Commingling government contract compliance with customer service (Part 1 of 2)
If your company sells to the US Federal government under an approved purchasing system and is subject to a Contractor Purchasing System Review (CPSR), here’s a “pop quiz” to explore your perspectives regarding designing a customer-centric experience into your overall compliance strategy.
- Do you view your Government auditors as a customer?
The correct answer is yes! Because auditors are a customer, in similar yet different ways as the Contracting Officer or the Contracting Officer’s Technical Representative.
- Do your end-to-end business processes and systems optimize the auditing experience of your customers?
Perhaps at this point individual responses diverge. To answer “yes”, you must be able to articulate and demonstrate what’s been done within your business processes and systems to improve the customer experience. If answered “yes”, then you likely feature these benefits with DCMA in the CPSR Entrance Conference.
If you answered “no”, then just one final question.
- Do you believe that it is a wise business strategy to sub-optimize the experience of those empowered to recommend granting or withdrawing a system approval?
First, some context
This is the first in a two-part blog addressing strategies and tactics for excelling at regulatory compliance as it relates to CPSRs as defined at FAR Subpart 44.3 and DFARS 244.3.
In this Part 1, a perspective is provided regarding a methodical approach to establishing a vision, strategy and change management framework to realize a customer-centric audit experience. In Part 2 of this blog, a handful of compliance requirements are used to illustrate the thought process and tactical approach necessary to achieve the vision.
It is not the intent of Part 1 nor Part 2 to otherwise comment on the requirements of the Defense Contract Management Agency’s Contractor Purchasing System Review (CPSR) Guidebook, dated February 26, 2019, which is a tool used by most contractors in assessing preparedness.
Developing the vision for your enhanced customer-centric experience
Setting the vision for your customer-centric audit experience is the first step in a process of transformation. Your objective in this step is to visualize and articulate what you want the improved end-state to look and feel like. Sometimes it is helpful to think about desired attributes of an integrated procurement environment. Certainly, consideration should be given to needed corrective action and documentation requirements that have been historically problematic to achieve compliance.
For example, your view of what makes for a successful customer auditor experience could be a totally electronic procurement file, with documentation automatically produced by end-users simply completing a transaction, all within an integrated solution. No paper files, no re-work.
A simple yet effective technique used at SAP to assist customers visualize outcomes is a design thinking method called Future/Current/Barriers. This is comprised of three brainstorming sessions around first the ideal future state that the customer envisions, second the current reality they are faced with, and third the barriers present between the current and future states.
Design thinking is best accomplished with a cross-section of stakeholders kept to a manageable size, say no more than 10 participants per team. The only resources needed are markers, sticky notes and appropriate wall space. For each of the three steps, a facilitator should provide just a few minutes for participants to list one idea per sticky note, then all place their notes on a wall, debrief the team, and group common ideas. Then repeat for the 2nd and 3rd step.
In a manner of minutes, a detailed description of the vision can be framed, along with current state realities, and the barriers to be overcome.
Four Pillars of Change Management
With your newly established vision in hand, it’s time to consider some basic elements of change management. When planning for change, it can be useful to group needed activities by strategy, organizational structure, necessary skills and enabling solutions.
In developing your strategy, it will be necessary to consider how you will overcome identified barriers in realizing your vision. This may require investments in IT solutions and/or integrations, perhaps some reorganization of resources, or maybe a new centralized function. Depending on the magnitude of the necessary change, it may be appropriate to prioritize business benefits and phase the change.
The current level of organizational maturity supporting the CPSR process and related organizational design should be evaluated to determine if any benefits might be realized through skills enhancement or organizational structure refinements.
Last, consideration should be given to the end-to-end systems and tools in place and identify any technology gaps that prevent a seamless flow of data throughout the source-to-pay process. Not surprisingly, a single integrated procurement platform precludes the need for replication of data and related activities, provides a simpler control environment, and thus enhances the continuity and efficiency of producing CPSR-required documentation.
Test your change management approach using SAP Ariba’s 12 Keys to Success
A useful tool in identifying any gaps in your approach to implementing change are the 12 Keys to Success. Think of the 12 Keys to Success as a checklist of sorts for ensuring that major predictors of success (and risk) have been considered. For example, is there an executive sponsor in place, and has necessary training and communications been considered? Provided for each of the keys are detailed considerations including stages of success, why the key matters, and best practices.
After establishing your strategy with insights regarding necessary change and investment in the organizational structure, skills and solutions, it’s time to develop a business case.
Identify within the business case all the significant financial and non-financial business benefits that are expected. Include all significant savings levers, and account for any investments that may be necessary. Time-phase the benefits and the investment considering both an expense and balance sheet view, if appropriate. Most customer Finance organizations will expect to see a net present value (NPV) estimate.
Then socialize the vision, strategy and business case internally to secure whatever approvals are necessary from executive management, to proceed with your project.
Benefit realization management
Following completion and acceptance of the business case, momentum can potentially stall unless specific approaches are used to summarize the benefits established in the business case. To prevent this, consider use of a benefit realization management (BRM) plan.
BRM is a methodology for both summarizing your project’s benefits in soundbites for use in future executive discussions as well as driving accountability for benefit realization. BRM comes from the Project Management Institute’s Body of Knowledge for program management and is likely a familiar methodology to project managers within your organization’s Program Management Office (PMO).
BRM includes a process of summarizing business benefits within a register, development of a specific plan for realizing each registered benefit and is used within the overall program management framework of the PMO to measure and report on benefit realization.
The final recommended tool to use in managing your customer-centric audit experience is the development of key performance indicators (KPIs) and a performance scorecard. The purpose of the performance scorecard is to monitor and report on benefit realization and transformation status within a 1- or 2-page dashboard.
Within the business case and BRM plan are the specific financial and non-financial benefits earlier established as primary sources of value creation. KPIs should measure the more significant benefits. It may be useful to identify KPIs that monitor strategic objectives, operational objectives, and the status of any temporary activities such as solution integrations.
Once all such KPIs are identified, summarize them on a scorecard and establish a cadence for producing updates to the performance scorecard. A monthly cadence may be appropriate early in the project, changing later to a quarterly cadence once the project is established.
About the Author
Don Seward is Director of Value Realization at SAP. He has over 30 years of experience in regulated industries and a variety of related roles including VP of Procurement Transformation, global head of procurement, Federal Purchasing System administrator, Federal Estimating System administrator, and government audit agency liaison.