones that are going to produce economic value to the, to the company, either if you're on, on the sales side or in the buying side.
49
00:08:34.494 --> 00:08:46.464
And now, that said, uh, Karthik, I would like to know more about your experience on this, right? Like, what's the, the difference between the sales and procurement contract management?
50
00:08:46.524 --> 00:08:54.094
Like, you know, like, sales wants everything fast. They just want the money in. Yeah. And procurement, they just want to hold the money. They just wanna, they- [laughs]...
51
00:08:54.124 --> 00:09:02.464
they don't wanna spend more than the- Absolutely... than the annual budget. But, but what's your experience in, in these two departments? Yeah.
52
00:09:02.504 --> 00:09:14.064
So I, I was fortunate to implement one of, a CRM tool to some extent, uh, of late, recently. It's not, uh, one of the big guys. It's just a pro- simple CRM tool.
53
00:09:14.684 --> 00:09:23.064
And, uh, I, I was able to also help with some of the, on the sales strategy. So I wouldn't call myself as a sales doctor as yet, but I am the procurement doctor.
54
00:09:23.144 --> 00:09:27.904
So I m- I might need your help in chiming, chiming in a little bit on the sales side. But what...
55
00:09:27.924 --> 00:09:36.473
And I was able to implement for two of my clients in the past, I was helping them with the procurement technology, and they said, "I also need the sales side."
56
00:09:36.544 --> 00:09:46.944
So I was able to deploy the, uh, the sales side, uh, as well as a, as a technology for them in the same tool itself. So that was a repository for the sales contracts. And, um,
57
00:09:47.864 --> 00:09:54.864
like, we did touch upon it a little bit on the, uh, the money element, trying to, uh, uh, hold onto the money on the procurement side.
58
00:09:55.324 --> 00:10:04.784
Uh, it's, uh, on, on the procurement side, if you look at it, I'll count on a few, few specific scenarios. For instance, you're purchasing something, a service or a product or whatever.
59
00:10:04.824 --> 00:10:12.164
A person has to come on the site to conduct the services. So that's, if you see, it, it is risk, risky, right?
60
00:10:13.024 --> 00:10:21.844
For sure, we have to pay more attention to it just because that person might be a drug addict or whatever may be the case. [laughs] So he could be,
61
00:10:22.804 --> 00:10:28.434
for, for instance, he might do something, he might steal your printer and go away, and you... Then, then who's gonna pay for it?
62
00:10:28.544 --> 00:10:40.374
So that's, that's the reason the procurement contracts are more so, uh, risk-averse or, uh, they're not that open-ended as such. On the sales side, like we know, it, it's...
63
00:10:41.154 --> 00:10:52.624
Uh, and, and there's a, um, on the sales side, who's owning the contracts or who's going to be initiating the contracts? It's, it's the sales guy, you know. And the sales guy knows how to get things done, right?
64
00:10:52.744 --> 00:11:02.104
[laughs] Because he has a customer online, he wants the money. It's, he's got a commission on that sale. There's a lot of things that are working in his favor, right?
65
00:11:02.264 --> 00:11:06.084
Because it's, it's, it's, it might be a big deal or whatever may be the case.
66
00:11:06.114 --> 00:11:13.833
And the, even the legal folks also are, uh, they don't have the same mindset when they're working on a procurement contract versus a sales contract, right?
67
00:11:13.924 --> 00:11:23.174
If they have two contracts in front of them, a sales and a procurement, which one do you think they'll pick first, or what will be their priority on? There, there'll be more push on the sales side.
68
00:11:23.254 --> 00:11:32.224
So that, that's the other angle, right? Uh, the, the sales guy has commission. The customer is waiting. There's money that's going to come in the, uh, in- into an organization.
69
00:11:32.524 --> 00:11:34.784
So I see all that kind of things working out.
70
00:11:35.364 --> 00:11:52.844
Uh, because of this, uh, what I've seen over the years on, or what I've heard talking to the various sales folks in, in my life, the, the process steps in the sales process are not as stringent or long or lengthy in compared to what happens on the contract process.
71
00:11:53.544 --> 00:12:00.044
Uh, so those are the main two pieces that I see. Even on the, on the procurement side, like, I took one example, right?
72
00:12:00.564 --> 00:12:14.198
Um, the other clear example here is, I'm assuming if it's a, a sales contract, if it's something to do with, uh, work that's... It, it usually is your company paper, right? On your legal-... formal.
73
00:12:14.828 --> 00:12:23.988
Uh, that-that's what I could, uh, that's what I could imagine in, in most of the cases. On the procurement side, it could be, it could be either or, depending on, uh, what.
74
00:12:24.728 --> 00:12:30.988
If you're a big company, you can push for your own contract, uh, template saying that, "Yeah, I need you as a supplier to sign this."
75
00:12:31.128 --> 00:12:37.328
But if it's, if you're a small upcoming guy, you might not have the leverage to push, uh, your own legal template.
76
00:12:37.748 --> 00:12:49.928
That's another reason why there's a huge difference in terms of cycle time between these two process areas as such. Um, I, I don't think of any other, uh, things that come to my mind apart from that.
77
00:12:52.128 --> 00:13:04.108
Yeah, no, Karthik, and I, I think a lot of the, the differences there are, are key areas where it's, it's interesting to see how different departments work and where companies are focused on, on these different types of contracts.
78
00:13:04.248 --> 00:13:10.048
And especially, you know, when it comes to legal, like you said, right? They're always going to try to jump on that, those sales contracts over the procurement ones.
79
00:13:10.108 --> 00:13:18.668
But I would say most of the time that's because legal's breathing down their neck to, to get their red lines done so that they can close some more opportunities. [laughs] Right. That's right. [laughs] For sure.
80
00:13:19.088 --> 00:13:29.448
And the sales guy's gonna be a pushy guy regardless. Mm-hmm. As opposed to a procurement guy, right? So that, that's the inner difference out there between both those pieces. And, um,
81
00:13:30.808 --> 00:13:43.278
and it, we- the, the other thing is the sales guy also, I-I've seen a lot of sales guy who are very also educated in the legal terms, is because they don't want to give it to legal. Right.
82
00:13:43.288 --> 00:13:49.268
If you give it to them, they're gonna take a longer timeline, right? [laughs] So they're like, "Yeah, yeah, that's okay. This is, this is not okay. That's okay."
83
00:13:49.328 --> 00:14:00.208
Or he'll try to negotiate the legal terms and make it, make the customer agree to whatever is best for the legal folks because he has that commission [laughs] hang- uh, the carrot in front of him. Yeah.
84
00:14:00.218 --> 00:14:10.027
So he'll, he'll try to do that. Yeah. Yeah. And the procurement guy is, "Oh boy, I don't want my company to be sued. Uh, let me run this past legal every time." Because he, he doesn't want to get into that.
85
00:14:10.068 --> 00:14:22.128
He doesn't want, and he, he doesn't want to do more than what it's supposed to do. And the other thing as well, uh, the sales guys also, y-you might have a big line of salespeople in your company.
86
00:14:22.538 --> 00:14:33.808
Uh, tell me if you have the same number of people on the procurement. You wouldn't, right? Because even though you don't need a, you need, maybe you're making 10, 10 sales per month, one guy ha- can do.
87
00:14:33.818 --> 00:14:37.848
Uh, so if you wanna make, uh, 10,000 sales, so you need to have X number of people.
88
00:14:38.208 --> 00:14:46.568
On the procurement side, if you see, if I need to buy, uh, 20,000 of those product types, he's gonna work with one supplier [laughs] and he'll get the thing done.
89
00:14:46.968 --> 00:14:54.768
So that's the other variation that you see, uh, in both these processes, and it ties back to the contract piece eventually as well. Yeah.
90
00:14:54.808 --> 00:15:04.448
Yeah, and I, and I think, you know, on either team or on any team, there's, there's always individuals who are, um, better or, or excelling faster than, than, uh, maybe some other members of the team.
