John Yuva (00:00:06):

Hello. Happy New Year and welcome to Ardent Partners monthly webinar series. Today's webinar, Vendor Management, The Good, The Bad, and The Ugly featuring Ardent's chief research officer and another industry expert. We have a ton of ground to cover, so let's dive in.

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My name is John Yuva, Ardent's director of research operations.

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Before we start, a few quick points.

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Everyone participating today will be getting a copy of the slides distributed by Ardent via an email sent out tomorrow.

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Our sponsor will also be hosting the webinar recording and it will be sending out a link once it is posted on site.

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Finally, if you have any technical questions, you can contact the go-to support staff or chat me directly.

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After a brief intro, our agenda jumps right into vendor management, followed by a short demo and review before the Q&A.

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Ardent Partners is a Boston-based research and advisory firm that is laser focused on supply management and the source to pay process including procurement, AP, P2P, and the contingent workforce.

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We advise clients and publish research that helps business decision makers understand industry best practices and how to improve performance.

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We also publish research that covers the technology landscape and helps professionals identify the best fit solution or solution for their specific budget and requirements. So one thing we're doing more and more is that we help companies with RFPs and solution selection.

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Are you looking to invest in technology in 2023? If so, Ardent Partners can help with our technology advisory report series and our analyst experts. Procurement teams can use these reports to identify and ultimately select the solution that best aligns with their specific requirements and budget.

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Contact us for more details or to speak with one of our analyst experts.

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We're celebrating our 10th year of this webinar series. The following are a few upcoming events including our event tomorrow titled The AP Metrics That Matter in 2023.

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We'd like to thank today's sponsor, Evisort. Evisort works with organizations of all sizes and industries. Here are a few of its amazing customers that it gets to collaborate with on a daily basis. In working with its customers, it is inspiring to see how they're using Evisort in different ways to innovate and transform their processes and businesses from compliance and vendor contracts to revenue recognition, reporting, and deal acceleration. There are many different ways businesses around the globe are using Evisort to create value and impact.

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Today's speakers are Andrew Bartolini and Lauren Guidas.

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Lauren joins us from Evisort where she serves as a senior strategic consultant helping prospects and customers revolutionize their contracting practices. She has over 12 years of experience working with leaders in procurement, finance, sales, and technology to improve the way we do business.

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For 23 years in the industry and 13 years leading the charge at Ardent Partners, Andrew is a globally recognized expert in sourcing, procurement, supply management, and accounts payable. As the chief research officer at Ardent Partners, Andrew oversees all research and client programs including the Annual State of the Market and Metrics that Matter ebook series, technology advisory reports, Ardent's monthly webinar series as well as its in-person and virtual CPO Rising Summit. Andrew is also the publisher of CPO Rising, the news and research site for chief procurement officers and other procurement leaders.

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Please check us out at www.cporising.com.

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Welcome, Andrew and Lauren.

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Andrew, the floor is yours.

Andrew Bartolini (00:03:51):

Hey, John.

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Thanks, everybody. The snow covering the United States at least anyway, it probably does feel like a new year, but we're a little bit into it and I really am excited to talk to you today about vendor management, vendor management this year and going forward. The good, the bad and the ugly.

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And it's an important topic and I'm glad that you're joining us today because you understand that in the age of globalization and innovation, supplier performance continues to have a more direct and immediate impact on your own company's revenues and on your customer's satisfaction levels.

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So finding and engaging the highest value vendors and managing their performance in 2023 is table stakes but doing it well can be a strategic business differentiator. And that's what we're really here to focus on.

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How can you get the most from your vendor relationships? How can you get the most from them leveraging technology? Utilizing... With the resource constraints that you have. What are some of the best practices?

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And so let's just dive in.

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So start, what is it that we're talking about today? Right?

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So we say vendor management for this presentation. Oftentimes, we will use the term supply management. And from Ardent Partners' perspective, what are we talking about?

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We're talking about the methods, the strategies, the technologies and the overall activities that support the sourcing, procurement and management of all third party goods and services. We are going to use it interchangeably sourced to settle process, spend management, supply management, vendor management.

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In the context of today's discussion, we're going more specifically at actually managing the supplier. And so there's the umbrella term like procurement and then there's the process itself.

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And so why we're talking about it? Why it's important? Right? Is that when you do... So Ardent Partners, we've been doing market research for the past 14 years and what we have seen is that procurement organizations are no longer really aggressively trying to put every dollar of spend under their management. Or I should say that most procurement organizations are no longer doing that.

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What they are instead trying to do is manage the spend that they do influence and control better. And vendor management is a primary lever to do that.

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And so when we asked the question just a couple years ago, what we see is it's a big area of interest, it's a big area of investment and that's because it's still an emerging area.

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This is a data point that's emblematic of the market. It's coming up on two years old, but these numbers haven't changed or shifted dramatically.

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And what we see here is that as is the case when looking at the larger procurement industry, some are doing it well, some are doing it, and then a lot of people really aren't doing it. And that's I think very indicative of why all of you are here today.

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This is a huge area of opportunity to drive value without significant investment of additional resources. Every new dollar spend that you put under your management of your team requires additional resources. So this is really flipping it around and saying, "We're already managing it, how can we manage it better?"

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Why is it more important? Suppliers are more important today to your operations, to a buying organization, to their performance, to their operations than at any other time.

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I'm not going to go through all of these major business trends but all of them are pointing in the direction that your supplier relationships and how you're doing vendor management is more important.

