Implementing a New Governance Model

Image of Governance

SIG University Certified Supplier Management Professional (CSMP) program graduate Mark Nilsson shares an example of how his team had to implement a new governance model that was instrumental in getting a project back on track and helped implement several layers of change across his organization.

The timing of my CSMP training occurred during a project derailment related to a vendor we selected in 2022 to replace our current Accounts. 
Payable (AP), Automation solution. The CSMP training helped me implement a new governance model that was instrumental in getting this project back on track. This essay will provide the project background, problem, and solution.
In the summer of 2022, we began a vendor selection process to replace our AP Automation solution, which includes electronically processing Purchase Orders while giving suppliers a portal to request dynamic discounting and monitor payments. The vendor chosen was based on the following criteria: 1) Payment processing functionality, 2) price, 3) ability to co-develop Dynamic Discounting functionality, and 4) culture fit. The plan was to sign the contract by December 2022 to ensure project delivery by August 15th, 2023. The August 15th date was critical. The renewal of our incumbent dynamic discount solution was due. Part of the project ROI depended on not renewing this solution.
The problem occurred during RFP. Information Technology was short on staff due to an SAP S4 upgrade.    We did not have a Project manager and were sharing an IT Solution Architect with the much larger S4 upgrade. This impacted all stages of the contracting process, from precontract, contract development, and post-contract activities. Not having a fully engage IT Solution Architect during the precontract period impacted the collection of accurate use cases that were the basis for our solution requirements and SOW. 
We didn’t have a program manager assigned during the precontract to coordinate internal stakeholders from IT and Accounts Payable. When we got ready for the contract signature in December, IT Stakeholders objected to delaying it by 3 months. This delayed the project start date by three months and put the August 15th go-live date at risk.
Not having a fully engaged IT Solution Architect or Project Manager during the Contract Development phase caused delays and cost overruns. We could only document 22 business use cases in the SOW and completely missed the most important requirement called PO Flip. 
Not having PO Flip documented and agreed to in the SOW impacted our go-live date and produced additional costs. 
We discovered three months into the project that we completely missed documenting one of the most important requirements that allowed us to replace and justify our current dynamic discounting solution. The missed functionality was called PO Flip. The original 22 business use cases expanded to over 90 during the post-contract phase resulting in a 90-day project delay and an additional $50,000 renewal expense for our current Dynamic Discounting solution.
How did we right the boat? We implemented a new governance framework by escalating the current situation to the supplier and our organization’s executive leadership. After escalation, as the IT Vendor Manager, I worked with my supplier counterpart to create this new governance framework that defined roles and authority, relationship elements, a communication strategy, and oversite mechanisms.
My counterpart on the supplier side was the Account Manager. We first discussed roles and authority levels from both organizations.
We defined all stakeholders, decision-makers, and roles and responsibilities. We created a stakeholder list with roles and responsibilities mapped to each other’s organization. This moved us from a traditional bow tie model to a reverse bow tie communication model. Now each role has its communication counterpart. Lastly, we created a monthly board of advisors meeting to monitor progress and a quarterly joint operations meeting to review dynamic discounting co-development requirements that will transform the relationship from forming to performing.
In summary, we would have reduced or eliminated costs by implementing a proper governance model from the beginning of our AP project automation project.   The lack of governance caused the concatenation of issues from pre to post contract resulting in an additional $50,000 renewal cost and 90 days of project delay. Introducing a governance model learned in the CSMP spring semester has put this project back on track and reduce future risks.  

The Certified Supplier Management Professional program is a five-week course delivered through SIG University’s unique education platform. Visit our website to learn more about the discipline of governance and enroll for the upcoming semester.


Mark Nilsson, Sr. IT Vendor Manager, Leprino Foods

Mark has 36 years of experience selling Information Technology Software, Hardware, Services, Business Process Outsourcing, and SaaS solutions to Oil &Gas, Communications, and general business.  Approximately 5 years ago, I moved to a buyer role as Leprino Foods IT Vendor Manager.  Leprino Foods is the world's largest manufacturer of Mozzarella Cheese.