91
00:15:04.488 --> 00:15:09.968
And I, I think that this is something, you know, that I wanna bring this next question into, which is, you know, around implementing a playbook.
92
00:15:10.328 --> 00:15:15.658
A-and like you said, you know, maybe you have somebody on the sales, the sales side who is actually negotiating his own contracts, and it...
93
00:15:15.968 --> 00:15:24.908
How does, you know, building out a playbook, how will that help these teams to operate more efficiently, uh, i-i-in, in these contracting processes?
94
00:15:25.448 --> 00:15:38.368
And before you answer that, Karthik, I would, I would say that maybe we can start on defining what's a playbook. What's a playbook- Yeah... inside a contract management process? Yeah. Yeah, it's, uh, uh, yeah, I know.
95
00:15:38.668 --> 00:15:48.138
It's, it's playbook is nowhere related to Playboy, guys, just to clarify, right? [laughs] It's not a Playboy magazine as such. So playbook is something completely different.
96
00:15:48.718 --> 00:16:03.108
[laughs] Uh, playbook is, um, just in layman terms, right? In layman terms is where it's, it's just giving, it's like, uh, a, a, a chess, a board of chess, right? And you know you have the rules as to when, when which...
97
00:16:03.188 --> 00:16:13.288
I'm not a chess player, so pardon me if I say something completely inappropriate. When can you move the, the, the elephant, whether the elephant goes straight or diagonal, or the horse.
98
00:16:13.548 --> 00:16:20.788
Everybody plays a different role, right? So basically, uh, the, the king can go whatever steps to the other side.
99
00:16:20.848 --> 00:16:27.288
So the playbook is somewhat like a chess book with the rules in it, and it's telling what could be moved where.
100
00:16:27.488 --> 00:16:34.608
The only difference here is, uh, is the playbook is of a game of chess with contracts and contract languages.
101
00:16:35.248 --> 00:16:43.208
And, uh, what it does is it would empower the, the procurement guy because legal is shit expensive, as we know, right?
102
00:16:43.308 --> 00:16:52.988
And if you go to them every time, especially if you have external counsel, then you're going to, uh, get billed maybe, uh, $400 an hour. An hour. [laughs] $400 an hour.
103
00:16:53.157 --> 00:17:05.388
And, uh, no, uh, disrespect to legal folks, they're like, they might try to drag it as well, right? [laughs] That, that's, that's a natural thing, right? I would have done the same if, if I was getting paid so high.
104
00:17:05.768 --> 00:17:10.248
Uh, I'm, but I'm not like that. Okay, just for, that was just a joke, guys. Don't take that into consideration.
105
00:17:10.598 --> 00:17:19.708
[laughs] So the, the legal folks, if you're having ex- ex- especially external counsel or even in-house counsel, it's a pretty expensive, uh, cost to the company.
106
00:17:20.188 --> 00:17:34.568
And if you're a company who's dealing with, uh, products which is insurance related or if it's to do with something, uh, let's say you're doing, you're working in research and development on nuclear en- nuclear energy, or you're doing radioactive waste, right?
107
00:17:34.628 --> 00:17:43.628
So it makes sense to pay them money and ensure that you're doing the right stuff, right? Yes. But, uh, but not everything needs to go to them. Do you think everything needs to go to them?
108
00:17:43.688 --> 00:17:54.228
Like, the sales guy has learnt it because he has a, a, what do you say, an incentive. The same thing we wanna do for the procurement guy, and what the playbook does is, I'll take a plain and simple example.
109
00:17:54.548 --> 00:18:08.928
Confidentiality la- language, right? Okay. A few companies are pretty, uh, strong. The first, the legal template with the confiden- confidentiality language is one way. I, I, I save, uh, my ass, I don't save your ass.
110
00:18:09.068 --> 00:18:18.368
So that's it, that's how the, the language is in it, right? And then- Right... the supplier is like, "No, no. I don't agree to that." And then it doesn't need to go to legal, technically.
111
00:18:18.708 --> 00:18:39.808
If the legal already knows a- and if all the lawyers think alike- So the problem that I see, the reason I came up with the playbook was because I used to work with three category managers who had three lawyers, and each lawyer liked to spell out or write the clause in, in their own style because that's how they are, right?
112
00:18:40.228 --> 00:18:44.188
And, and what I used, I used to do is I used to work with these three people.
113
00:18:44.508 --> 00:18:53.968
I used to write the language as per one of the lawyers to the other lawyer, and that guy used to get pissed as to, "What the heck is wrong with Karthik? Does he know, or doesn't he know how to prepare a contract?"
114
00:18:54.388 --> 00:19:05.948
And then it happened too often, maybe for a couple of months, and then I walked up to my boss and I told him, "It's not my problem. I can't remember so many things, and, uh, we need to... Let's why not we do a playbook?"
115
00:19:06.028 --> 00:19:20.208
And that's how all of this happened. And, uh, coming back to the confidentiality example, right? The first is one-sided. The second could be mutual, right? Where I am, I'm also say, "I'll save your ass, you save my ass.
116
00:19:20.228 --> 00:19:33.108
You scratch my back, I scratch my back." So that particular clause sits in the playbook as a secondary language that could be utilized, and you put it... And it would also have a rule saying that, "Don't engage legal."
117
00:19:33.138 --> 00:19:40.608
Procurement has been given the auth- authorization to use that clause without their involvement. That's, that's just one simple clause, guys.
118
00:19:40.708 --> 00:19:53.608
This could be done for the entire, uh, 270-page document if you want to, right? Uh, maybe there's certain scenarios that you absolutely do, can't have a fallback language. Um, and you know the, the way the tools are.
119
00:19:53.678 --> 00:19:58.108
This is what I'm talking about in the 1920s, what I did, right?
120
00:19:58.428 --> 00:20:11.088
Right now, we're, we're, we are in the age of AI and this technology, all these options, and I, I was fortunate enough to do a similar concept in one of the procurement tools,
121
00:20:12.148 --> 00:20:22.608
where you could basically add the same fallback language on the NDA. Uh, and, uh, it, it, it doesn't go to the procure- the, this, uh, legal team.
122
00:20:23.208 --> 00:20:33.948
But if the supplier says, "I don't like this mutual either," or he says that, "I want it to be one-sided," or whatever may be the case, right? He, he's still, still changing the mutual language in a particular way.
123
00:20:34.548 --> 00:20:45.328
I can have the system automatically trigger the approval to the legal guy who's a specialist in confidentiality, and this could apply for indemnity, patents, or whatever may be the case.
124
00:20:45.768 --> 00:20:50.788
So that's what the playbook does, and it also, uh, it's, it's a mammoth of task.
125
00:20:51.068 --> 00:21:07.888
If you have a messed up, uh, process or you don't, you don't have a hang of all the legal templates on the clauses, uh, it's definitely a big effort, but it's worth the effort because it would ensure that you clear all the cholesterol from your bloodlines or all the blockages.
126
00:21:08.268 --> 00:21:18.688
It's kind of you t- you getting on a fitness regime and trying to, uh, redo your, uh, entire health from the contract standpoint. From that point onwards, it'll be much easier for you.
127
00:21:19.208 --> 00:21:25.908
There's lesser tension and, uh, for definitely I see this as a good cost savings for an organization as well.
128
00:21:25.968 --> 00:21:33.348
Because you see over a period of time, the usage of legal will come down, and that's how you could use a playbook. Yeah.
129
00:21:33.388 --> 00:21:51.548
No, and, and I think you know that that kind of playbook is something that, that we often talk about, you know, while we're going through these processes and, and helping organizations to get a better understanding of, of, of what, first off, what processes they, they wanna work on, and secondly, you know, how an, an application or a software application can be utilized to, to help them with those changes.
130
00:21:51.648 --> 00:22:00.848
But, you know, at the end of the day, if you don't, if you're not putting new processes in place, you know, software's only going to take you so far, and I think that that's exactly where the, the playbook comes in extremely handy.