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Globalization. Your vendors are no longer down the street.

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Technology allows you to communicate better, reduce friction in transactions, become better collaborators, manage performance, manage risk better. Communication.

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In the bigger picture, with globalization, the world has gotten increasingly competitive and the trend towards deep specialization is really driving innovation and it's driving innovation in all supply markets, not all at the same pace but it is happening. And so who your suppliers are and the innovations that they're bringing back into your own products and services is more important than ever before.

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If you've heard us do presentations over the years, I probably utilize a slide like this or that. Joy's laws I call it. Probably at least once a year on these webinars.

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What Bill Joy said in 2001 still holds true today. If your company has not cornered the market on innovation in its industry and of course no company has done that, innovation opportunities exist in the supply base. Untapped value exists in the supply base.

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So this presentation is about going out, finding, and really maximizing that value, not optimizing, but actually maximizing.

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CPOs... So I guess we still talk about the pandemic and the lingering impact in any number of ways. What it did for the CPOs in more recent times is it shifted the focus from internal operations and improving those to external operations.

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As someone who has written literally millions of words about the supply chain over the past 20 years, the expanded coverage about the supply chain and the explanations about what a supply chain actually is. Unfortunately, highlighted by all of the problems, challenges, and disruptions has helped put a larger spotlight on the work that people in procurement are doing and the importance of vendor management.

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Major shifts in the CPO's agenda during the pandemic.

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I start at the top here. Managing and mitigating supply risk was something that was not a top five priority for CPOs even in 2021. We expect that trend to continue this year. We do.

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I should mention I have a survey that has gone out. You may have gotten an email from us today. If you did, I'd appreciate and would love if you could take 15 minutes to complete that survey. Thank you.

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Identifying cost savings, market disruptions, high inflation, cost of capital increasing, threat of recession. When these things all get onto the CFO and executive radar, procurement becomes much more important because they're looking for you to defend the bottom line.

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How do you defend the bottom line?

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It's knowing and understanding your supply markets, knowing and understanding your vendors and managing their performance and getting to where you need to.

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So what are the main elements of vendor management?

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I put this framework together in the context of today's presentation. It's information and onboarding, it's compliance, it's performance, and it's risk and it's the management of all of those factors. So what I'm going to do now is walk you through each of those areas.

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And so let's start with information and onboarding, right?

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It's going to give you some market research and again, everybody's going to get a copy of these slides. You're going to get an email link tomorrow. I see a couple questions come in asking that. Don't worry. You don't have to take frantic notes, but let's start here.

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So vendor management. Information and onboarding. This is the management of your vendor information and this is getting them onto the systems that enable you to transact. This is getting them involved in your sourcing initiatives. This is certainly getting them involved in utilizing contracting platforms.

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And when we're talking about the 43% here, what we're talking about is the suppliers that are enabled on platforms that enable transactions to occur. This is the submission of purchase orders. This is the P2P process essentially. And this number continues to rise.

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But as an organization, if you have gone through a digital transformation in recent times or are about to go through a digital transformation in the near future, this is a very important metric because this is a leading indicator of your overall digital transformation.

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You can drive significant sourcing activity but if your suppliers aren't participating in those events, the yield is going to be significantly less than otherwise.

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If you don't have your strategic suppliers on there, you're losing inefficiencies, you're losing visibility, you're losing a lot of elements that are crucial to the vendor relationship.

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And on the P2P side, the ROI on your investment in procurement technologies, this is a very strong component. How many of your suppliers are on the platform?

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Including data here. So when we talk about supplier information, there's a lot of different things that are composed. It's the remittance information, it's the understanding of their category coverage. It's understanding who you need to contact if and when issues arise.

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Voluminous. There may be other certifications that are required. But like the example here, for diversity spent, if this has become an important initiative for many organizations often folded into a larger ESG initiative, if you don't have a way to start capturing this information, if you don't have a way to start tracking this information becomes very problematic to start to report out. And when organizations start to put pressure on you for this supplier information, it becomes a real problem if you don't have it.

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So in the context of what we're talking about, the good, the bad, and the ugly, it's enabling your suppliers, it's getting their information, it's having them manage the information and finding ways to validate it.

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When it comes to contracts, let's look at the baseline value proposition for process automation. What we've seen in our research is that the ability to standardize and scale contracting processes has a direct impact on efficiency. It has a direct impact on budgets and it has a direct impact on the ability to manage a much more streamlined process.

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Our research shows that after the deployment of a contract management solution, procurement or the contract team can collapse the average contract execution cycle time by at least a third on average.

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Now this means that fewer resources can carry your greater workload. This allows you to focus more of your resources on the performance management, on the risk management.

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These solutions can also pay an efficiency dividend to suppliers as well because it's a nice win-win.

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And it's not something we often think about in the supplier relationships. So many of the supply disruptions that were covered, that were experienced by, I'm sure many of you listening in, the cause behind them, capacity constraints. If you are not your strategic supplier's favorite customer, that's a red flag, that's a problem.

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And so if you are having problems in getting through the process of something you've already agreed upon, that's a problem. And the impact of contract solutions can play a big role in that regard.

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So best in class supplier information management, the good. So centralize and standardize the collection and management of all key vendor information, improved supplier or vendor communication so that collaboration can be initiated.

