An increasing number of companies are embracing cloud-based solutions like SaaS to manage critical tasks across various business functions including contract management. However, contract negotiators are often not included early in the process of evaluating new solutions. Effective contract management in the cloud requires alignment between business users and legal teams from the start to ensure contract terms meet both business and legal needs.

1. Contract Management in the Cloud
Ariba Knowledge Nuggets Supply uncertainty, capacity volatility, resource constraints, and a
heightened need to assess and mitigate operational and trading partner
risk have fundamentally changed the way companies organize and
measure success. As the recovery progresses, one thing is becoming
clear—this is no temporary shift in approach. Leading companies have
realized that the organizational agility required to survive the downturn
can act as a differentiator, enabling them to emerge more strongly
positioned to compete and be successful.
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The tools and processes that companies are employing to achieve
success today are wide and varied. However, in terms of technology, a
clear transformation has taken place. Faster time to value, lower total cost
of ownership, more flexible pricing and usage models, and rapid
innovation cycles have brought Software-as-a-Service (SaaS) and Cloud
computing delivery models to the forefront—as has the fact that these
models enable the CIO to focus on more strategic initiatives and manage
information versus technology. Leveraging SaaS solutions, businesses
can be up and running faster with minimal upfront investment. They also
have the ability to dial up (or down) usage in order to meet the needs of
the organization and pressures of the market. And while we will discuss a
number of data and security considerations in this paper, the reality is that
the security level provided by leading SaaS providers exceeds that of
most enterprise companies.
The emergence and growing acceptance of these models has sparked a
fundamental shift in the way that procurement, sales operations, IT, and
finance go about achieving their objectives. Legal and contracting
professionals must be at the forefront enabling this organizational
transformation.

2. Where To Start ? ? ?
Start Internally
Ask a legal or contracting professional what his or her largest pain point in
negotiating contracts is, and you’ll likely hear that it is a lack of alignment between
the buying group who sources a contract and those responsible for negotiating the
actual agreement. Too often, thorough diligence in evaluating SaaS or Cloud-
based solutions focuses on educating consumers on the benefits of technology to
automate the contract process and allaying concerns about data availability,
access, and security. Contract negotiators are not commonly included in these
discussions and, as a result, their concerns—and ultimately, the real issues
related to contract negotiations—are not captured and must be revisited after the fact.
The contract management group should consider creating a checklist that will enable the business
functions to acquire the tools and benefits they seek. Meanwhile, it can be assured that the
company as a whole is comfortable with the terms of the agreement in order to open the dialogue
between functional areas of the business and legal/contract management.
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Treasu rk
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AP critical tasks across
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Finance Procurem contract management
is among these tasks.
Use the customizable dashboard functionality to further
enhance visibility into procurement contracts. Dashboards
can provide near or real time views into the status of
impending renewals, compliance and utilization and
overall spend against contracts. Such visibility can be
leveraged to make an organization more nimble and
T S
N T R AC
responsive to market changes or supply disruptions. Only
CO 17% of Best-in-Class enterprises currently leverage
dashboards (The Aberdeen Group).

3. Trading Partner Contract Process—An Overview
Trading partners work toward joint value in their relationships. Contract lifecycle management can ensure
the value of partners by enabling them to ensure compliance to the contract and understand all terms and
conditions as related to the business expectations, both in good and unfavorable circumstances.
The CLM process has five steps:
Contract authoring and creation—Contracts typically contain, but not are limited to, trading partner
information, contract value, contract time period, specific terms and conditions that must be met by
each trading partner, addenda, approval signatures, and date of signatures.
Contract negotiation and revision—The second step is where contract terms are negotiated,
reworded, and changed by one or both parties and their legal and finance departments.
Contract approval—This step includes approvals for clauses, quantitative amounts such as total
dollar value and total items contracted, and terms and conditions by each trading partner and its
organization. The organization may include, but is not limited to, the CEO, CFO, legal counsel, CPO,
and CSCO or representative organization.
Signature—This is where the final agreement between two parties becomes definitive. When both
identifying parties have signed the contract, the contract is considered complete. It is also active for
the duration as defined in the contract.
Contract archiving— Archiving, the final step, is one that immature companies take for granted, often
just filing the contract away for future record. More advanced companies use the information for
compliance and value analysis.
The four elements of value in contracts:
To gain the most success from the contract, companies must also understand and be able to act on the value
that can be derived from a contract. Trading partners can derive four elements of value in particular from
their contracts:
Compliance—Many companies audit and review their trading partner relationships. Search
capabilities and analytics are the most utilized tools to ensure compliance with trading partner
agreements.
Visibility—Contract visibility provides a view of each step of the contract process, progress, revisions,
and remaining steps that must be fulfilled. In addition, dashboards and alerts are configured for more
visibility based on quantitative and qualitative requirements, such as volume, lead time, and inventory
requirements.
Collaboration—This refers to the ability for a contract to track revisions, ideas, comments, and
alternatives for clauses and terms. Innovative ideas and key performance criteria can be jointly
defined and enabled with a collaborative workflow.
Contract value analysis—This is where the meat of the contract is embedded. Understanding the
true quantitative and qualitative requirements between trading partners and their ability to meet the
parameters outlined is critical to ensuring a joint value relationship. The total dollars and cents, relative
to the revenue, margin, and overall supply chain ecosystem costs, are highlighted, assessed, and tied
to business requirements.