The Determine


Vision. Insight. Control.

May 27, 2015

Focus on what matters most by silencing contract management “Noise”

Before I entered the world of software and technology, I spent over 10 years in manufacturing. I hear engineers often discussing what’s called “signal-to-noise” ratios. Like tuning an old AM radio, sometimes you get a good signal and the background noise is minimal. At other times, the static and buzzing is so intense that you cannot hear what the station is trying to broadcast.

Managing contracts can be like tuning a radio. You have to reduce the noise to hone in on the clearest signal. Do you know all the consequences of the contract–could you be missing the signal due to distracting noise? Once the contract is signed, ask yourself if you are taking full advantage of negotiated clauses, or are you letting opportunities slip by because you’re not aware of them? Knowing what to look for and effectively monitoring the progress of the contract can actually shorten the time to close.

Businesses rely on alliances, outsourcing, and collaboration with various internal departments to meet their objectives. Significant time and resources are spent negotiating agreements with all parties–customers, employees, and vendors–to attain value. The use of CLM reduces considerable risks by allowing each department in the enterprise to focus on the signal from the contracts, minimizing the distractions of the noise.

Contract management systems that ONLY function as a repository, or are used just for simple analytics are very much like bad radio reception–they generate lots of unnecessary noise and clutter that obscure the valuable signals to which you should be listening.

This is where Enterprise CLM (ECLM) can make a big difference. It will reduce the noise and improve the signal by enabling companies to streamline processes and focus on the most important information inside the contract, such as opportunities, compliance issues, and key deadlines.

ECLM can connect the dots between the various departments within the enterprise. By sharing the buy- and sell-side obligations, it will help monitor savings and associated risks, and then send you a clear signal that THIS is what needs attention, HERE is your critical data, and NOW is when you need to take advantage of the deal or pivot.

Failing to proactively monitor the key elements of ALL your company’s contracts can result in significant lost revenue, fines, inadequate governance, a damaged reputation, and unplanned contract termination.

A well-conceived ECLM strategy incorporates risk and compliance factors into the management of the contract lifecycle to help companies optimize their agreements with customers, employees, and other third parties. By focusing on these vital signals contained within each agreement, companies can build their business relationships, improve processes, reduce risk, increase compliance, maximize revenue, manage costs, and boost overall performance.

At the end of the day, nobody can remember the details of every contract in your company. But effective Enterprise Contract Lifecycle Management software (ECLM) combined with well-managed processes can help you identify the opportunities and the risks, so you can minimize the noise and tune in on what matters most in each agreement.

Do you know your noise-to-signal ratio?

For more information about ECLM, read this white paper on how to take CLM to the enterprise level.