131
00:22:01.708 --> 00:22:14.188
Absolutely. There's a funny analogy I made, uh, in one of the other webinars recently. It was a bunch of folks from UK, all, uh, high level, uh, chief procurement officers, senior managers who came in.
132
00:22:14.268 --> 00:22:25.568
It was very intimidating with [laughs] with just me and so many other people who could ask me anything. There was no format. It was just an open AMA, a- as we call these days, right? Ask me anything.
133
00:22:25.688 --> 00:22:37.058
And, uh, on, on, on that session in particular, [laughs] I was saying, uh, the, the, the... It's, it's not like you wear a Fitbit and you get a six-pack ab, right?
134
00:22:37.348 --> 00:22:41.718
[laughs] And that, that's what the freaking technology is. Unfortunately- [laughs]...
135
00:22:41.747 --> 00:22:51.988
whatever bloody processes we have or companies we have, they have some extra money in their pocket at the end of the day, and they're like, "Oh, how do I spend? How do I spend? Okay, let's buy this tool.
136
00:22:52.128 --> 00:23:03.308
I got, I got a billion dollars in my budget, and let's implement it in, in three weeks or four weeks or six weeks or eight weeks just, and let's, uh, assume that everything gets fixed overnight."
137
00:23:03.408 --> 00:23:16.648
So, um, it, it again c- comes back here, and it's very funny because that's how people think or that's how organizations think. I wear a Fitbit, I get six-pack abs, and I start looking like, uh, The Rock, [laughs]
138
00:23:16.708 --> 00:23:21.078
Dwayne Johnson. [laughs] So unfortunately, that's not the case, guys.
139
00:23:21.968 --> 00:23:31.588
That's a great analogy, and I would say that that's completely true because some, some of, most of the times pe- companies will like to jump in, uh, to technology before they do, uh...
140
00:23:31.918 --> 00:23:45.748
We, we recently have an interview with Tom Fuchs from Video, uh, call it phase zero, where you have to have all your processes, uh, well defined, what's going to happen, what's your goals, uh, having of course your templates.
141
00:23:45.808 --> 00:23:55.588
Because if you don't have all of this, if you wanna use a system, and then you have no idea what to do with that system, then you- your, your staff is never going to use it.
142
00:23:55.948 --> 00:24:05.768
So those couple of thousand dollars will, uh, were not going to be spent well because nobody is, uh, the, the software is gonna be sitting there for months.
143
00:24:06.228 --> 00:24:15.508
Maybe they're not going to renew on the, on the next year- [laughs]... and, and that's going-- and then the procurement department is going to be in the, in a problem, right? Yeah, receiving end. Yeah.
144
00:24:15.628 --> 00:24:27.828
So they just find a reason to... And they blame the software. So unfortunately, that's the case. Um, uh, the, the other funny thing, uh, recently what I've seen is, um, the kind of requirements they ask.
145
00:24:28.128 --> 00:24:37.600
They have a- Right now they're doing it manually. They don't have any software, no nothing. And then they want to advance it to the level that they have never imagined.
146
00:24:37.680 --> 00:24:48.480
Uh, there are certain requirements that, uh, my clients had asked. And, uh, to basically to one of them, uh, I told, "You don't need to do anything. Just you think about a contract, it just gets populated."
147
00:24:49.030 --> 00:24:58.520
[laughs] So I was like, "Y- you gotta have some bit of patience or some... So you need to have some business process or a logic. That's when the soft- software can help you, right?
148
00:24:58.620 --> 00:25:01.959
So the logic or the business process is what needs to be built.
149
00:25:02.140 --> 00:25:12.040
And, uh, if you want to still convert from your standard to the current process to the future process in your CLM system, it basically is not going to bring you anywhere."
150
00:25:12.400 --> 00:25:23.180
And, uh, I was giving him as an answer because he came back with a such a, a, a weird requirement which is not at all, uh, not at all attain- attainable by any system as such.
151
00:25:23.240 --> 00:25:32.800
So I told him, "Maybe what I'll do with the system is you start thinking about the system, and the contract gets created, the supplier comes and signs it, and everything gets done automatically.
152
00:25:32.880 --> 00:25:43.610
So you don't need to even, uh, join, get onto the internet, no- [laughs] not the laptop, no nothing." So that's how their mindset is. Right. Sometimes they just want Alexa to do everything. "Hey, Alexa." That's right.
153
00:25:43.610 --> 00:25:53.930
"Do a master agreement," and there you go. Oh. "Give me, give me all of these contracts from, from, from last quarter." [laughs] Absolutely. I don't think they're even looking at Alexa. They don't want to talk to Alexa.
154
00:25:54.010 --> 00:26:04.840
They just think and things happen, and that's how they [laughs] they pretty much are expecting technology to work. We haven't gotten there as yet, unfortunately. No, no. But I, we're, we're on our way.
155
00:26:05.080 --> 00:26:12.920
Who knows where we're gonna be- Yeah... in a couple of years. It's pretty crazy. I think the Alexa functionality- Uh, we could just-... is actually coming. Yeah. We could install this chip in their brain- Yeah...
156
00:26:12.960 --> 00:26:23.000
for contract management. And what that does is it goes and connects the dots and creates the contract. [laughs] I think there's a movie about that. [laughs] Yeah, for sure.
157
00:26:24.530 --> 00:26:39.200
[laughs] Hey, so Karthik, so if, if you could, you know, suggest maybe one way of, an ar- an organization could focus their attention on, on their contract management processes, what, what would be, like, the biggest tip or the biggest takeaway that you could give them today?
158
00:26:40.880 --> 00:26:48.780
So we s- we did speak about the playbook. Mm-hmm. That's a very good item to consider if you're having trouble with your contracts. Um,
159
00:26:50.520 --> 00:26:58.220
I see, uh, the, one of the biggest pain points, I know the process has also been covered, so I don't want to bring back the process. It's also a tighter thing.
160
00:26:59.120 --> 00:27:07.640
Uh, the biggest pain point is the data and maintaining your contracts. Uh, maintaining your contracts also ties back to the point we spoke in the beginning.
161
00:27:07.770 --> 00:27:15.240
You just sign it and put it in the cupboard and it's there for life. [laughs] Unless someone asks for it or there's, uh... You don't care for it, right?
162
00:27:15.500 --> 00:27:26.460
So that, the maintenance or the management of the contract data, uh, makes a lot of your life easy. And it ties back to the post that I told that got close to 10,000 views as well. Mm-hmm.
163
00:27:26.540 --> 00:27:38.420
So it, uh, I see that as the, the main improvement area. If you're a small company and you're a startup, you're about to, uh, grow, it's better to get that, inculcate that in your process.
164
00:27:38.460 --> 00:27:45.840
There are a lot of free tools as well in contracts. Or you could manage your database even online on OneDrive or wherever, but start doing it.
165
00:27:46.340 --> 00:27:54.400
If, if you should get that as a part of your company culture, you would not fall flat on your face later and, uh, uh, and work backwards, right?
166
00:27:54.820 --> 00:28:09.120
So the data administration, maintenance, and ensuring that you're following through on whatever the contract was signed for. And this goes for sales as well as, um, the procurement side of folks. Great.
167
00:28:09.280 --> 00:28:17.370
No, I, I think those are, those are some great takeaways there. And, um, definitely, you know, I, I don't wanna keep focusing on the, on the playbook th- thing, but I, I think- [laughs]...
168
00:28:17.370 --> 00:28:27.880
that that's, you know, definitely the biggest takeaway of, of, of today's episode, is really, you know, being able to, to understand that and implement that, I, I think is, is, again, a key takeaway, uh, for a lot of these organizations.
169
00:28:29.140 --> 00:28:41.370
Absolutely. And I, I tell you, uh, in my overall, uh, 17 year lifespan, I've, uh... I think I've migrated close to 40,000 contracts. Wow. Old contracts.