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Don't debate enablement. Again, your investment in the source to pay or what we would call the source to settle process, the investment of your time, the investment of your resources, your digital transformations. A key factor in your ROI in all of this energy and focus and investment is whether or not your vendors are participating on the platforms you've invested in. Don't leave this subject to debate with particularly new vendors. Make a supplier's ability to be onboarded and enabled part of the overall sourcing decision.

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And then finally, integrate third party information sources, not just what the supplier has, not just what you have.

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So section two, vendor management compliance.

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Let's start with still a fact, a data point that's pretty chilling.

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Our research on contract compliance has shown that every non-compliant dollar spend costs enterprise an extra 12 to 18%. I'm going to come back to that in a second.

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The contract compliance and compliance related metrics, our tracking is a strong either second or third most utilized CPO metric. You have impact on cash, you have savings in the various ways that savings is measured, and then you really look at contract compliance and these related metrics.

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If your team is going to spend the time driving a multi X dollar cross functional strategic sourcing project that has X number of vendors participating, that has X number of stakeholders that ultimately identifies savings that time of contract award that's significant. If you've gone through all of that work, you have to carry it through. These contract compliance numbers are disappointing in how low they remain.

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Sixty-one percent represents the amount of spend that is contract compliant for the average procurement organization in 2022. There's a real cost.

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And that cost, as I said... This is a stat. We don't spend enough time talking about this stat. We talk a lot about the impact of bringing a new dollar of spend under management.

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But how about after you're managing it, right? Rogue spend, maverick spend, whatever terminology you want. And in a post pandemic world with a distributed workforce that is given greater freedom and responsibility which are all fantastic things, by the way, can be problematic if they don't know who your strategic suppliers are, if they don't know that specific contracts exist and if they don't know how and in what way they can order against those existing contracts. That maverick dollar of spend costs you an extra 12 and 18 cents.

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If you are a procurement organization that is looking to justify an investment in contracts, looking for an investment to justify in strategic sourcing or the full source to pay, this is one of those key elements.

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Explain to your CFO that when they are feeling pressure for the commitment they made to Wall Street or whatever [inaudible 00:19:45] your company is on or to shareholders or to investors or to owners, whatever the structure of your organization is, maverick spend puts a lot of pressure on that CFO commitment. So engage them on this. Now is the time.

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Tracking ESG. ESG is something that is not going away. It is rising and increasing. It may hit some speed bumps along the way, but customers are no longer the loan stakeholder promoting environmental sustainable and governance initiatives. During the pandemic, employees and investors began gravitating to businesses with stellar ESG credentials.

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And let me be clear, I'm not making a case that on the relative merits of this. I'm telling you that it's happening in the market. I'm telling you that our research shows that this is becoming more important to more organizations globally and within the United States and there's no indication that that is going to change and shift the other way.

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It may slow down. I'd look at many of the other initiatives that procurement has undertaken. It takes a while for things to pervade the full market.

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But my point here is that one of our big predictions for the year is that ESG initiatives, despite pressure on budgets, despite pressure on resources, that these initiatives are going to maintain momentum through the year. And in the context of compliance, what your suppliers are doing in these areas are going to become increasingly important.

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Do you have specific SLAs structured into your contracts? Are you able to understand what those are? Are you able to roll those up across a supply base in a specific region, in a specific category, or area of spend?

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All of the different ways that you may want to look at this becomes important and not having tools that can track and measure compliance and that can report out and flag when you're not, it becomes a problem.

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The good here, best in class compliance, automate it. If you're going to invest the time to find the value, make sure you capture it. I'm going to show that in a second. Automate it.

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Communicate it. You've got these contracts, you have these strategic suppliers. If you don't use them, it's costing you.

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Track it, enforce it. You don't have to be the bad guy here. Finance can play a significant role in this. You've done the work now let's realize the value of it.

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Vendor performance. Vendor management on the performance side. This is a great one. This is an area that still is I think well below where procurement organizations should be. If compliance is at 60%, really progressive successful supplier performance management, vendor performance management is less than that. I don't know that there's a way to fully quantify it.

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What we do know is that vendor management is important. But it's not just me saying that, it's not just Ardent saying that. This is recent research. This is our survey data. This is hundreds of procurement organizations saying that what our suppliers do is more important to operations.

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And I think at the top right, I've been saying it now, it's that direct and immediate impact on the business, what suppliers do or don't do and how they do it.

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The second part of it here clearly is that half of procurement organizations, half of CPOs think that supplier performance has improved because of the work done by procurement. If there's value in the spend, there's value in managing it better.

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Now this is something I actually put together, not the data point. The data point's more recent, but the concept of savings leakage in this chart is something about I put together maybe more than 15 or 16 years ago.

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When I first became an analyst, I spent a large amount of my time focused on helping procurement teams and CPOs better establish credibility for themselves.

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And so one of the big problems at the time and for those of you that have been working in the space a little bit longer, you'd recall that you procurement didn't have credibility around its performance because the savings metrics that it was communicating to the larger organization and that it was claiming as having delivered was the savings that were negotiated at the beginning, at the point of contract award. And the reality is there's some erosion that happens.

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Sometimes, that's because procurement doesn't keep its eye on the ball and the suppliers trade out the terms and change the pricing. Sometimes, it happens because there aren't contracts that capture what was negotiated properly. Sometimes, it's the organization not understanding that these contracts exist. Other times, not as much what's bought against the contract as was anticipated. There's a lot of different factors here.

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But the relationship that you have with the supplier and how you move from identifying your highest value supplier to actually buying against their contract, there's a lot of opportunity for missed value.

