Toward Contracting Excellence
It’s easy to understand that contract management is important to business success. It’s not so easy to actually implement contract management practices that contribute to this success. At the operational level, enterprises often can’t envision a nuts-and-bolts strategy toward contracting excellence.
“There is plenty of evidence that improved contracting delivers better business results. There are also strong indicators that senior management is increasingly interested in this topic and would welcome proposals for improvement,” says Tim Cummins, the founder and CEO of the nonprofit International Association for Contract and Commercial Management. “But at the practitioner level, these issues often translate into a perception that the only way to perform better is through the addition of more staff and by executive management giving the contracts or commercial function a mandate for greater power.”
Cummins says that more staff or power for the contracting function isn’t going to happen, in part because they aren’t needed but also because the role and value of contract management within organizations is poorly defined and insufficiently appreciated.
The solution usually isn’t more people or rearranging hierarchical structure, so in most cases that shouldn’t be a concern. But lack of clarity about contract management’s role and value is always indicative of an underlying problem.
There’s awareness that contract management can yield benefits, but exactly what benefits — and exactly how they can be achieved — are often murky concepts. Contracting excellence won’t be possible until that murkiness is cleared up.
Fortunately, enterprises can turn to contract management software for help in gaining the clarity that’s needed to turn contract management into a competitive advantage.
Contract management software includes data gathering, analysis, and reporting features that enable an enterprise to automatically document and measure contract performance. Contract management software will provide customizable metrics to readily reveal how specific contracts are performing, how certain contract types are performing, contract clause that are proving problematic, operational procedures that are inefficient, and other key information.
This level of comprehensive and accurate measurement is essential to maximizing contract performance. Without this measurement, an enterprise will be perpetually in the dark about how to excel at the contracting process. With this measurement, contract goals can be established or clarified and all-important awareness of the importance of contract management will grow within the organization.
It’s theoretically possible to cull this information manually, using paper-based processes, but it’s nonsensical. The software can do the heavy lifting of data gathering and reporting, so that management can focus on interpreting and responding to the data to make the contracting process more efficient.
The automated data provided by contract management software can help identify the specific financial significance of the various aspects of an enterprises contract management structureallowing for more-astute allocation of human resources. The enterprise can begin to think about specific roles in the process, rather than job titles and loosely assigned responsibilities that dont correspond to how contracts are actually managed.
This capability to precisely show people the direct results of their role in contract management also leads to greater buy-in and awareness of contract-related duties — resulting in increased productivity. When people can see that how they manage contracts matters — and that their performance is being tracked — they almost always respond with better execution.
Contract management success is built upon clarity, and contract management software is the tool to lay this foundation. It can help all stakeholders in the organization appropriately value contract management, while always reminding them of how well they, their department, and the enterprise are realizing that value.