If we ever want to achieve excellence in contract management, the way forward is clear.
We must start thinking of it as a distinct business process in its own right – and support it accordingly.
In many corporations today, contract management is seen as a sub-element of other processes or disciplines such as procurement, project management, legal, CRM, SRM, etc. This fragmentation means that it is generally inefficient and ineffective, leading to the revenue and value erosion identified in multiple IACCM research studies.
Of course, some organisations have awakened to this issue, and invested heavily in building superior contracting competence, as they’ve realised the goal of sales and acquisition processes is to generate successful contracts. In other words, contracts are a core business asset, and efficient sales and procurement activities are the means to achieving them.
In today’s technology-driven world, one of the biggest obstacles to driving value from contracts and contracting processes has been the absence of relevant technology. Rather than challenge existing perceptions, many software providers have designed products that reinforce existing approaches. Thus their products are targeted for sales, or for procurement, or as an adjunct to ERP or CRM – but end up being seen as irrelevant to the needs of many parts of the business.
Hence, their adoption rates are low. Recent IACCM research showed that 62% of organisations have contract management software, yet less than 20% have achieved widespread adoption, for instance.
In a recent whitepaper from Document Management software specialist EASY Software on best practices in contract management, to which I supply an introduction, the issue of how to best choose and implement contract management technology is well addressed.
One of the key messages of that report is that IT leaders need to think about what users of the system will experience and do everything in their power to make that experience a positive one.
The advice is to integrate into other business systems as much as possible so as to drive a positive experience throughout the organisation and with trading partners.
Integration internally, for example with ERP, is one source of value. Leading organizations are going further and exploring how contract management software can facilitate external relationship through sharing of data and common management tools.
Tim Cummins is CEO of IACCM, The International Association for Contract and Commercial Management, the global professional group for contract management specialists
More detail about the approaches discussed can be found in this recent EASY-IACCM resource