Contact management
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This document discusses the importance of effective contract management. It notes that consequences of non-compliance with contracts can be catastrophic, and that contracts require proactive managing and collaboration across an organization. Research from Aberdeen shows that effective contract management systems can increase compliance by 55%, rebates by 25-30%, and revenues by 1-2%, while reducing costs by 25-30%. The document advocates planning contract management actions immediately after signing to realize all negotiated value through enterprise collaboration and expertise. It asks a series of questions to assess an organization's contract management status and effectiveness.
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Contact management
- 1. How can we do the right things at the right time if we don’t know the contents of our contracts How Excellent Contract Management Can Improve Your Business Success
- 2. Contracts: The Backbone of all business transactions and relationships. • Consequences of non-compliance with contracted commitments can be catastrophic. • Contracts require proactive managing • Contracts require people to collaborate to realize all negotiated potential value. Observation: Most companies-Observation: Most companies- 1.1.Do not manage their contracts, andDo not manage their contracts, and 2.2.AreAre not awarenot aware of that!of that!
- 3. Benefit Improvement Compliance Management Increase 55% Rebate Management Increase 25% to 30% Material / Service Costs Reduce 2% to 7% Contract Renewal Rates Increase 25% Revenues Increase 1% to 2% Evergreen Contracts Eliminated Administrative Costs Reduce 25% to 30% Aberdeen Research Contract management systems bring benefits It is about Maximizing PerformanceIt is about Maximizing Performance
- 4. But after signature you get roped back into Business- as-usual…and you don’t get time to convert the negotiated potential into real value. First Negotiate the Deal • Negotiate best Terms • Use tactics • Solve and agree • Throw everything into getting the best deal Then Sign The Contract Contract Management Plan all future contract actions at the time you know it most intimately: directly after you sign on the dotted line! Then just monitor when reminded. After Signature, • You want to realize ALL the negotiated value • For which you need Enterprise-wide collaboration • Experts doing the right thing at the right time, • Executing with discipline, • Managing compliance on every critical clause, • Driving for value, • For the life of the contract (up to 10 years?)
- 5. Check Your Contract Management Status 1. Do you know exactly how many contracts your organization has? 2. Do you know where every contract is physically located? 3. Do you know how many of your contracts have cost penalties or potential legal liability exposure, and what the aggregate value of your potential liability is? 4. Are all of your contracts renegotiated prior to the automatic renewal dates? Are you sure you are only paying the annual software license, maintenance fees or services fees that are needed? 5. Are you sure you are charging accurately to all your customers? 6. Does legal have full visibility of contract variations, and do you know about all the risk you may be taking on? 7. If a key employee leaves, can you guarantee no loss of knowledge or correspondence relating to a contract? 8. Can you identify all your contracts for a specific entity? Or in a specific country? 9. Do you know how much time staff loose trying to find contracts, chasing up colleagues to determine location of contracts and sending them between offices? And is this acceptable? Do you know if all your staff are fulfilling the company’s contractual obligations in time? 10. Is contract management in your organization as efficient as other key functions such as accounts?
- 6. Benefits of Cloud Computing 1. No internal IT resources required to manage and upgrade 2. Easy access from anywhere in the world 3. Provides flexible levels of user security and availability 4. Fast deployment without any business downtime 5. Regular updates/upgrades of functionality 6. With different internet browsers on a range of computers, all running different operating systems, the application can be accessed 7. Regularly improve and enahce 8. Provides the security of a professional data center, regular backups and contingency planning (as in Banking industry) 9. It is an operating expense, not a capital expenditure
Editor's Notes
- Contracts form the backbone of all business transactions and relationships —even if poorly documented, agreements enforceable by law dictate the terms on which most business will be performed. Consequences of non-compliance with contracted commitments can be catastrophic —contract Management is about practical prevention of contract management problems, reducing the need to rely on the legal protection built into agreements. Typically contracts require managing —if they are not managed correctly, then contracts tend not to go according to plan; they take longer than anticipated, or they cost more than they should, they are delivered incorrectly, or they end in litigation, and/or termination with various, usually negative consequences for all parties involved. Contracts require people to work together to achieve mutually beneficial outcomes —nobody sets out with the goal to fail, or not deliver, and like a garden, nurturing will go a long way to achieving positive outcomes.
- Click-1 The first part entails negotiating the contract. People get trained for this. The learn negotiating tactics and skills to get the best possible deal. Much ‘ potential ’ value is negotiated into contracts. Click-2 Then you sign the contract. This the moment you intimately know the details of the contract. You can just about ‘dream’ it. Click-3 From this point on the challenge is to materialize all the negotiated value. To realize every bit of value that was negotiated by the deal-makers. To realize this you need multi-disciplinary teams in a company to collaborate while executing all the clauses of the contract. These people are often located in different departments, locations of even countries. But in most cases the ‘expertise’ in the company needs to be brought to bear in the realization of the value that was negotiated. Click-4 And while the contract is executed over the years you want to capture all experiences and make this available to the negotiators to apply in future negotiations. Click-5 As the pressure of ‘Business-as-usual’ starts after completion of the deal, as priorities and daily pressures take over again, it is questionable if all the negotiated value will be realized by the company in the years following signature of the agreement. It is likely that experiences will not be fed back to negotiating teams so they can apply this knowledge in future agreements. Click-6 Unless, of course, you manage the contract with a contract management system, entering all the critical compliance items and opportunities, managing all the risks, on the day when the contract is fresh in your memory, the day you know the contract intimately and can virtually dream it, which is the day you sign the contract. Then your future potential value, which was so laboriously negotiated during negotiations, is ‘managed’ and can be realized in the years ahead, regardless if employees leave or not. Execution of the clauses can be monitored. Experiences can be captured and made available to negotiators.
- 1. Contracked is an operating expense, not a capital expenditure? (Difference between renting and buying) 2. No internal IT resources required to manage and upgrade Contracked —desktop applications require a significant investment of time in deployment and upgrades. 3. Easy access to Contracked from anywhere in the world —Contracked can be accessed instantly from any computer with internet access. Contracked gives flexible levels of security and availability. 4. SaaS applications are all based on logged users and make restricting access to certain functions easier than complicated desktop systems. 5. Fast deployment without any business downtime —Contracked can be turned on and off as easily, and as quickly, as a tap. 6. Contracked is regularly updated —deployment of updates for web-based software is so much easier and less-intrusive than desktop programs, Contracked will make available new updates sooner and more often, meaning you get access to all the latest enhancements as soon as they’re ready! 7. Contracked runs on a range of different computers —all running different operating systems? A huge headache for a lot of traditional software companies was getting their programs to work on a wide range of operating systems and hardware configurations. Contracked does not have this problem since it’s all browser-based. If you can access the internet you can use Contracked. 8. Contracked works with you on an ongoing basis —desktop software is usually a case of ‘sell and run’.; once the sale is made, you’re on your own. Contracked works along with you, supporting your application every step of the way, making sure it does what it needs to do, day after day, week after week. 9. Contracked provides the security of a professional data center, regular backups and contingency planning —with a desktop application, it’s all up to you. With Contracked you have none of those worries, with professional providers offering top-level security, frequent backups (and backups of backups) as well as contingency planning should a network fault occur.