170
00:28:41.420 --> 00:28:50.000
So you can imagine the pain and torture that I've gone through, the scrapes and bruises that I've been through of, uh, collating the contracts from 22 different countries.
171
00:28:50.159 --> 00:29:00.100
And then they had it in their drawer, in their, uh, in their cabinet. They had it on email of an employee who left. They had it in a shared drive. They had it all places. [laughs] So...
172
00:29:00.540 --> 00:29:11.040
And they didn't know what the heck is happening. One country had paper ink signed contracts. One country had them online. Uh, they, they didn't track the expiration dates. Few people had an extension.
173
00:29:11.100 --> 00:29:12.840
So there's a lot of variations around that.
174
00:29:13.320 --> 00:29:24.669
And, uh, [laughs] I, I could for, for, I, for one, can, uh, have a nice methodology around how do you want to go about this procurement contracts that the 30,000, 35,000 contracts.
175
00:29:24.730 --> 00:29:34.419
And how do you want to bring them to a system, whether they make sense, are they active or not? Is it a PO against it or an invoice against it? Uh, is it non-compliant? So all those kind of stuff.
176
00:29:34.500 --> 00:29:45.840
So that's where w- I think it's very critical to have a very good, uh, contract database which is active and, uh, pushed or maintained. Yeah. Yeah, absolutely.
177
00:29:45.880 --> 00:29:48.880
I think that that's, that should be everybody's, you know, first step.
178
00:29:48.960 --> 00:29:59.780
After understanding your processes, let's get everything into that database and, and allow folks to have access to it so that they can track it, you can track it, and, and the whole company has a, a central location to go to.
179
00:29:59.860 --> 00:30:05.299
Um- That's right... well, Karthik, this has been a, uh, a great conversation. We really appreciate you coming on.
180
00:30:05.380 --> 00:30:14.470
And, uh, if folks want to connect with you or, or learn more about The Procurement Doctor, where's, where's the best place to do that? Oh, I'm very active on LinkedIn. Uh- Yeah...
181
00:30:14.500 --> 00:30:24.739
so you could, you could search by Procurement Doctor Karthik Rama. Uh, Twitter, uh, we have, uh, uh, Twitter, YouTube. I got a couple of videos on YouTube.
182
00:30:25.340 --> 00:30:38.130
Uh, these are the three places that, uh, I could be reached out at. And, uh, my... You could just type in my name and it's K-A-R-T-H-I-K, and then Rama, my last name. And I'll share you the links as well, uh, Mark.
183
00:30:38.160 --> 00:30:45.880
You could put it in the show notes or wherever you'd like to for my- Yeah... how we could reach out to me. Absolutely. Will do. All right, Karthik. Well, this has been a pleasure. Thanks for joining us.
184
00:30:47.220 --> 00:30:58.590
Thank you so much. It's been a, it's been fun talking to you both, and I was able to relieve some of my frustration as well, so thank you. [laughs] Thanks a lot, Karthik. Take care, guys. Thanks everybody. Bye.
185
00:30:58.620 --> 00:31:06.119
Thanks for listening to another episode of Contract Heroes. We hope to hear you or have you back here soon. Bye-bye.
1
00:00:02.500 --> 00:00:11.080
Hello, everyone, and welcome to another episode of Contract Heroes, where we're not the heroes, our guests are. Today, we've got a great episode for you. The Contract Doctor is in.
2
00:00:11.320 --> 00:00:19.240
This is an episode we've been trying to get scheduled for quite some time now. Want to give a warm welcome to Karthik Rama. Karthik, thanks for joining us today.
3
00:00:19.260 --> 00:00:31.040
And before Pepe gives us, uh, kind of an overview of what we're gonna be chatting about, we'd love to get, uh, some more understanding on firstly, how you've come up with that name or, or gotten the name Procurement Doctor, and, uh, what you've been working on lately.
4
00:00:32.259 --> 00:00:42.960
Oh, wow. Uh, thank you so much for that, uh, question. And I, I'm always excited when someone asks me that question. So it lets me talk a little bit of, uh, what the Procurement Doctor is all about.
5
00:00:43.080 --> 00:00:48.560
Um, a- and I was- procurement includes contracts, and that's why we are here talking to each other.
6
00:00:48.680 --> 00:00:57.540
Uh, the Procurement Doctor, the name itself evolved, uh, because people were trying to understand what the heck I'm doing as a work, work type, right?
7
00:00:57.640 --> 00:01:11.180
And I was explaining that I usually go at a client, go to a client location, look at the current processes, look at the pain areas, I diagnose the issues, and then I give recommendations on how to go about it, right, uh, and how to fix.
8
00:01:11.360 --> 00:01:21.680
So it's basically, uh, my- one of my friends had suggested that, "Okay, you're like the doctor, but for procurement." And that kind of stuck to my, uh, head. And, uh, I thought, why not?
9
00:01:21.740 --> 00:01:40.740
Because I've created, uh, one of my previous companies, an entire, uh, diagnostic study, we call it the diagnostic study, and it was unintentionally even the cover letter of that, or the cover page of it, uh, had the doctor's, uh, what do you say, stethoscope and, like, a MRI thing and all that.
10
00:01:40.840 --> 00:01:48.280
So it was like, maybe it was in me way before that, uh, but this guy kind of got it out of me, and that's where the Procurement Doctor got started.
11
00:01:48.880 --> 00:01:58.020
And, uh, procurement, in procurement, there's a lot of facets, as you know, right? It's pretty broad. The reason I kept it broad is I just don't do contracts. I do, do a lot more than that.
12
00:01:58.560 --> 00:02:19.480
And, uh, basically, uh, contracts has been a bread and butter for me for a while, where people going through specific kind of pains, and I have, uh, thanks to my experience or the opportunities I've got, I work with, uh, multiple legal folks, uh, multiple, uh, contract administrators and multiple procurement organizations, and they have been fixing the contract database.
13
00:02:19.700 --> 00:02:31.160
Uh, the funny note on the side is my mom, uh, as a kid, like, you know, Indians are very ambitious. Either, once a kid is born, he either is tagged with a doctor or an engineer.
14
00:02:31.200 --> 00:02:41.780
That's why you see Indians producing- Right... so many doctors, so many engineers. And, uh, uh, and she was like, "What do you want to become, uh, once you get old?" And I was like, "I don't know.
15
00:02:41.940 --> 00:02:51.320
I'm a six-year-old kid," right? But, uh, it, then the doctor did come up. Um, and, uh, so this somewhere also ties back to that. We keep, I keep my mommy happy as well.
16
00:02:51.510 --> 00:03:01.560
[laughs] Even though she knows I'm not a real doctor, I can't operate on a human being. I can operate on a procurement, uh, organization or a contract, uh, management, uh, process as such.
17
00:03:01.620 --> 00:03:10.880
So that's what my speciality is. Surgery, I can do surgeries on [laughs] contract management tools or processes. [laughs] That's great, Karthik.
18
00:03:11.300 --> 00:03:20.859
And so there's a lot of things that we're gonna cover in, in this episode, especially, uh, where are, like, the main difference between, of course, you know, like the sales, uh, and procurement.
19
00:03:21.120 --> 00:03:30.160
Contracting or negotiation cycles are completely different. Of course- Mm-hmm... on the sales side, if you're inside a company, you want it to be quick because you, you wanna close the sale.
20
00:03:30.580 --> 00:03:42.760
On the procurement side, maybe you want it to get, like, more on the details because you don't want to, uh, because you are more risk adverse and, and you wanna be covered in case, uh, shit hit, hits the fan.
21
00:03:43.540 --> 00:03:58.290
But- Yeah... before we jump into those details, Karthik, I would like to know your opinion on why in general contract management needs, uh, attention on every organization. Oh, wow. That's a good question, Pepe.
22
00:03:58.460 --> 00:04:06.240
And, uh, I'll tell you why. I just made a post like five days ago on LinkedIn. I think even Mark had liked it, if I remember.