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And so again, the concept here to reduce the savings leakage, to increase your contract compliance, it doesn't require you to bring in a huge team of outside consultants. It really just requires you to take a little bit more focus on what it is that you've actually done getting visibility into the process. It's getting some automation which provides that visibility into the process. And it's making sure that the organization is aware of these relationships.

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Now using contracts to manage vendor performance. And so this is not necessarily a novel idea, but it is not something that I think organizations are thinking about. I think that when you think about contract management and vendor performance management, there's a real opportunity here. And what do I mean by that?

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I mean that really almost every procurement department can improve inventor performance. I think that that's pretty clear but that there are newer more advanced contract management solutions that can help procurement teams advance quickly.

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Traditional supplier performance management utilizes surveys and scorecards which it sends out to stakeholders. And the reality is that this can give procurement a sense of how well the supplier's performing and how the stakeholders feel about the supplier.

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But what's often missed is the more quantified analysis of how the supplier performs against the details of their contractual obligations.

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Stakeholders aren't doing a full review of supplier of a supplier contract before filling out each survey. So their expectations of what a supplier should be doing and what the contracted terms are can be a pretty wide variance. Oftentimes, it's like, "Oh, the person who's representing the vendor onsite is a great person. I'm going to give that person good marks."

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Contracts over the years... As organizations, as your suppliers, and that's what I mean by organizations are competing across a much broader range of value points.

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Contracts is the billing model, the contract model, their revenue model, their delivery model. All of those things are changing and shifting. And this has resulted in contracts becoming more complex. They've got different service levels which may be added in or taken out and stakeholders may not really have view into the full and final negotiation.

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So again, there's a big gap here that often exists between the stakeholders who are completing the vendor performance surveys and the reality of how the vendor actually did. So huge opportunity here.

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And I'm talking about beyond price compliance which contracts can play an essential role for. But what we're really talking about is significantly more. You can go significantly deeper than that.

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Best in class vendor performance management. What's the good?

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First, it's collaboration with the supplier. Understanding going into this relationship what you're trying to accomplish and then setting and establishing unambiguous metrics that allow for you to track that performance. It's measure and manage, it's communicate and improves.

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So that brings us to, in the vendor management realm, the piece that's captured all the headlines. The first three pieces are equally important because what they do, if you've done those first three pieces well, you have set the table for your risk management to be a lot easier, for this meal to be a lot more enjoyable by setting it up in place.

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And so this is the surprising state of supply risk. And so we'll have some slightly newer data points for you in about two months' time. I can tell you that while this reflects last year, there's no huge dramatic shifts in the space as it relates to programs, initiatives, and investment.

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And so we've talked about... I've spent a lot of time talking about the good and I think that that's really by design. This is one of those slides that just aligns very well with the good, the bad, and the ugly.

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The good is we are doing this, we're focusing resources on it, and we're continuing to improve in how we do it.

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The bad is poor execution but we're thinking about it, we're starting to do it.

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The ugly is when you ignore it. And with supply risk, there's really just this huge and massive blind spot as to... For many organizations...

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Even today, I talked about the millions of words I have written about supply management and I don't mean that in a congratulatory way because my point was that for decades nobody was focused on the space till we hit 2020. Now the coverage is expansive and deep and fantastic. It has shown the good, the bad, and the ugly of supply chains and the problems that can occur.

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But for an organization in 2023 to have no plan around supply risk is a huge, huge, huge red flag. As an example... So even for those organizations that have programs in place, understanding the risks, tracking it, and measuring it is not an easy feat.

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Sharing with you data that we captured for the first time in the last year's survey, just to give you a sense of relative to your supply base. The first question is if you can use these metrics and use them in context because you understand the breakdown of your own suppliers and the risk profile of your supply base, you are far ahead with the vast majority of organizations today.

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If you are more in the realm of, "Well, we know where some of the hot button risks are, but we don't have a full view," it's time to start focusing in on that a little bit more closely.

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Even if you were an organization that didn't experience significant disruptions during the pandemic, there's an element of luck that can drive organizations forward and ahead for many, many years. Confusing luck with good process.

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I think the point here is that we have a lot of procurement organizations that are driving blind. And again, all of this is in the context. It's not the risks and the threats, it's not an equal proposition for everybody listening in today. Different supply chains, global in nature, more complex. What are those goods and services that are moving across that supply chain? So there's a relative context to it. But if you're driving blind, there's problems that are certainly ahead.

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And again, why we're doing this presentation today is because vendor management is more important today than it's ever been. It's not going to get less important tomorrow. That's what I'm telling you.

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Gaining visibility into and control over supplier and third party risk can be challenging even for sophisticated enterprises with dedicated risk management teams. There are some best in class organizations that had all these tools in place and they still had disruptions and problems.

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Having a supplier risk management component to your larger vendor management program doesn't mean that you are reducing and eliminating risk. No, there's a lot of times where you do want to take on risk, but you want to do so knowingly. You want to mitigate it and as important, you want when risk events occur to have a plan and a process to move swiftly through it.

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So again, another area... Oh. Sorry about that.

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Another area where contracts can come into play.

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There's so many forms of risk residing across global supply chains and with today's supply chains extending well beyond first tier suppliers to third parties. And then some case...

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If you think about the garment industry, just think about the path all the way back of who's in those supply chains. There's a lot of risk there.

