The power of contract management
Too much ‘freedom’ in the contract process and a lack of insight in what has been agreed may result in unwanted risks and missed opportunities. There are a number of contract management solutions available. From a fairly simple database to an end-to-end solution that fully supports the life cycle of a contract. How can you benefit from a contract management solution?
In our view, contract management has a process and a data side. The process side ensures that no (unwanted) risks are entered into and the necessary agreed sign offs are obtained within your organization. The data side facilitates clear and concise insights in what has been agreed in the contract, the risks and the life cycle of the contract.
Selecting the best solution for you depends on what you desire to achieve:
- If you desire a better insight in your contracts, you require a solution that captures data and presents it in a clear and concise manner;
- If you desire to ensure compliance of your contract process and/or make the contract process more efficient, you require a solution that supports and enforces the workflow;
- Or do you desire a combination of 1 and 2 above?
The process side of contract management
To ensure compliance of your contract process and/or make the contract process more efficient, the current and desired contract process should be precisely mapped. If the process is (to a large extent) repetitive it can be automated using workflow management technology. The advantages are for instance:
- Control over the contracting process through:
a. automated allocation of new contract requests to the right people;
b. sign off from the correct persons before a contract is entered into;
c. clear and uniform instructions from the start of the process;
d. ability to re-assign workload to ensure you meet deadlines;
- Oversight of and control over contracts entered into.
Many available contract management solutions focus on the data side of contract management, however the contracting process side is in our view equally important and should be thought about when choosing or evaluating your contract management solution.
The data side of contract management
Most high volume contracts include about 80% similar terms. This is an excellent starting point for introducing template contracts. The remaining 20% of deviating terms can be catered for through ‘free format’ fields in the template contract. Authorisation of input in these free format fields can be automated as well. Additional benefits of working with template contracts are:
- Everybody works with the same document and the most recent version;
- High level of comfort that all your minimum requirements are included in the contract given these cannot (without authorization) be amended in the templates;
- Ability to capture relevant data from the template. A robust contract process combined with working with templates ensures a high quality of the data that is captured. Therefore, it provides valuable and accurate management information.
Most contract management solutions shall provide for an easy accessible repository and a high quality of data that is captured. Therefore, it can provide for valuable and accurate management information.
Preparation is key in finding the solution that fits your circumstances best. Our advice is to start building your business case first. What do you want to enhance, how do you want to use the solution and what do you expect to gain: process, risk and value wise. There are great benefits to contract management technology, however only if it resolves your challenges and if the users embrace and use the technology it shall be successful.
Happy to discuss!
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