7 Tips to embed Contractual Compliance in a supplier organisation

During the honeymoon period that follows the signing of a strategically important, multi-million pound contract between a technology service provider and corporate customer, there’s a danger that little attention is given to proactively managing contractual compliance. Having survived an arduous period of negotiations, internal consultations, and meticulous levels of detail, all energy may instead be directed towards promptly designing and delivering the service. While this focus is understandable, a failure to recognise the nuances of contractual commitments and prevent breaches can steadily erode goodwill and prove costly down the line.

We’ll worry about it later

When agreeing the legal minutiae underpinning a unique technology service, it’s unsurprising that the relentless industry pressures affecting such offerings can sometimes prevail, with corners cut as parties succumb to a mentality of ‘we’ll worry about it later’. From the supplier’s perspective, it can also be challenging to get all relevant subject-matter experts around the table when finalising terms of technical significance, leaving lawyers to hastily write up their own interpretations of specialist topics. A resulting legalese misrepresentation can go unchecked in the rush for the supplier to win big business and prepare to enter the market.

…Worrying about it later

In such a context, ‘worrying about it later’ can involve a subsequent need to redesign internal operating models, or additional hiring and training across the organisation to incorporate all contractual obligations before the service goes live. It’s crucial then that contracts don’t gather dust during the design and development phase, acting as a single source of truth in cross-functional discussions around customer expectations and team accountabilities.

As part of Airwalk Reply’s involvement in a large-scale technology programme within a globally renowned payments company, ensuring our client’s compliance with its own customer contracts is considered paramount to success. Throughout reviews of dozens of hefty documents, analysis of obligations within a customised framework, and owner assignment and engagement, we’ve continually refined our approach and gained some handy insights. Here are our tips to effectively embed contractual compliance in a supplier organisation:

1. Analyse obligations from the owner’s perspective

In capturing each obligation’s detail, alongside references to the parent document and section, it’s a good idea to assume the perspective of the eventual owner. Given the wordiness of many contractual articles, this could include a subject heading, any mentions of dates, durations, or frequencies of delivery, as well as distinguishing between items that are dependent on a particular scenario occurring, e.g. dispute resolution responsibilities, and those that must be satisfied regardless. It’s also useful to include further articles related to each obligation, i.e. associated principles and performance standards, to give the owner guidance on the proper approach.

2. Detail customer obligations too

Customer owned commitments should not be overlooked, as full compliance is achieved by both parties playing their part. Detailing these items together with the supplier’s, i.e. in a single framework, gives a complete account of the dynamics of the relationship, highlighting shared responsibilities as well as the differing expectations upon the parties in given scenarios. Sharing a view of these with the customer also helps prevent any ambiguity or slippage on their side.

3. Distinguish between programme and organisational ownership

When assigning ownership, the programme’s scope should be considered. Certain obligations will relate to activities undertaken by stakeholders in the delivery phase, while others pertain to the business as usual (BAU) processes of the wider organisation, often only relevant after the service goes live. In some cases, e.g. risk management and reporting, ongoing commitments may at first need fulfilment by the programme before transferring to BAU teams, so two separate owners might need to be identified. It’s also worth noting further teams that will likely provide inputs or collaborate with owners in their activities.

4. Prepare one-page summaries

Discussing obligations with assigned owners in order to get their agreement can be difficult, especially given contractual wording’s convoluted nature. At times it can be hard to “see the wood for the trees”, with the essence of proposed responsibilities lost in legalese. Putting together one-page summaries, per functional team or stakeholder group, in plain English and organised by topic, is a more practical way of facilitating conversations. In this way, agreement of high-level tasks can be reached before owners consider the exact contractual wording. These summaries can also come in handy when ownership is formally signed-off by senior stakeholders.

5. Keep an audit trail

It’s inevitable that some obligations will be bounced between functions that don’t accept accountability, be it due to the restrictions of existing team structures or conflicting understandings of scope. It’s good practice to keep a record of the stakeholders that have been engaged per obligation, as it gives a clear audit trail that’s useful in any escalation of outstanding items.

6. Build metrics

Simple graphs showing the split of obligations across programme and organisational teams, overlayed with the current status of ownership agreement and fulfilment, can be powerful assurance metrics as part of standard programme reporting. Executives can get a clear understanding of any gaps, which facilitates resolution and prevents contractual breach. The distribution of responsibilities amongst functions can also highlight expected pressures on certain areas once the service goes live, allowing leadership to plan resourcing and team restructuring accordingly.

7. Track progress and obtain evidence

Once obligations have been agreed by owners, it’s time to manage readiness ahead of go-live by ensuring their speedy completion. Proposed dates and current statuses can be tracked, alongside efforts to relieve pressure around the overall service go-live date by encouraging earlier delivery where possible. Evidence, primarily in the form of linked policies and other documentation, should be collated in a centralised location for easy reference, which is also a great way of keeping auditors happy.

No more worries!

As a result of this methodical approach to driving contractual compliance, our client has confidence that all commitments to the customer are being upheld, whether incorporated into formal plans, policies, processes, or role profiles throughout the organisation. There is significant value recognised in effectively mitigating threats of suboptimal service support, customer escalations, and potentially costly contractual penalties.

As challenging as the endeavour may seem, ensuring clear ownership and prompt fulfilment of obligations ahead of service go-live has proven essential to overall assurance, encouraging earlier cross-functional collaboration and greatly de-risking both the programme and ongoing service provision.



Written by Andrew Kelly, Airwalk Reply Senior Consultant

Please get in touch if you’d like to discuss this article further with Andrew.