23
00:04:06.900 --> 00:04:18.740
And, uh, it was a, a post with, with regards to contract management, and in five days, I received close to 10,000 views and 140 likes on it. Okay? Wow. And I'll tell you what the post is about.
24
00:04:19.160 --> 00:04:31.380
The post is a picture of, uh, uh, the movie Hangover. Okay. It has Stu and everyone in the middle of the desert, out of fuel in their car, and they're tired, and they're sitting down like that, laying down, right?
25
00:04:31.560 --> 00:04:42.920
Uh, the entire, uh, the three, three actors. And I said, uh, "Someone asked for a old contract, and this is what happened," right? [laughs] They tried, they couldn't find a old contract, and this is what happened.
26
00:04:42.960 --> 00:04:51.300
And, and the, the epitome of it is you see that there's so many people. You know, procurement is a small world. It's not like sales, right? Uh- Right...
27
00:04:51.340 --> 00:04:59.900
but you could see the traction that it gave and the pain that so many people are, uh, they find it funny is because they're going through that pain day in and day out.
28
00:05:00.440 --> 00:05:08.540
And that, that's what struck to my mind a- as soon as I- I, I didn't even expect that to blow out of proportion, right? Uh, it was just a plain joke on a Friday.
29
00:05:09.040 --> 00:05:16.480
And then you could see so many people, uh, there were at least, like, 50 people who commented on it. "Why is this the case? Why can't we manage a contract?
30
00:05:16.960 --> 00:05:27.060
Uh, why is it even though we have a tool, uh, we don't know what the heck is happening with the contract?" or things like that. Uh, and, uh, that is one simple example which I could correlate from last week.
31
00:05:27.620 --> 00:05:43.480
But essentially, if you look at it, uh, contract, whether it's sales, procurement, real estate, employee contracts, whatever may be the contract, right, it is like your, uh, your bloodline of your entire organization, even though people don't think of it that way.
32
00:05:43.960 --> 00:05:54.060
If you, if there, if there's something wrong in your blood report, it's high cholesterol or high sh- uh, high sugar, I'm talking from the doctor's standpoint, right, immediately it affects your entire body.
33
00:05:54.550 --> 00:05:56.540
And it's basically the same thing.
34
00:05:56.740 --> 00:06:10.764
And if, if you're looking at it at a, as a human anatomy or entire body structure, that the body is your company And contracts are the, like the blood stream that need to be [laughs] monitored at all times, managed the right way.
35
00:06:10.804 --> 00:06:12.244
You've got to be fit, right?
36
00:06:12.364 --> 00:06:25.124
And you need to ensure where, what is, how, how, uh, fit you are as a contract management process to ensure you're living without stress, because I see a lot of people in stress just because of contracts. It may...
37
00:06:25.384 --> 00:06:31.224
And it's not to do all with tool, Pepe. It could be also just a very strong business process.
38
00:06:31.284 --> 00:06:40.464
You need to at least have, uh, the, the willingness to adopt a business process that is helpful for everyone, and then maybe you could look at a tool.
39
00:06:41.004 --> 00:06:48.804
And, uh, that- that's why I think it's really, uh, important to have, uh, uh, a good... Attention needs to be given to contract management tool.
40
00:06:49.284 --> 00:06:58.404
And I'll tell you, on the procurement side of things, what I've seen is like, like you spoke in the beginning, right? Right. Sales, you're getting, getting in the moolah. The money's coming in the bank.
41
00:06:58.664 --> 00:07:09.404
Here, the money's going out. You want it fast. [laughs] You, you want to hold it as long as you can, right? [laughs] Right. Or you're not sure, uh, that, uh, you're buying something, something gets messed up.
42
00:07:09.463 --> 00:07:23.584
There's risk-averse-ness, right? So all of that kind of plays in, uh, comes into play. And, uh, th- that, and that's why I see that there is a definite need to have, uh, much more attention towards contracts in specific.
43
00:07:24.564 --> 00:07:35.624
Right. And, and that's a really good analogy because, uh, what happens in most of the companies is that they don't see this in, like, in their contracts because, I, I mean,
44
00:07:37.004 --> 00:07:46.194
most of the companies, they just think about contracts because it's just, like, a very form- formal way that you have in order to, uh, close a commercial relationship.
45
00:07:46.464 --> 00:07:55.494
And once you go through all these negotiation process, you sign the contract and put it on the file, and that's it, and you're n- and you're never going to see it. Yeah.
46
00:07:55.504 --> 00:08:09.184
However, the information that it's inside those contracts is exactly that. It's the blood streams. How are you going to get those services and deliver those services or products, and how are you going to get paid?
47
00:08:09.524 --> 00:08:16.454
And what's happened, and, and, and, and what can happen when something goes wrong in the middle, right? Absolutely.
48
00:08:16.454 --> 00:08:34.344
So, uh, I would say, like, that's, that, that's one of, of the main reason why companies most, uh, pay more attention into their contracts, because it's the manual of those commercial relationship that at the end is the ones that are going to produce economic value to the, to the company, either if you're on, on the sales side or in the buying side.
49
00:08:34.494 --> 00:08:46.464
And now, that said, uh, Karthik, I would like to know more about your experience on this, right? Like, what's the, the difference between the sales and procurement contract management?
50
00:08:46.524 --> 00:08:54.094
Like, you know, like, sales wants everything fast. They just want the money in. Yeah. And procurement, they just want to hold the money. They just wanna, they- [laughs]...
51
00:08:54.124 --> 00:09:02.464
they don't wanna spend more than the- Absolutely... than the annual budget. But, but what's your experience in, in these two departments? Yeah.
52
00:09:02.504 --> 00:09:14.064
So I, I was fortunate to implement one of, a CRM tool to some extent, uh, of late, recently. It's not, uh, one of the big guys. It's just a pro- simple CRM tool.
53
00:09:14.684 --> 00:09:23.064
And, uh, I, I was able to also help with some of the, on the sales strategy. So I wouldn't call myself as a sales doctor as yet, but I am the procurement doctor.
54
00:09:23.144 --> 00:09:27.904
So I m- I might need your help in chiming, chiming in a little bit on the sales side. But what...
55
00:09:27.924 --> 00:09:36.473
And I was able to implement for two of my clients in the past, I was helping them with the procurement technology, and they said, "I also need the sales side."
56
00:09:36.544 --> 00:09:46.944
So I was able to deploy the, uh, the sales side, uh, as well as a, as a technology for them in the same tool itself. So that was a repository for the sales contracts. And, um,
57
00:09:47.864 --> 00:09:54.864
like, we did touch upon it a little bit on the, uh, the money element, trying to, uh, uh, hold onto the money on the procurement side.
58
00:09:55.324 --> 00:10:04.784
Uh, it's, uh, on, on the procurement side, if you look at it, I'll count on a few, few specific scenarios. For instance, you're purchasing something, a service or a product or whatever.
59
00:10:04.824 --> 00:10:12.164
A person has to come on the site to conduct the services. So that's, if you see, it, it is risk, risky, right?
60
00:10:13.024 --> 00:10:21.844
For sure, we have to pay more attention to it just because that person might be a drug addict or whatever may be the case. [laughs] So he could be,
61
00:10:22.804 --> 00:10:28.434
for, for instance, he might do something, he might steal your printer and go away, and you... Then, then who's gonna pay for it?
62
00:10:28.544 --> 00:10:40.374
So that's, that's the reason the procurement contracts are more so, uh, risk-averse or, uh, they're not that open-ended as such. On the sales side, like we know, it, it's...
63
00:10:41.154 --> 00:10:52.624
Uh, and, and there's a, um, on the sales side, who's owning the contracts or who's going to be initiating the contracts? It's, it's the sales guy, you know. And the sales guy knows how to get things done, right?
64
00:10:52.744 --> 00:11:02.104
[laughs] Because he has a customer online, he wants the money. It's, he's got a commission on that sale. There's a lot of things that are working in his favor, right?
