How much should procurement really care about contract management?
A lot. More and more, procurement is being asked to improve supplier relationships and reduce supply chain risk. According to research by Spend Matters, procurement should be analyzing contracts during negotiation to increase successful agreement and execution, and predict disputes before they occur with the help of contract management tools.
We agree. Reporting on contract information is critical for mitigating risk, maintaining compliance and realizing savings.
Contracts and the data they contain are valuable. But too often they are underutilized because of the challenges in organizing and accessing data. To get the most from your contracts, you need to manage the information they contain to be able to use them in a way that is actionable and informs business decisions.
The advantages of contract management tools.
Contract management tools allow for deep analysis of contract data. Comparing past with current information helps you answer questions about what happened and why. Tracking the probabilities of things happening again is essential for managing corporate risk.
Unlike in the past, it is now easy to access contract data and generate insightful reports. Comparing information from myriad sources provides intelligence that improves contract agreements and execution. Contract analytics can also help to identify risk as well as predict future disputes and areas of legal concern and contention.
Even so, not all data is valuable and not all analysis is equal. Identifying relevant contractual documents and data can be a challenge. Also, organizing ancillary documents (i.e., amendments, exhibits, etc.) in one place can be overwhelming. Data discovery and analytics make it easier to track information and analyze and distribute it in meaningful ways.
Regular reporting improves processes and helps organizations recognize the full value of their contracts. Having a baseline to measure against helps users track the impact of new strategies. Auditing contracts helps organizations ensure regulatory, internal policy, commitment and obligation compliance.
Using contract management software to facilitate contract analysis, many organizations are now leveraging contract information to drive their business like never before. Users can track every edit made during the course of contract negotiation and throughout its lifecycle. Reports identifying deviations from standards or inconsistencies in turnaround time reveal inefficiencies and highlight areas of potential improvement. These insights can also help build a business case for performance bonuses and increasing headcount. Contract management tools can provide transparency that, along with easy to set up pre-approved language, policy guidelines and secure approval chains, can help ensure the use of acceptable provisions and practices that reduce risk and improve the bottom line.
Tracking and organizing contract information is the first step towards maximizing the potential of your contracts. Analytics can make them even more valuable to get ahead of risk and plan for the future.
* Download this research about the benefits of effective contract process and negotiations. And if you want to see just how much more valuable and effective your company’s contract management process can be, request a demo. Or contact us with your questions anytime.