3 Reasons to Use SaaS for Contract Management Software

saas for contract managementThe Cloud and cloud computing are much more than just buzzwords being pandered by avant garde tech pundits. They are a reality that savvy business managers should embrace in order to streamline and lower the costs of their operations. One particular aspect of cloud computing that deserves special attention is the hosted model of software delivery. Better known as Software-as-as-Service or SaaS.

While SaaS may seem a brand new concept, its origin dates back to the 1960s, when IBM and other mainframe providers offered computer and database storage on a time-sharing or utility basis. The development of the Internet in the 1990s enabled the development of more advanced centralized computing, which eventually led to the rise of the SaaS software deliver model. The term SaaS was first used in February 2011 by the Sofware & Information Industry’s (SIIA) eBusiness Division.

Here are 3 reasons why SaaS makes sense for the implementation of any contract management system.

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Taking Action Steps in Contract Management

contract management project management

“If you know anything about magic, you know that the best tricks are the ones that are the most simple to perform. Levitation relies on pulleys, floating dollars need thread, and the disappearing coin depends on hidden pockets; all of the most remarkable tricks have the most “obvious” explanations. Similarly, the best methods for managing projects are simple and intuitive. They help you capture ideas and do something with them—no more, no less. This simple efficiency keeps you engaged and on task with as little effort as possible.”

This is Scott Belsky, Adobe’s Vice President of Community and Co-Founder & Head of Behance, explaining the Action Method to project management. The action method is an intuitive approach to task management, which seeks to simplify work. While there are various different approaches to project management, this method stands because of its emphasis on action, particularly action steps. This project management methodology is applicable to contract management.

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Management Skills and Successful Contract Management – Part 1

successful contract managementAutomation should be considered an absolute necessity in contract management. Without it, an enterprise will be hard-pressed to efficiently manage its contracts to maximize cost savings and revenue opportunities.

But automation doesn’t work in a vacuum, and it’s not an instant panacea. To realize the many benefits of automation, an enterprise also must have contract managers who know how to utilize the software and possess certain critical skills.

A recent article on the website of the International Association for Contract and Commercial Management (IACCM), “The Competencies a Contract Manager Needs: A Process Perspective,” examines the skills that contract managers need to maximize the value of contract management software. The article breaks the necessary skills down into five areas, each focused on a specific stage of the contract management process.

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Outcome-Based Contracting Requires Contract Management

outcome-based contractingOutcome-based contracts are becoming increasingly popular in B2B contracting, and their use is likely to continue growing—making the adoption of enterprise contract management software even more imperative than it already has been.

An outcome-based service contract doesn’t require a customer to pay until a specific outcome, as defined in the contract, is achieved by the service provider. Rather than billing for activities and tasks, the provider bills based on the results. The CEO of Novartis recently told The Wall Street Journal that he considers this approach to contracting to be the wave of the future.

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Contract Management Ethics

contract management ethicsThe National Contract Management Association’s code of ethics calls for professionals in the contract management industry to “continuously improve” their “professional knowledge and job performance in the field of contract management.”

The NCMA considers it unethical for professionals involved with contract management to accept the status quo and fail to take advantage of advances in the field that enable improved contract performance.  It’s essentially the same ethical concept that requires attorneys to represent their clients “zealously”—contract management professionals owe it to their employers to do their upmost to maximize return on investment for each contract.

In today’s contracting environment, that obligation entails the use of a digital contract management system, which allows contract management professionals to meet the NCMA’s ethical guidelines and virtually always increases contract ROI. Consider the following specific requirements of the NCMA code and how contract management software helps contract management professionals fulfill both the letter and the spirit of those requirements.

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Contract Management Software Leads to Procurement Cost Savings

procurement cost savingsEnterprises are increasingly recognizing the immense potential of technology to lower the costs of procurement processes, particularly contract management.

A survey by SAP and the Procurement Leaders Network—conducted during the height of the global recession—found that almost 40 percent of responding enterprises increased their focus on technology in order to achieve procurement cost savings during the tough economic times.

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The Rise of the Supertemp

rise of supertempHarvard Business Review recently published an article, “The Rise of the Supertemp,” which focuses on the rise of an emerging class of high-skill professional workers who choose to work as independent contractors rather than traditional “permanent” employees.

The traditional employment model exists in large part because it has been cheaper for enterprises to keep talent in-house than to constantly hire it on the open market. But technological advances have lowered the cost of using skilled temporary workers, while technology has also played a role in the increasing desire among valuable professionals to work for themselves, resulting in enough supertemps to meet the growing demand.

“Today technology makes it easy to plug in, the corporate social contract guaranteeing job security and plush benefits is dead or dying, and 80-hour weeks are all too common in high-powered full-time jobs,” explains the HBR article, by Jody Greenstone Miller and Matt Miller.

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Importance of Automated Contract Discovery in Contract Management

automated contract discovery

Automated contract management can enable companies to expand revenue from contracts, increase productivity, and reduce legal costs. But highly efficient contract management can’t be achieved without first knowing what contracts a company has.

It mays seem that an enterprise would, as a matter of course, know all of its contracts. But most enterprises don’t. Organizations that undertake a contract discovery process are often shocked to find out the actual number.

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Enforcing Compliance in SaaS Environments with Contract Management Software

compliance in saas environments with contract managementAs the use of the SaaS delivery model continues to proliferate, enterprises moving to cloud solutions are discovering how vital it is to pay close attention to the contract terms of their SaaS vendors.

Before signing a SaaS vendor contract, enterprises should internally clarify the needs and objectives that they intend for that SaaS to help them meet. Then they can search the market for a vendor who offers specific contract terms that allow for those needs and objectives to be met. Or failing to find such a vendor, they can try to negotiate the terms they want with a vendor who otherwise appeals to them.

But even after an enterprise has secured the best contract terms it can, the challenge of SaaS implementation is long from over. To achieve the full potential of SaaS, enterprises need to have a contract management system for their vendor contracts.

“Once an organization has done all the hard work of negotiating suitable contract terms and conditions, it can be easy to sit back and think that their job is done. Unfortunately, that’s when the real work begins,” Thomas Trappler, UCLA’s director of software licensing and SaaS contracting instructor, recently told CIO.com.

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What to Consider When Negotiating SaaS Contracts

how to negotiate saas contractThe market for software-as-a-service (SaaS) continues to grow rapidly, with global spending expected to rise 17.9 percent in 2012, to $14.5 billion, and to reach $22.1 billion by 2015, according to the market research firm, Gartner.

Increased awareness of how SaaS works, growth in related technology (e.g. platform-as-a-service), and the low upfront licensing and capital costs are driving this increase, said Gartner’s research director, Susan Mertz.

But as many enterprises transition to SaaS, they’re often unsure of how to find and negotiate service contract terms that best suit their business needs. Many enterprises don’t adequately review the contract terms of the SaaS vendors they are considering, and even more never try to change the terms in their favor.

In a July 2012 article on CIO.com, Thomas Trappler, director of software licensing at UCLA and SaaS contracting instructor at the school, urges enterprises to be more aggressive in seeking terms that will provide the most benefit.

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