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Gaining visibility into suppliers' third parties and associated risks is paramount.

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Again, I want you to think bigger picture here. So if you're an organization greenfield opportunity, you've just come in, there has never been a procurement organization, you got to get your hands around the spend. You have to understand operationally what it is that you're managing. But risk is a really important part of that is the point.

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If and when procurement teams proactively manage risk and what we've seen here is that a majority don't, they tend to focus on financial risk. But that's not enough as we've seen over the past couple of years. There have been a lot of problems that had nothing to do with the liquidity of global suppliers located halfway around the world.

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So you need to look beyond the traditional financial and operational risks that business leaders are managing and really look at the new set of risks that increasingly fall to procurement and supply management teams to manage, mitigate, and avoid conflict, environmental disasters, infectious diseases as we've seen, human trafficking, modern slavery. Things now that if you put the ESG umbrella, the risks of not meeting commitments that you've made to the SEC that you've made to the market, that you've made to customers.

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Geopolitical risks. We're dealing in a world now that is much less stable than it was five or six years ago even. Any enterprise use digital or physical supply chain originates in and extends through a troubled country or a region is put at risk by what happens in the rest of the world.

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And so it's not 40 years ago when your key suppliers were located down the street and your kids went to the same school, this is a very different economic and business world. And the challenges of managing the complexity, of managing global suppliers, of gaining visibility into it has been increased by a factor exponentially. Let's just say exponentially.

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And so, Lauren, I'm going to bring you into the conversation here because you've done a lot of work at Evisort with contracts. And as you and your organization think about supply risk, why don't you offer your perspective here on the use of contracts?

Lauren Guidas (00:36:54):

Yeah, absolutely.

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Hi, everybody. Thanks for having me.

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So risk is a conversation that we have all day, day in and out here at Evisort because it's obviously top of mind for most people. Like you said, Andrew, given the current state of the world, it's just something that needs to be brought into the conversation about all contracting but particularly about vendor management and vendor contracts as well.

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So the way that we think about it is in terms of the data in your contracts that you have today and how you can apply that to all your contracts going forward. And the biggest way to do that is by knowing what's in your current contracts. You can make informed decisions about the way that you're structuring your contracts going forward. So we think about risk centered on the data point within all of those agreements.

Andrew Bartolini (00:37:44):

Yeah. No, that's great.

(00:37:44):

And so now Lauren works at Evisort and she works with organizations of all sizes and industries and so we're going to pass the controls over to her and she's going to get to show you a little bit more specific detail what she's talking about when we're talking about contract management and what Evisort.

(00:38:02):

So Lauren, I'm passing that over to you. The floor is yours.

Lauren Guidas (00:38:06):

Right. All right.

(00:38:10):

Can you see my screen? Andrew, can you verify that we're on a dashboard here?

Andrew Bartolini (00:38:14):

We are good. We are right there on the documents.

Lauren Guidas (00:38:17):

Excellent. All right.

(00:38:18):

So what I'm going to do now is run us through a demonstration of Evisort's platform centering on that data piece that I was talking about and more specifically centering around how Evisort can help with your vendor agreements and just managing all things dealing with your vendors across your entire organization.

(00:38:40):

So this Evisort platform, we think of it in three main parts that come together to create a full end-to-end contracting solution. The first part of that platform is going to be a centralized repository so we can become that centralized hub for all of your agreements wherever they live today that we can plug into those systems and bring them into Evisort so that we have one centralized location and single source of truth for your current existing contracts.

(00:39:13):

And the second piece of the platform is going to be our data analytics. So this is that data piece I was talking about, how can we understand what's in our current contracts. So I'll go through how we use AI to extract information from our contracts that we can then use to inform the way we build our future contracts.

(00:39:33):

And then the third piece is going to be contract lifecycle management tools. So our ability to exist in that pre signature space. How can we request new contracts? How can we make sure they're negotiated and reviewed in a timely and easily managed way? Once those contracts are finalized after a negotiation phase and a review phase, they can get ingested into the repository to complete that full circle.

(00:40:01):

So what I'm looking at here is one of our customizable dashboard. So we're going to start here today.

(00:40:09):

As I mentioned, we have the ability to become that single source of truth, that centralized repository for all the contracts in your current organization. And from there, we can build these custom dashboards based on the data within all of those agreements.

(00:40:25):

So every time you bring a contract into Evisort, we are going to apply 70 AI models to those contracts to extract some of the data points you see here.

(00:40:38):

So you can see I have a handful of different widgets on my dashboard here. And for those in the vendor management space, things like understanding who your counterparties are, what kind of termination for conveniences notices we have, what payment terms have we agreed to, these are going to be the data points that my vendor folks are going to care about.

(00:40:57):

But maybe we also want to see things like our contracting type. We can build our dashboards around the data points that the AI is extracting to whatever is going to make our job the easiest, what data do we care about in our individual role.

(00:41:13):

Knowing things like counterparties are going to be great for vendor consolidation. Maybe we have multiple different agreements with a single vendor and we want to start to streamline that and bring them in together under the same contract.

(00:41:28):

Termination for convenience is going to be important because it shows you which vendors you might have some negotiation powers with.

(00:41:35):

Payment terms. Is there somewhere we can delay payments for a couple weeks to free up some capital?

(00:41:40):

So all of these data points from a vendor perspective are going to be really helpful for me to know.