65
00:11:02.264 --> 00:11:06.084
Because it's, it's, it's, it might be a big deal or whatever may be the case.
66
00:11:06.114 --> 00:11:13.833
And the, even the legal folks also are, uh, they don't have the same mindset when they're working on a procurement contract versus a sales contract, right?
67
00:11:13.924 --> 00:11:23.174
If they have two contracts in front of them, a sales and a procurement, which one do you think they'll pick first, or what will be their priority on? There, there'll be more push on the sales side.
68
00:11:23.254 --> 00:11:32.224
So that, that's the other angle, right? Uh, the, the sales guy has commission. The customer is waiting. There's money that's going to come in the, uh, in- into an organization.
69
00:11:32.524 --> 00:11:34.784
So I see all that kind of things working out.
70
00:11:35.364 --> 00:11:52.844
Uh, because of this, uh, what I've seen over the years on, or what I've heard talking to the various sales folks in, in my life, the, the process steps in the sales process are not as stringent or long or lengthy in compared to what happens on the contract process.
71
00:11:53.544 --> 00:12:00.044
Uh, so those are the main two pieces that I see. Even on the, on the procurement side, like, I took one example, right?
72
00:12:00.564 --> 00:12:14.198
Um, the other clear example here is, I'm assuming if it's a, a sales contract, if it's something to do with, uh, work that's... It, it usually is your company paper, right? On your legal-... formal.
73
00:12:14.828 --> 00:12:23.988
Uh, that-that's what I could, uh, that's what I could imagine in, in most of the cases. On the procurement side, it could be, it could be either or, depending on, uh, what.
74
00:12:24.728 --> 00:12:30.988
If you're a big company, you can push for your own contract, uh, template saying that, "Yeah, I need you as a supplier to sign this."
75
00:12:31.128 --> 00:12:37.328
But if it's, if you're a small upcoming guy, you might not have the leverage to push, uh, your own legal template.
76
00:12:37.748 --> 00:12:49.928
That's another reason why there's a huge difference in terms of cycle time between these two process areas as such. Um, I, I don't think of any other, uh, things that come to my mind apart from that.
77
00:12:52.128 --> 00:13:04.108
Yeah, no, Karthik, and I, I think a lot of the, the differences there are, are key areas where it's, it's interesting to see how different departments work and where companies are focused on, on these different types of contracts.
78
00:13:04.248 --> 00:13:10.048
And especially, you know, when it comes to legal, like you said, right? They're always going to try to jump on that, those sales contracts over the procurement ones.
79
00:13:10.108 --> 00:13:18.668
But I would say most of the time that's because legal's breathing down their neck to, to get their red lines done so that they can close some more opportunities. [laughs] Right. That's right. [laughs] For sure.
80
00:13:19.088 --> 00:13:29.448
And the sales guy's gonna be a pushy guy regardless. Mm-hmm. As opposed to a procurement guy, right? So that, that's the inner difference out there between both those pieces. And, um,
81
00:13:30.808 --> 00:13:43.278
and it, we- the, the other thing is the sales guy also, I-I've seen a lot of sales guy who are very also educated in the legal terms, is because they don't want to give it to legal. Right.
82
00:13:43.288 --> 00:13:49.268
If you give it to them, they're gonna take a longer timeline, right? [laughs] So they're like, "Yeah, yeah, that's okay. This is, this is not okay. That's okay."
83
00:13:49.328 --> 00:14:00.208
Or he'll try to negotiate the legal terms and make it, make the customer agree to whatever is best for the legal folks because he has that commission [laughs] hang- uh, the carrot in front of him. Yeah.
84
00:14:00.218 --> 00:14:10.027
So he'll, he'll try to do that. Yeah. Yeah. And the procurement guy is, "Oh boy, I don't want my company to be sued. Uh, let me run this past legal every time." Because he, he doesn't want to get into that.
85
00:14:10.068 --> 00:14:22.128
He doesn't want, and he, he doesn't want to do more than what it's supposed to do. And the other thing as well, uh, the sales guys also, y-you might have a big line of salespeople in your company.
86
00:14:22.538 --> 00:14:33.808
Uh, tell me if you have the same number of people on the procurement. You wouldn't, right? Because even though you don't need a, you need, maybe you're making 10, 10 sales per month, one guy ha- can do.
87
00:14:33.818 --> 00:14:37.848
Uh, so if you wanna make, uh, 10,000 sales, so you need to have X number of people.
88
00:14:38.208 --> 00:14:46.568
On the procurement side, if you see, if I need to buy, uh, 20,000 of those product types, he's gonna work with one supplier [laughs] and he'll get the thing done.
89
00:14:46.968 --> 00:14:54.768
So that's the other variation that you see, uh, in both these processes, and it ties back to the contract piece eventually as well. Yeah.
90
00:14:54.808 --> 00:15:04.448
Yeah, and I, and I think, you know, on either team or on any team, there's, there's always individuals who are, um, better or, or excelling faster than, than, uh, maybe some other members of the team.
91
00:15:04.488 --> 00:15:09.968
And I, I think that this is something, you know, that I wanna bring this next question into, which is, you know, around implementing a playbook.
92
00:15:10.328 --> 00:15:15.658
A-and like you said, you know, maybe you have somebody on the sales, the sales side who is actually negotiating his own contracts, and it...
93
00:15:15.968 --> 00:15:24.908
How does, you know, building out a playbook, how will that help these teams to operate more efficiently, uh, i-i-in, in these contracting processes?
94
00:15:25.448 --> 00:15:38.368
And before you answer that, Karthik, I would, I would say that maybe we can start on defining what's a playbook. What's a playbook- Yeah... inside a contract management process? Yeah. Yeah, it's, uh, uh, yeah, I know.
95
00:15:38.668 --> 00:15:48.138
It's, it's playbook is nowhere related to Playboy, guys, just to clarify, right? [laughs] It's not a Playboy magazine as such. So playbook is something completely different.
96
00:15:48.718 --> 00:16:03.108
[laughs] Uh, playbook is, um, just in layman terms, right? In layman terms is where it's, it's just giving, it's like, uh, a, a, a chess, a board of chess, right? And you know you have the rules as to when, when which...
97
00:16:03.188 --> 00:16:13.288
I'm not a chess player, so pardon me if I say something completely inappropriate. When can you move the, the, the elephant, whether the elephant goes straight or diagonal, or the horse.
98
00:16:13.548 --> 00:16:20.788
Everybody plays a different role, right? So basically, uh, the, the king can go whatever steps to the other side.
99
00:16:20.848 --> 00:16:27.288
So the playbook is somewhat like a chess book with the rules in it, and it's telling what could be moved where.
100
00:16:27.488 --> 00:16:34.608
The only difference here is, uh, is the playbook is of a game of chess with contracts and contract languages.
101
00:16:35.248 --> 00:16:43.208
And, uh, what it does is it would empower the, the procurement guy because legal is shit expensive, as we know, right?
102
00:16:43.308 --> 00:16:52.988
And if you go to them every time, especially if you have external counsel, then you're going to, uh, get billed maybe, uh, $400 an hour. An hour. [laughs] $400 an hour.
103
00:16:53.157 --> 00:17:05.388
And, uh, no, uh, disrespect to legal folks, they're like, they might try to drag it as well, right? [laughs] That, that's, that's a natural thing, right? I would have done the same if, if I was getting paid so high.
104
00:17:05.768 --> 00:17:10.248
Uh, I'm, but I'm not like that. Okay, just for, that was just a joke, guys. Don't take that into consideration.
105
00:17:10.598 --> 00:17:19.708
[laughs] So the, the legal folks, if you're having ex- ex- especially external counsel or even in-house counsel, it's a pretty expensive, uh, cost to the company.
106
00:17:20.188 --> 00:17:34.568
And if you're a company who's dealing with, uh, products which is insurance related or if it's to do with something, uh, let's say you're doing, you're working in research and development on nuclear en- nuclear energy, or you're doing radioactive waste, right?
