Why Excel is Not Enough for Contract Management
Excel is a great tool.
It is not only the standard in spreadsheet software, but it is also synonymous with efficient business analysis. From bankers to healthcare consultants to desperate bachelors, the user base of Excel is ever growing. However, this amazing business tool falls short in the realm of contract management.
More specifically, there are 4 reasons why Excel is not enough to make the contract management process efficient and seamless from start to finish.
1. Lack of Big Picture
Excel doesn’t provide an overview of your entire contract lifecycle. Sure, you can argue that a crafty Excel whiz can whip out a dashboard in a couple hours. Still, he or she would have to add that same dashboard to every single file and assume ceteris paribus. Do things always remain the same at your office? Most likely not, which in turn also makes the process of creating and updating a master dashboard a very hard task with Excel.
Excel is an ever changing canvas, which can be the source for very expensive mistakes even for some of the smartest people on the planet. Take the guys at JP Morgan, for example; JP Morgan’s Chief Investment Office was in dire need of a value-at-risk model for a synthetic credit portfolio, so the company hired a quant expert (a.k.a. Excel whiz and model developer). What did he do? He ran a complicated model that “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.”
Smart company. Brilliant guy. $6 billion loss and $600 million in fines.
3. Lack of CRM Features
Contract management requires not only a dashboard, but also a set of CRM tools. It is necessary to have an overview of the processes, but it’s equally important to have the ability to assign action items to the appropriate coworker or client. If you insist on running deal-making purely on Excel, you can find yourself in hot water like JP Morgan (poor guys, they don’t get a break!) did with its hiring practices in China. Several sources have linked the errors to the improper use of Excel and unscrupulous decision making.
It is clear why contract management benefits from automation. First, there’s the strict coordination of contract clauses; this is necessary to minimize contract risk and ensure proper compliance with industry and company policies. Second, automation takes out the guesswork from providing alerts regarding contract milestones (e.g. renewal dates, review deadlines). Finally, automation allows you to execute contracts faster with e-Signature. None of these three features are available on Microsoft Excel.
When it comes to contract management, contract management software is superior to Excel in many aspects including:
- Provides you with an up-to-date dashboard without you having to do any programming.
- Minimizes the room for human error by limiting the access of users to specific areas only.
- Combines power features, such as library of documents and email clearinghouse.
- Supports key contract management automation features, such as pre-scheduled email alerts, e-signature capabilities, and file storage capacities.