Randy Roth often tells his clients, “If your mouth is open around a vendor, there’s money flowing one way or the other, and it’s usually not towards you.”

Roth, managing partner of Corporate Contracts, bases that credo on his 21 years of experience in negotiation and vendor management, seven of those with Principal Financial Group Inc., before launching his own vendor management company with two former Principal colleagues in 2002.  

“What we decided was, we should be doing this for other companies because you can save so much money doing this, and people within organizations generally have 110 percent of another job to do,” said Roth, who partnered with Pat Bohnenkamp and Brad Simpson to launch the firm 14 years ago. 

The West Des Moines-based company has built a niche in vendor management, contract negotiation and contract management that its partners say is unparalleled in its scope nationally.  

“We’re the only company that we know of that does everything, not just the negotiations and the request for proposal; we also negotiate and write the contract for them,” Roth said. “We don’t believe there’s any other vendor management company that does that.” 

Roth also chairs the IT Procurement Working Group of the Society for Information Management, an industry group with about 5,000 individuals members representing a significant portion of information technology spending across the United States and Canada. 

“Randy formed that (working group) many years ago as a way to share procurement and contracting best practices,” said Steve Hufford, SIM’s CEO. “The  members get a lot of value from that, and Randy is a driver for setting the agenda and that everyone gets value from their participation. That group has grown over the years because Randy focuses on the right things that are interesting to the procurement community.”

Hufford said he believes Corporate Contracts holds a unique niche among vendor managers. 

“There are companies out there that do negotiations, there are those that do best practices, there are those that manage contracts, but I’ve not heard of other organizations that do the 360-degree view,” he said.

Among Corporate Contracts’ clients are two of the Big Four accounting firms, plus a number of Fortune 500 companies, several Blue Cross and Blue Shield companies, as well as Iowa-based companies such as  Farmers Mutual Hail Company of Iowa and FBL Financial Group Inc. 

“I’ve always said our niche is the Fortune 501 to the Fortune 2000,” Roth said. “It’s that medium-size niche — small to medium-size companies that either can’t or don’t want to hire the talent to do this sort of thing, but spend enough on IT and goods and services that they want to save money on and have reasonable contracts put in place.” 

The firm has generated as much as $10 million a year in savings for its clients in multiple years through its negotiation processes. One banking client, Oregon-based Bank of the Cascades, has documented a 6-to-1 return on investment for every dollar it spends with the firm. 

“We bring a specialization of expertise in negotiation,” said Patrick Boucher, a senior corporate negotiator with the firm. “We know the process; we know how procurement works. We also see a lot of deals. We do hundreds of deals a year. If a company might see a deal with a particular vendor every five years, we see that deal 10 times as much or more, depending on the particular vendor.” 

Without the proper strategy in place, a company can unwittingly lose all the leverage it might have employed in negotiating a contract, Boucher said. 

“That’s one of the challenges we have with all of our clients, training them to understand the processes we have in place are by design to achieve cost savings,” he said. “Withholding certain points at certain times and disclosing only as much information as is necessary at that given point. Being strategic rather than tactical in how we approach a project. We have to ensure our entire team is on the same page. If it’s executed right, every time we achieve cost savings.”

The firm also writes the contracts it  brings to the negotiating table to counter vendor contracts that are heavily weighted toward the vendors’ advantage. 

Because Corporate Contracts serves companies that are competitive within the same industry under strict confidentiality agreements, it’s able to use that industry knowledge to each of its clients’ benefit, Boucher said. 

For instance, he said, “we serve clients in the health care industry that have related business interests and needs; they all benefit from the fact that we work with several. All of the experience you gain working for one client does transcend, so they actually like that we work for their competitors.”  

Roth estimates that 75 percent of Fortune 500 companies have an in-house vendor sourcing organization. “Some of them do it very well,” he said. “Others don’t, and we see a lot of opportunity to help.” 

New federal banking regulations within the past year have driven more attention by banks to vendor management, Roth said, and his firm has tailored its contracts for banking clients to align with the new regulations. The Federal Financial Institutions Examination Council enacted a rule known as Appendix J, which lays out requirements that financial institutions regulated by the council must follow when outsourcing any services. 

“Banks and financial institutions are being pushed more and more to do a better job of managing their vendors because more and more companies are moving to software as a service,” Roth said. “And when you buy a SaaS product, you’re putting your data in someone else’s hands. The regulators want to make sure everyone knows how their data is being handled.”

Contract administration and contract management are new services the firm has introduced in the past year. 

“A lot of companies do not manage their contracts well,” Roth said. “Someone signs off on a contract, takes that contract and sticks in in their desk drawer and never looks at it again. Those get thrown out after the person leaves, and suddenly the company no longer has access to them. We put them into a system and manage them so that the obligations are being met by both parties.” 

The more companies learn about how to handle vendor management, the more they appreciate the need to manage their vendor contracts as well, Roth said. “It kind of goes in hand with the sourcing and negotiation part,” he said. “If you keep and manage that contract and manage it over its life, you’re always better off than having it sit in somebody’s desk drawer.”