107
00:17:34.628 --> 00:17:43.628
So it makes sense to pay them money and ensure that you're doing the right stuff, right? Yes. But, uh, but not everything needs to go to them. Do you think everything needs to go to them?
108
00:17:43.688 --> 00:17:54.228
Like, the sales guy has learnt it because he has a, a, what do you say, an incentive. The same thing we wanna do for the procurement guy, and what the playbook does is, I'll take a plain and simple example.
109
00:17:54.548 --> 00:18:08.928
Confidentiality la- language, right? Okay. A few companies are pretty, uh, strong. The first, the legal template with the confiden- confidentiality language is one way. I, I, I save, uh, my ass, I don't save your ass.
110
00:18:09.068 --> 00:18:18.368
So that's it, that's how the, the language is in it, right? And then- Right... the supplier is like, "No, no. I don't agree to that." And then it doesn't need to go to legal, technically.
111
00:18:18.708 --> 00:18:39.808
If the legal already knows a- and if all the lawyers think alike- So the problem that I see, the reason I came up with the playbook was because I used to work with three category managers who had three lawyers, and each lawyer liked to spell out or write the clause in, in their own style because that's how they are, right?
112
00:18:40.228 --> 00:18:44.188
And, and what I used, I used to do is I used to work with these three people.
113
00:18:44.508 --> 00:18:53.968
I used to write the language as per one of the lawyers to the other lawyer, and that guy used to get pissed as to, "What the heck is wrong with Karthik? Does he know, or doesn't he know how to prepare a contract?"
114
00:18:54.388 --> 00:19:05.948
And then it happened too often, maybe for a couple of months, and then I walked up to my boss and I told him, "It's not my problem. I can't remember so many things, and, uh, we need to... Let's why not we do a playbook?"
115
00:19:06.028 --> 00:19:20.208
And that's how all of this happened. And, uh, coming back to the confidentiality example, right? The first is one-sided. The second could be mutual, right? Where I am, I'm also say, "I'll save your ass, you save my ass.
116
00:19:20.228 --> 00:19:33.108
You scratch my back, I scratch my back." So that particular clause sits in the playbook as a secondary language that could be utilized, and you put it... And it would also have a rule saying that, "Don't engage legal."
117
00:19:33.138 --> 00:19:40.608
Procurement has been given the auth- authorization to use that clause without their involvement. That's, that's just one simple clause, guys.
118
00:19:40.708 --> 00:19:53.608
This could be done for the entire, uh, 270-page document if you want to, right? Uh, maybe there's certain scenarios that you absolutely do, can't have a fallback language. Um, and you know the, the way the tools are.
119
00:19:53.678 --> 00:19:58.108
This is what I'm talking about in the 1920s, what I did, right?
120
00:19:58.428 --> 00:20:11.088
Right now, we're, we're, we are in the age of AI and this technology, all these options, and I, I was fortunate enough to do a similar concept in one of the procurement tools,
121
00:20:12.148 --> 00:20:22.608
where you could basically add the same fallback language on the NDA. Uh, and, uh, it, it, it doesn't go to the procure- the, this, uh, legal team.
122
00:20:23.208 --> 00:20:33.948
But if the supplier says, "I don't like this mutual either," or he says that, "I want it to be one-sided," or whatever may be the case, right? He, he's still, still changing the mutual language in a particular way.
123
00:20:34.548 --> 00:20:45.328
I can have the system automatically trigger the approval to the legal guy who's a specialist in confidentiality, and this could apply for indemnity, patents, or whatever may be the case.
124
00:20:45.768 --> 00:20:50.788
So that's what the playbook does, and it also, uh, it's, it's a mammoth of task.
125
00:20:51.068 --> 00:21:07.888
If you have a messed up, uh, process or you don't, you don't have a hang of all the legal templates on the clauses, uh, it's definitely a big effort, but it's worth the effort because it would ensure that you clear all the cholesterol from your bloodlines or all the blockages.
126
00:21:08.268 --> 00:21:18.688
It's kind of you t- you getting on a fitness regime and trying to, uh, redo your, uh, entire health from the contract standpoint. From that point onwards, it'll be much easier for you.
127
00:21:19.208 --> 00:21:25.908
There's lesser tension and, uh, for definitely I see this as a good cost savings for an organization as well.
128
00:21:25.968 --> 00:21:33.348
Because you see over a period of time, the usage of legal will come down, and that's how you could use a playbook. Yeah.
129
00:21:33.388 --> 00:21:51.548
No, and, and I think you know that that kind of playbook is something that, that we often talk about, you know, while we're going through these processes and, and helping organizations to get a better understanding of, of, of what, first off, what processes they, they wanna work on, and secondly, you know, how an, an application or a software application can be utilized to, to help them with those changes.
130
00:21:51.648 --> 00:22:00.848
But, you know, at the end of the day, if you don't, if you're not putting new processes in place, you know, software's only going to take you so far, and I think that that's exactly where the, the playbook comes in extremely handy.
131
00:22:01.708 --> 00:22:14.188
Absolutely. There's a funny analogy I made, uh, in one of the other webinars recently. It was a bunch of folks from UK, all, uh, high level, uh, chief procurement officers, senior managers who came in.
132
00:22:14.268 --> 00:22:25.568
It was very intimidating with [laughs] with just me and so many other people who could ask me anything. There was no format. It was just an open AMA, a- as we call these days, right? Ask me anything.
133
00:22:25.688 --> 00:22:37.058
And, uh, on, on, on that session in particular, [laughs] I was saying, uh, the, the, the... It's, it's not like you wear a Fitbit and you get a six-pack ab, right?
134
00:22:37.348 --> 00:22:41.718
[laughs] And that, that's what the freaking technology is. Unfortunately- [laughs]...
135
00:22:41.747 --> 00:22:51.988
whatever bloody processes we have or companies we have, they have some extra money in their pocket at the end of the day, and they're like, "Oh, how do I spend? How do I spend? Okay, let's buy this tool.
136
00:22:52.128 --> 00:23:03.308
I got, I got a billion dollars in my budget, and let's implement it in, in three weeks or four weeks or six weeks or eight weeks just, and let's, uh, assume that everything gets fixed overnight."
137
00:23:03.408 --> 00:23:16.648
So, um, it, it again c- comes back here, and it's very funny because that's how people think or that's how organizations think. I wear a Fitbit, I get six-pack abs, and I start looking like, uh, The Rock, [laughs]
138
00:23:16.708 --> 00:23:21.078
Dwayne Johnson. [laughs] So unfortunately, that's not the case, guys.
139
00:23:21.968 --> 00:23:31.588
That's a great analogy, and I would say that that's completely true because some, some of, most of the times pe- companies will like to jump in, uh, to technology before they do, uh...
140
00:23:31.918 --> 00:23:45.748
We, we recently have an interview with Tom Fuchs from Video, uh, call it phase zero, where you have to have all your processes, uh, well defined, what's going to happen, what's your goals, uh, having of course your templates.
141
00:23:45.808 --> 00:23:55.588
Because if you don't have all of this, if you wanna use a system, and then you have no idea what to do with that system, then you- your, your staff is never going to use it.
142
00:23:55.948 --> 00:24:05.768
So those couple of thousand dollars will, uh, were not going to be spent well because nobody is, uh, the, the software is gonna be sitting there for months.
143
00:24:06.228 --> 00:24:15.508
Maybe they're not going to renew on the, on the next year- [laughs]... and, and that's going-- and then the procurement department is going to be in the, in a problem, right? Yeah, receiving end. Yeah.
144
00:24:15.628 --> 00:24:27.828
So they just find a reason to... And they blame the software. So unfortunately, that's the case. Um, uh, the, the other funny thing, uh, recently what I've seen is, um, the kind of requirements they ask.
145
00:24:28.128 --> 00:24:37.600
They have a- Right now they're doing it manually. They don't have any software, no nothing. And then they want to advance it to the level that they have never imagined.