(00:41:45):

Every role in my organization can create their own dashboards. We can filter down just by specific contract [inaudible 00:42:00]-

Andrew Bartolini (00:43:30):

Hey, Lauren, we're having a hard time hearing you.

(00:43:38):

Lauren, can you hear me?

(00:43:45):

Hi, all. Lauren's experiencing some technical difficulties. We'll hopefully ... Lauren, continue to keep trying. Your audio-

Lauren Guidas (00:43:54):

... gives you an idea of some of the power of what these tools can do for you.

(00:43:59):

I touch this or it can act as a-

Andrew Bartolini (00:44:01):

No.

Lauren Guidas (00:44:03):

Yeah?

Andrew Bartolini (00:44:04):

Yeah. Hey, Lauren, we were saying that we're having some hard times hearing you. I don't know if it makes sense to switch to the dial in or... Can you hear me?

(00:44:23):

Lauren, can you hear me?

(00:44:26):

Okay. So I think Lauren's dialing in. So while we're waiting, so going to come back at the end and really talk about the vendor management framework and we'll show you the slide in a minute.

(00:44:37):

But it's really how do you ensure compliance while managing the lifecycle, while managing performance and managing risk. I do note and I'll take a question here. We'll wait.

(00:44:48):

Lauren, as soon as you're on-

Lauren Guidas (00:44:50):

Yeah, can you hear me?

Andrew Bartolini (00:44:51):

Yes, we can hear you now.

Lauren Guidas (00:44:52):

Okay. So sorry about that. I dialed in on my phone, so hopefully I should have no more interruptions.

Andrew Bartolini (00:44:58):

Great.

Lauren Guidas (00:45:01):

Did you want me to continue or do you have a question [inaudible 00:45:04]?

Andrew Bartolini (00:45:03):

No, please, please. Yeah, please continue on.

Lauren Guidas (00:45:06):

All right. I apologize for that, everybody. I'm not sure what happened there but hopefully, we are all set from here on out.

(00:45:11):

So what I was saying was Evisort provides the ability to create a centralized repository by allowing you to plug any of your existing repository systems into Evisort.

(00:45:25):

Now the key here is we're not trying to replace anything that you might currently be using today. We just allow you to sync your Evisort system to those existing repositories. So maybe some of your folks work in Google Drive, others are working in SharePoint, maybe you have some folks that are just storing things on their computer. Everything, you can keep using those systems today, but Evisort will essentially act as that centralized hub for each and every one.

(00:45:53):

So now let's go ahead and look at what it looks like to upload a contract into Evisort and get some of that data extracted. So here I am in my document repository. You'll see I have a robust folder structure. We can mirror any folder structure that you're currently using today or you can create a new one in Evisort. We also allow for access controls. You'll see some of these folders have locks on them so you can control who gets to see which document. But let's go ahead and upload a new document. Have services agreement here.

(00:46:29):

And in my update log, I can see that agreement is already uploaded. I have a green check mark that says it's ready to go. So let's go ahead and view it.

(00:46:37):

So as I mentioned before, we have around 70 different AI models that are extracting different pieces of data in each contract that you bring in. On this overview tab, you'll see I have some data about the agreement I just uploaded automatically available to me. I can see things like what kind of agreement is, what governing law we might have agreed to here, key dates, expirations, renewal dates, maybe some breach notice information, early payment discount. I can see that I can save some money by paying early and liability information. These are all going to be some of the data points that we capture.

(00:47:13):

Going a step further into our contents tab, I'm actually able to see a text rendition of the contract that is searchable so I can start running searches within the text of the contract. But more importantly, this contract summary is showing me all of the clauses that our AI models are extracting.

(00:47:31):

So this is part of those 70 out the box clauses that I mentioned. So things like force majeure, I know that's top of mind for everybody over the last few years.

(00:47:40):

I can see that the system identified a force majeure clause and in order to review it, all I have to do is click view and it takes me to that language in the contract so I can see what it is we actually agreed to when it comes to force majeure.

(00:47:55):

Now if you look closely, you'll notice that the term force majeure is actually not mentioned in this language that it highlighted and that's because our AI models are looking for more than just text. It's also looking for things like the context around the clause and the intent behind the language to determine force majeure.

(00:48:16):

Now the out of the box clauses are going to be available for all of your contracts that you bring into Evisort but we also give you the ability to create your own.

(00:48:28):

So if there's a clause or a term that you want the system to start extracting, I have, let's see, a press release clause here. If I want to start tracking all the press release language that is mentioned in my contracts but it's not part of the box clauses, I can just highlight it, tag a clause, and create a new one.

(00:48:52):

By applying this sample to every contract in my account, I am now training a new AI model with just a couple clicks to start extracting press release language from every contract that's brought in. So you're going to have the ability to act as a data scientist in this way and actually start training your own AI models with just a sample from one of your existing contracts.

(00:49:16):

The system is designed to work for you from day one once you start bringing contracts into Evisort. But as you use it, as you train new models and add more samples to your models over time, it's going to become more tailored to work with you and help identify some of that language that you're going to need to review to help prevent risks and make sure all of your contracts are up to date.

(00:49:42):

Now, all of that data is great on a singular contract level but the advanced searching tools are going to make it even more powerful for you. So let's go ahead and look at that now.

(00:49:54):

So let's say we are on the procurement team and we are tasked with freeing up some more cash in our budget. And so we want to start looking for places that we can do that.

