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Excellence in contract management

February 17, 2016

If we ever want to achieve excellence in contract management, we must start thinking of it as a distinct business process and equipping it accordingly.

In many organizations, contract management is seen as a sub-element of other processes or disciplines – 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 organizations have awakened to this issue and invested heavily in building their contracting competence. They have realized that the goal of sales and acquisition processes is to generate successful contracts. In other words, contracts are the core business asset and 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. Their products are targeted for sales, or for procurement, or as an adjunct to ERP or CRM. As a result, they are seen as irrelevant to the needs of many parts of the business and hence adoption rates are low. Recent IACCM research showed that 62% of organizations have contract management software, yet less than 20% have achieved widespread adoption.

It is this background that causes me to feel optimistic about the announcement of amalgamation between Contiki and Exari. Together, they believe that they bring robust lifecycle management software that combines with powerful document creation and management. More importantly, they emphasize that their focus is on contract management as a competency in its own right – not as some sub-element of another process or function.

Of course, we have yet to see whether this vision translates to a powerful new player in the market, but it is an important step forward and offers the potential to support ‘excellence’ in contract management.

2 Comments
  1. Ian Heptinstall permalink

    Hi Tim,

    Do you have any examples when you say “..one of the biggest obstacles to driving value from contracts and contracting processes has been the absence of relevant technology.”?

    Whilst I can see how a few leading organisations may be able to exploit technology, for me, in most the issue is more process, awareness and skill, rather than technology.

    Ian

    • Ian, yes – quite simply, those who are using technology are achieving better financial results. The solutions vary, but technology is starting to enable fundamental shifts in the way that contract management is performed and evaluated. Most important, the data from contracts is driving strategic decisions rather than simple operational performance.

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