5 More Important Contract Management KPIs for Evaluating Your Processes
Editor’s Note: For a more thorough examination of this topic, download our complete whitepaper entitled Contract Management KPIs: Ammunition for Optimization.
Given the wealth of available data from an enterprise’s contract management processes, it’s no surprise that many key performance indicators are available to evaluate the performance of an enterprise across several industries. Here’s a list of five additional KPIs to supplement this list of 6 KPIs for evaluating your contract management processes.
- Percentage of Contracts Executed with E-Signature
As more and more public and private organizations are taking advantage of electronic signature technologies to accelerate the execution of contracts, your enterprise needs to keep track of the percentage of contracts actually executed that way. The main reason is that e-signature dramatically accelerates the average time for a document to be signed.
For example, the Office of the State of Hawaii had an average time between four and 12 days for a state document to be signed. With the use of e-signature technologies, the Office State of Hawaii has lowered that average time to between 129 and 181 minutes! To capitalize on these potential timesavings, you need to process all documents electronically as much as possible and this KPI keeps tracks of your progress towards that goal.
- Volume of Contracts Per Client
Remember the Pareto principle: for many enterprises, roughly 80% of revenues from 20% of clients.
In order to better allocate resources, contract managers need to have a clear count of the number of contracts generated by each client. While it’s easy to understand that a contract with a large dollar amount would require a lot of resources, it may not be as clear to understand for a client that has many contracts with smaller dollar amounts. When tallying up all of those smaller contracts, an organization may find that the total could represent a considerable share of revenues. This process can be automated through a centralized enterprise CLM software solution that can provide a real-time snapshot of volume of contracts per client at all times and empower contract managers to make more informed decisions.
- Turnover of Contract Managers Per Client
A common complaint among clients is that they feel that they were just getting used to their current contract manager when a new one is in put in place. A high contract manager turnover is a red flag that the quality of client servicing may be suffering. This KPI allows you to center the conversation on actual data and not “guess estimates”.
Determine what is an acceptable range of turnover for your industry and portfolio of clients, prepare a list of contract managers who specialize in turning around these kind of scenarios, and keep extensive documentation of the initiatives that have been tried to improve the situation.
- Volume of Contracts in Foreign Currencies
Whether it was due the economic woes from China, Greece, and Puerto Rico in 2015 or the “Brexit” in 2016, your enterprise will always be exposed to foreign currency risk when doing business abroad. To quickly answer the question “How bad is it?” and be able to implement the appropriate solution, you need to have a clear idea of your financial exposure and number of contracts affected.
With your CLM software, you can take a step further and set up an automated alert triggered when an exchange rate falls outside a certain range. The alert could go directly to the appropriate contract manager for every client who is affected and provide a summary of key indicators so that the contract manager can get to work right away.
- Internal Qualitative or Quantitative Scoring
Last but not least, every industry and every enterprise has unique demands and requirements. Therefore, your organization may have developed internal benchmarks to keep on top of compliance requirements, yearly initiatives, or changes to retain preferred supplier status from a large corporation or government agency.
Make that qualitative or quantitative scoring or reporting more visible to your contract managers so that they can focus on improving those benchmarks. This is particularly important for accounts that have a high turnover of contract manager. Unless the incoming contract managers receive a debriefing on the importance of that scoring from day one, those contract managers will have a hard time incorporating those benchmarks into their processes later on.
Presenting the appropriate scoring in the dashboard of your enterprise contract manager, setting automated reminders about upcoming evaluations for that scoring, and incorporating prep time for that scoring review into the contract lifecycle are some of the strategies to continuously improve your enterprise’s “grade”.
Between these two lists of KPIs (the other one is available here), you now have access to 11 key indicators to evaluate your contract management processes. As you review these benchmarks, you’ll realize the importance of having a robust CLM software that can be configured to your enterprise requirements and grow with your enterprise.