(00:50:07):

I'm going to come to my search tool and I'm going to start looking for contracts that have a termination for convenience clause. What I can do I search based on that clause type, click on them here, and it's going to give me a list of all of the contracts that have some type of termination for convenience language.

(00:50:29):

I can do a couple things here. I can add more filters to this to drill down even further. I can click into one of these and actually take a look at the termination for convenience language that is included here. I can scroll through each one, so it's going to show me all the different clauses that I've agreed to in past agreements, knowing this information's going to be really helpful for this type of review as well as informing future contracts.

(00:50:55):

And then I can do some post signature execution. So I can do things like export this list to Excel. I can get an Excel of all 4415 of these contracts, share it with somebody that can then start taking some review on them.

(00:51:12):

I can also bulk assign new data fields to these contracts so I can highlight those and then give it a reviewer. So I'll assign these to myself. I'm now labeling myself as the assigned reviewer in bulk. So I have all of those contracts now assigned to me to review.

(00:51:34):

I can now set up an alert that sends me an email once a day or once a week, however often I want it, showing me all the contracts that have been assigned to me to review.

(00:51:45):

So it's actually helping those on my procurement team understand what contracts are assigned to them. They can take some kind of action on them. In the case of our termination for convenience, we can start freeing up some of that capital that is in contracts we no longer need and it will overall help me save some money for my organization.

(00:52:10):

All right. So the last thing I want to cover today is our post signature or CLM component which is our workflow tools.

(00:52:18):

So for any contracts that we need to request or negotiate before it becomes part of the rest of the system, we can use our ticketing tool for that.

(00:52:29):

So as a contract requester, I can come into the workflow tool and click new ticket. I'm working with a new vendor today, so I'm go ahead and click the vendor services agreement and it's going to take me to an intake form.

(00:52:44):

This is going to ask for information about the transaction. So am I generating off our own paper or are we using third party paper? Evisort supports both. So however you're doing it today, it's totally fine.

(00:52:56):

Vendor entity, we're going to be ABC Consulting.

(00:53:04):

And as I'm filling this out, the information that I'm providing here is doing a couple things.

(00:53:09):

Number one, it's feeding data to my template. So adding things like names and addresses, any information that needs to live in the contract, the information on this page is going to feed to it. But it's also going to do things that will determine who receives the contract for the review stage.

(00:53:28):

So for example, if this contract is worth over a hundred thousand dollars, just as an example, maybe I need to add a finance reviewer to the project. So automatically, by creating a field that fits that threshold, a finance reviewer will be included in my workflow downstream.

(00:53:48):

And that's true of any of these data points. They can all be used to dynamically affect where the contract goes once it's created.

(00:53:58):

Let's fill a few more out here just to give you an idea of all the different types of data that we can work with. And we're going to create the ticket.

(00:54:10):

Once that contract is created, anyone who is involved in that workflow that were added during the intake form phase will be notified via email. They will receive a link to that contract.

(00:54:25):

As the contract administrator, I'm going to be able to see what each stage of the review process. So right now, it's in my legal review. I can see who's got it, who's working on it. I have robust audit trail following these documents as it goes through its negotiation. Each person that receives the email to work on the document will be able to open it up within Evisort. Start their review process from here. There we go.

(00:54:57):

And we have our own internal editing tools. You never have to download or leave the platform to actually make any changes. You can just work directly off the document right in the Evisort platform.

(00:55:10):

Once my version is finalized, I can go ahead and save it and it'll move it along in its workflow.

(00:55:17):

I also have the ability to add other reviewers to the process as needed so I can tag someone else in my organization and add them to the workflow as well. So more of an ad hoc status.

(00:55:31):

Once everybody in the workflow has approved their step and finalizes the document, we can integrate with e-signature tools or use what signature to finalize the agreement and feed it back to the document repository. So it really completes the whole life cycle there.

(00:55:49):

So using a system like this is going to make sure that your templates are up-to-date. There's no outdated language so you're not exposing yourself to risk from old templates, people using things that they shouldn't be. You're really in control of the contract template and then the workflow is also something that you're going to be able to control throughout the negotiation and review phase here.

(00:56:13):

All right. I know we're coming up at the end of time and we have some questions so I'm going to go ahead and stop there. I hope that was helpful. I apologize again for the interruption. But, Andrew, I'll pass it back to you.

Andrew Bartolini (00:56:23):

Great, great. Thanks, Lauren.

Lauren Guidas (00:56:25):

Andrew, I think you're on mute. Oh, there we go.

Andrew Bartolini (00:56:44):

Hopefully, the system's going to let me talk right.

(00:56:45):

So great demonstration there, Lauren. I think they got the general gist even with some of the audio challenges.

(00:56:51):

So where do we go from here? Right? Vendor management summary. Why don't you put together just two conceptual slides that give the perspective of how to think about this right there?

(00:57:04):

I think it's helpful or what we've tried to do today is to present the key areas that in turn become the framework from which you can start to tackle your vendor management program. And what are the elements that are of value? Is it technology? Does it provide intelligence and flexibility?

(00:57:23):

The goal is proactive decision making. The goal is reduced friction. The goal is tighter collaboration and greater communication and improved compliance, better performance, and lower risk.

(00:57:36):

And when we think about a way that things have evolved over time, the legacy view of vendors, what allows this more than anything else to occur, all the things I just mentioned there, all the other things is the traditional view was that your vendors are companies that provide goods and services and that the interactions are zero-sum and that your leverage is the key to value. And that contracts and SLAs are the primary tools.