146
00:24:37.680 --> 00:24:48.480
Uh, there are certain requirements that, uh, my clients had asked. And, uh, to basically to one of them, uh, I told, "You don't need to do anything. Just you think about a contract, it just gets populated."
147
00:24:49.030 --> 00:24:58.520
[laughs] So I was like, "Y- you gotta have some bit of patience or some... So you need to have some business process or a logic. That's when the soft- software can help you, right?
148
00:24:58.620 --> 00:25:01.959
So the logic or the business process is what needs to be built.
149
00:25:02.140 --> 00:25:12.040
And, uh, if you want to still convert from your standard to the current process to the future process in your CLM system, it basically is not going to bring you anywhere."
150
00:25:12.400 --> 00:25:23.180
And, uh, I was giving him as an answer because he came back with a such a, a, a weird requirement which is not at all, uh, not at all attain- attainable by any system as such.
151
00:25:23.240 --> 00:25:32.800
So I told him, "Maybe what I'll do with the system is you start thinking about the system, and the contract gets created, the supplier comes and signs it, and everything gets done automatically.
152
00:25:32.880 --> 00:25:43.610
So you don't need to even, uh, join, get onto the internet, no- [laughs] not the laptop, no nothing." So that's how their mindset is. Right. Sometimes they just want Alexa to do everything. "Hey, Alexa." That's right.
153
00:25:43.610 --> 00:25:53.930
"Do a master agreement," and there you go. Oh. "Give me, give me all of these contracts from, from, from last quarter." [laughs] Absolutely. I don't think they're even looking at Alexa. They don't want to talk to Alexa.
154
00:25:54.010 --> 00:26:04.840
They just think and things happen, and that's how they [laughs] they pretty much are expecting technology to work. We haven't gotten there as yet, unfortunately. No, no. But I, we're, we're on our way.
155
00:26:05.080 --> 00:26:12.920
Who knows where we're gonna be- Yeah... in a couple of years. It's pretty crazy. I think the Alexa functionality- Uh, we could just-... is actually coming. Yeah. We could install this chip in their brain- Yeah...
156
00:26:12.960 --> 00:26:23.000
for contract management. And what that does is it goes and connects the dots and creates the contract. [laughs] I think there's a movie about that. [laughs] Yeah, for sure.
157
00:26:24.530 --> 00:26:39.200
[laughs] Hey, so Karthik, so if, if you could, you know, suggest maybe one way of, an ar- an organization could focus their attention on, on their contract management processes, what, what would be, like, the biggest tip or the biggest takeaway that you could give them today?
158
00:26:40.880 --> 00:26:48.780
So we s- we did speak about the playbook. Mm-hmm. That's a very good item to consider if you're having trouble with your contracts. Um,
159
00:26:50.520 --> 00:26:58.220
I see, uh, the, one of the biggest pain points, I know the process has also been covered, so I don't want to bring back the process. It's also a tighter thing.
160
00:26:59.120 --> 00:27:07.640
Uh, the biggest pain point is the data and maintaining your contracts. Uh, maintaining your contracts also ties back to the point we spoke in the beginning.
161
00:27:07.770 --> 00:27:15.240
You just sign it and put it in the cupboard and it's there for life. [laughs] Unless someone asks for it or there's, uh... You don't care for it, right?
162
00:27:15.500 --> 00:27:26.460
So that, the maintenance or the management of the contract data, uh, makes a lot of your life easy. And it ties back to the post that I told that got close to 10,000 views as well. Mm-hmm.
163
00:27:26.540 --> 00:27:38.420
So it, uh, I see that as the, the main improvement area. If you're a small company and you're a startup, you're about to, uh, grow, it's better to get that, inculcate that in your process.
164
00:27:38.460 --> 00:27:45.840
There are a lot of free tools as well in contracts. Or you could manage your database even online on OneDrive or wherever, but start doing it.
165
00:27:46.340 --> 00:27:54.400
If, if you should get that as a part of your company culture, you would not fall flat on your face later and, uh, uh, and work backwards, right?
166
00:27:54.820 --> 00:28:09.120
So the data administration, maintenance, and ensuring that you're following through on whatever the contract was signed for. And this goes for sales as well as, um, the procurement side of folks. Great.
167
00:28:09.280 --> 00:28:17.370
No, I, I think those are, those are some great takeaways there. And, um, definitely, you know, I, I don't wanna keep focusing on the, on the playbook th- thing, but I, I think- [laughs]...
168
00:28:17.370 --> 00:28:27.880
that that's, you know, definitely the biggest takeaway of, of, of today's episode, is really, you know, being able to, to understand that and implement that, I, I think is, is, again, a key takeaway, uh, for a lot of these organizations.
169
00:28:29.140 --> 00:28:41.370
Absolutely. And I, I tell you, uh, in my overall, uh, 17 year lifespan, I've, uh... I think I've migrated close to 40,000 contracts. Wow. Old contracts.
170
00:28:41.420 --> 00:28:50.000
So you can imagine the pain and torture that I've gone through, the scrapes and bruises that I've been through of, uh, collating the contracts from 22 different countries.
171
00:28:50.159 --> 00:29:00.100
And then they had it in their drawer, in their, uh, in their cabinet. They had it on email of an employee who left. They had it in a shared drive. They had it all places. [laughs] So...
172
00:29:00.540 --> 00:29:11.040
And they didn't know what the heck is happening. One country had paper ink signed contracts. One country had them online. Uh, they, they didn't track the expiration dates. Few people had an extension.
173
00:29:11.100 --> 00:29:12.840
So there's a lot of variations around that.
174
00:29:13.320 --> 00:29:24.669
And, uh, [laughs] I, I could for, for, I, for one, can, uh, have a nice methodology around how do you want to go about this procurement contracts that the 30,000, 35,000 contracts.
175
00:29:24.730 --> 00:29:34.419
And how do you want to bring them to a system, whether they make sense, are they active or not? Is it a PO against it or an invoice against it? Uh, is it non-compliant? So all those kind of stuff.
176
00:29:34.500 --> 00:29:45.840
So that's where w- I think it's very critical to have a very good, uh, contract database which is active and, uh, pushed or maintained. Yeah. Yeah, absolutely.
177
00:29:45.880 --> 00:29:48.880
I think that that's, that should be everybody's, you know, first step.
178
00:29:48.960 --> 00:29:59.780
After understanding your processes, let's get everything into that database and, and allow folks to have access to it so that they can track it, you can track it, and, and the whole company has a, a central location to go to.
179
00:29:59.860 --> 00:30:05.299
Um- That's right... well, Karthik, this has been a, uh, a great conversation. We really appreciate you coming on.
180
00:30:05.380 --> 00:30:14.470
And, uh, if folks want to connect with you or, or learn more about The Procurement Doctor, where's, where's the best place to do that? Oh, I'm very active on LinkedIn. Uh- Yeah...
181
00:30:14.500 --> 00:30:24.739
so you could, you could search by Procurement Doctor Karthik Rama. Uh, Twitter, uh, we have, uh, uh, Twitter, YouTube. I got a couple of videos on YouTube.
182
00:30:25.340 --> 00:30:38.130
Uh, these are the three places that, uh, I could be reached out at. And, uh, my... You could just type in my name and it's K-A-R-T-H-I-K, and then Rama, my last name. And I'll share you the links as well, uh, Mark.
183
00:30:38.160 --> 00:30:45.880
You could put it in the show notes or wherever you'd like to for my- Yeah... how we could reach out to me. Absolutely. Will do. All right, Karthik. Well, this has been a pleasure. Thanks for joining us.
184
00:30:47.220 --> 00:30:58.590
Thank you so much. It's been a, it's been fun talking to you both, and I was able to relieve some of my frustration as well, so thank you. [laughs] Thanks a lot, Karthik. Take care, guys. Thanks everybody. Bye.
185
00:30:58.620 --> 00:31:06.119
Thanks for listening to another episode of Contract Heroes. We hope to hear you or have you back here soon. Bye-bye.
