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Contract Management Software: Make Sure It’s An Asset To Your Business

January 7, 2010

Technology is a great enabler. But there are times when we must ensure it does not become a disabler.

The contracts community has been relatively slow in its efforts to understand and adopt contract management software. Even its advocates have been inconsistent in their goals and expectations, resulting in hybrid implementations and confused messages to developers.

One issue at the heart of this confusion is the extent to which the software should focus on compliance, versus the delivery of value. The answer of course should be a balance between the two, but increasingly I am observing how too much emphasis on one (compliance) can actually result in the loss of both.

Contracts are complex instruments and they capture a multitude of commitments and obligations. Armed for the first time with software tools, it can be tempting for management to seek detailed oversight of every aspect of compliance. Yet this is a mistake and risks sabotaging the entire implementation.

While contract management applications should support improved compliance, they must also increase efficiency and reduce operational workload. They must free up the the time of contract managers to add value through better intelligence and proactive risk avoidance. If instead they simply overwhelm the contracts and project staff with action items, they will fail on all counts.

My observations are made because of several recent examples where management did not take time to assess the volume of reminders and ‘ticklers’ being sent out by the system. And more importantly, they failed to grasp the relative priority of these different messages. Some are truly critical to success; others are indicators that should only be accessed on demand, or appear in summary reports.

In one case, contract managers on complex deals were receiving up to 40 system outputs per day – with the result that the system itself lost credibility. Staff were inevitbaly ignoring the outputs and reverting to previous manual methods of management. Far from being a tool, the software had become a burden.

 Business intelligence is a great thing – so long as we use our intelligence in its design!

2 Comments
  1. Good points Tim. The problem is that it is all too common that people/organisations think about these aspects after the fact or at least place importance on this when it is too late – in the early stages it gets placed at the bottom of the pile with other aspects taking priority.

    The discussion on compliance vs value is an interesting one. I would advocate that a proper functioning Governance, Risk and Compliance system creates value as it dictates the functioning environment in which the organisation is to achieve stated strategic and tactical objectives. Improper structuring of such a system could however easily lead to a significant subtraction to value.

  2. Excellent article Tim!
    Another issue I have observed in most of my Contract Management Software implementations is most organizations don’t completely understand their business processes. When the contract management software project begins to fully document each process in a step towards software automation there is much discussion and debate regarding a process as simple as an NDA. Department A has a completely different process than Department B and when they are all in the same room it gets to be a quite a discussion.

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