Enterprises considering whether to implement contract management software should always ask the central question: Will this technology ultimately help the organization achieve its key strategic objectives?
In a recent blog post at CIO.com, Martin Davis, a vice president of IT for J.D. Irving Ltd., points out the perils of adopting new technologies without proper alignment with business goals. Often an organization wants to try a new technology such as contract management software without any definitive plan for how that technology will actually help increase revenue, improve productivity, lower costs, or realize any other specific, measurable objectives.
“What happens in most of these situations is that we end up with a solution being implemented that may or may not address a business problem, has little buy-in from the business users, and is never fully utilized,” Davis writes. “In these cases the enterprise does not get the full return on its investment.”
Davis calls this the “tail wagging the dog,” and he’s right. Technology such as contract management software serves only as a means to an end and should never be confused with the end itself.
Tie Benefits to Strategy
To align its strategic goals with technology use, an enterprise must first employ straightforward business planning to determine what those goals are. Once these big-picture goals are decided upon, clearly defined initiatives should be formulated to achieve them. Defining precisely how the adoption of contract management software will help accomplish these initiatives will provide justification for its adoption, perhaps providing the impetus to finally move away from paper-based contract management.
Automating contract management software becomes a no-brainer once key decision makers realize how much it can tangibly assist in the execution of specific initiatives by providing benefits such as lower labor costs, improved revenue collection, better customer and vendor relationships, contract compliance monitoring, and protection against legal missteps.
Is the Cloud the Answer?
If an enterprise has analyzed its contract management process and decided to implement contact management software, the question still remains: What’s the best solution—an in-house system or the cloud?
Again, strategic planning comes into play. The decision to use a software-as-a-service (SaaS) provider should be arrived at only after careful consideration of how that decision fits into the enterprise’s strategic direction. In most cases, SaaS offers the best contract management solution, but this choice should be based on an organization’s overall planning—not a knee-jerk impulse to get on the “cloud bandwagon.”
The cloud is an immensely attractive solution, but organizations shouldn’t enter into it with unreasonable expectations. It can be highly advantageous, but it’s not a magic bullet.
“The cloud” is a relatively new term, but enterprises have been outsourcing IT functions for years now. There are numerous technical distinctions that define what the cloud is, but from a purely business perspective, many of the key benefits of the cloud are the long-recognized benefits of outsourcing. The choice to use a cloud solution remains at its core a decision to outsource.
That being said, SaaS contract management solutions have evolved to the point that they do offer enterprises more than those traditional reasons for outsourcing. For example, with its anywhere/anytime data and template access, cloud contract management can provide superior service to users “in the field.”
Analyzing how those added benefits support strategic goals will provide further guidance in the choice of whether to invest in in-house software applications and data storage or to outsource with a SaaS provider.
Aligning contract management software’s benefits with strategic goals can provide the necessary internal justification for using the software and help answer whether SaaS is the best option.