How to think about contract management in an era of rising regulation and compliance enforcement.
As explored in Part One of this series, a shifting regulatory and global business environment are compelling organizations to implement a much more robust strategy and technology approach to contract management (or contract lifecycle management – CLM). Part Two looks at how changing your perspective on the topic can make all the difference in how you approach it, and how you think about the outcome. Consider the role of the consultant in business. It’s their perspective — as much as experience and expertise — that bring value to a business. By adopting some of that ability to see things differently as it relates to contract management, you begin to see all the way it can create value.
It’s surprising how a manager can change their contract management process and increase their effectiveness by thinking like an outsider — a CLM consultant — if you will. Thinking bigger – aligning contract process goals with overall enterprise objectives, for instance – increases the understanding of how exactly contracts are impacting the organization. Impacts that can be negative as well as positive.
Thinking like a CLM consultant allows you to bring together disparate stakeholder issues without a personal agenda. It allows you to see the contracting process as a whole, and what’s valuable from each departmental perspective while supporting enterprise-wide mandates. Your mission as a consultant is to engage stakeholders – internal and external – to determine the critical outcomes required by the contract itself. Before you can design contracting strategies that optimize compliance and business impact, you must understand the goals and results needed.
The “as is” and “to be” approach is used by consultants in understanding what the current systems and processes are, and designing what you want them to be: to make money, save money, reduce risk and be compliant.
Positioning yourself as a consultant allows you to see the contract process from each user’s point of view, with the aim to make life easier for them. In other words, consider the impact on the end users and the stakeholders using the contract management solution. Here are some tips when deploying and improving contract management solutions.
- Get stakeholders buy-in before you get started.
- Have change management in place to help with adoption.
- Offer tools and resources to remove obstacles that bog things down.
- Keep the benefits of a successful implementation top-of-mind, and how the process will change everyone’s daily work lives.
- Know how you want the process to work at each step so the end product does what it needs to.
The “As Is” approach: Involving contract management stakeholders
- Have you identified each point in the current contract and business process where information is captured or created?
- Are there multiple points where contracts or aggregations of contracts are captured?
- Have user roles, procedures, and business rules been established to capture the necessary information to create a contract?
- Is the content of the contract fully identified, searchable and discoverable?
- How are the requirements for contract compliance dealt with in regards to all applicable statutes, regulations, and internal policies?
- How is the contract managed throughout its life cycle?
- Is the information accessible and usable for the entire life of the contract?
- Is the information protected from unauthorized access, distribution, and deletion?
- Is the contract authenticity and integrity preserved throughout its life cycle?
- Are there quality control procedures in place to verify the completeness and trustworthiness of the contracts?
- Is there a migration plan for contracts with long-term value?
The “To Be” approach: Define how contract management will work
- Identify how you would like for each point in the future contract and business process where information will be captured or created.
- Determine where you want the multiple points where contracts aggregate.
- Define user roles, procedures, and business rules to capture the necessary information; use guides and templates to determine best practices.
- Update the compliance policy to comply with all applicable statutes, regulations, and internal policies.
- Define how you want contacts to be managed throughout the lifecycle.
- Build out a security model to assure the contract information is protected from unauthorized access, distribution, and deletion.
- Design quality control procedures in place to verify the completeness and trustworthiness of the contracts.
Increase visibility to improve compliance
Gather data to develop an accurate assessment of the current situation. Simply find the contracts and figure out what is going on with them – what we are the commitments, what are the negotiated benefits, and are there duplication or overlap problems? Where are the data gaps where risk grows?
Articulate a contract management strategy
Look beyond terms and conditions to the overarching strategy for the organization to ensure that terms and conditions support top-level strategic directives. The contract needs to guide management of a strategic relationship through the entire lifecycle: from how you plan to engage with another party to how you will operate on an ongoing basis – from the SLAs and reviews to every detail that will govern the relationship, including termination.
Use the data to measure and improve contract agility
Consultants seek to define key metrics, when rigorously measured, can help drive continuous improvements. The contract management process must always be revisited and improved. This is how you begin to get a better picture of how to conduct business and eliminate noncompliance. Repeatable success is the name of the game.
Check out our Contract Management Resources
How is your organization currently managing contracts? What is your backup plan if you are unable to produce contracts or provide adequate evidence of meeting compliance? If you are still relying on spreadsheets, word docs and non-integrated solutions, check out our host of contract management resources to get a deep dive into how and why cloud-based contract management should be in your near future.