(00:58:07):

The new view. Suppliers are a source of knowledge, expertise, and assets that can be leveraged to gain competitive advantage. In a world of competing supply chains, your success is tied to that of your suppliers. Collaboration with suppliers is key to value. It's not managing the details, it's managing the relationship and that above all else.

(00:58:33):

And Lauren, yes, that is correct. We do have a couple of questions. We'll take a couple of those quickly. Let me just pull open a few that came in. I think first is one that I'll just take.

(00:58:48):

The question is really about what data is the cost of maverick spend based on?

(00:58:53):

So this was a detailed survey. It was probably close to... Well, we've asked this question a couple of times over the years, but we have asked procurement organizations to evaluate the cost of maverick spend on their own bottom line and that's where we got the 12 to 18% ranges. That 12 to 18% is essentially the bell curve.

(00:59:12):

Other question... That question was from Rich. This question is from Jenny or Jennifer rather. I guess the question to start is and maybe we'll go to you Lauren first, what factors do you consider when it comes to finding the best solutions for moving toward centralized compliance focused procurement?

Lauren Guidas (00:59:34):

Yeah, that's a great question.

(00:59:36):

I'd say the two biggest things are going to be number one, visibility. What tools are going to let you know what is happening across the board? You need insight into what those negotiations are or where your legacy contracts have come from. And so being able to understand what's really in your contract is going to be hugely important for both pre sig and post signature.

(01:00:00):

And then the second thing I would say is automation. We're moving more and more towards an automated world, towards an AI focused world. Finding a solution that's going to allow for some automation practices across your vendor management, take some work off your plate, free up some time for you, that's going to be the tool that's going to be able to grow with you as you embrace new technology and expand.

(01:00:25):

Andrew, do you have anything to add to that?

Andrew Bartolini (01:00:27):

Yeah, no, I think that's generally right.

(01:00:29):

When you think about centralized and compliance focused, you need visibility into your spend. You have to know who your suppliers are and then you can start to figure out where the opportunities of value exist within that information. And then where you apply the resources. Is it sourcing? Is it more on the operational procurement side? Is it on the compliance side?

(01:00:52):

So that was a great question, Jenny.

(01:00:55):

Question here from David, but David has two questions. We'll go to the first one. Maybe start again with you, Lauren. Where do you see AI fitting into improving supplier relationships and reducing risk?

Lauren Guidas (01:01:08):

Yeah, that's a great question.

(01:01:10):

So I would say, again, AI can exist or can be applied to your existing contract to help you pull out all of the information that is currently being reviewed manually so ensuring that you're not missing any key risk components. So any outdated language, making sure your obligations are up-to-date. And if you're doing things manually, you're going to have a harder time finding everything and making sure that nothing is falling through the cracks. So AI's going to give you that ability to automatically extract that data and make it easy to find.

(01:01:49):

From a pre signature perspective, knowing what you have already agreed to is going to help inform the way that you build your contracts going forward. So ensuring that you're only agreeing to things that are up-to-date, making sure that nothing is being missed that needs to be in those contracts is going to be able to help you do that. So just a smarter approach to the way that you're handling your vendor agreement.

Andrew Bartolini (01:02:19):

Yeah, right. Right.

(01:02:21):

So AI works best when you've got good clean data. It's something that's going to evolve and really going to...

(01:02:28):

People are talking about AI. We think that this is the first year where they're going to see some breakthroughs but over the longer term as it relates to supply risk and managing relationships, the predictive element of pulling in third party data, transactional data, supplier data, your own data and being able to make better sense about something that is about to occur from a risk standpoint I think is huge.

(01:02:52):

And so we've got time for one more question here from Mike. And speaking about supply risk management, nowadays our procurement teams are charged with much more than financial health of suppliers includes compliance and ESG, responsibility of supply. How do you go about controlling all of this?

(01:03:16):

I don't know if it makes sense for me to start here, Lauren, but I guess I will.

(01:03:23):

I think the question is absolutely right in the framing of well, what is supply risk today. It used to be have the supplier file papered with a DNB financial report. That was essentially meaningless.

(01:03:39):

As supply chains have gotten more complex, as the churn in your supply base becomes more rapid, your ability to really fully understand who your suppliers are and what it is that they're doing and all of the risks that are potentially exposed is significantly harder certainly than 25 years ago.

(01:04:04):

I think it starts with visibility, it starts with tools, it starts with the construct of understanding where your spend is, where are your strategic suppliers, where are the leverage. You can do any type of matrix to evaluate this. But it starts with understanding who your suppliers are and getting your hands around that.

(01:04:26):

And that's where most organizations are today. As you start to look and move forward, more best practices are going to continue to emerge. Maybe they're industry specific or regional specific, but it's a complex problem. It's why I'm glad we've had the opportunity to spend time talking about this important issue with you all.

(01:04:42):

Lauren, I don't know if you've got final comment or...

Lauren Guidas (01:04:46):

No, I would just second everything you said. I think you hit it spot on.

Andrew Bartolini (01:04:50):

Great. So want to thank everybody for attending. We're going to send a note out tomorrow morning with a link to download the slides. Evisort is going to provide a link to this recording.

(01:05:01):

As a reminder, we do have a webinar tomorrow morning focused on P2P metrics that matter. We hope that we can see you then.

(01:05:07):

Thanks, Lauren. Thanks, John. Thank you, Evisort. I hope everybody has a great day. Take care.

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