How have recent technology developments and transformations in the Enterprise Contract Management space made their impacts on your business environment?
As I sit in a meeting with my business partners and am able to access any of their department contracts from my laptop and then scan the PDF for keywords, it occurs to me that technology has made a significant positive impact on our business environment. We have had a software as a service (SaaS) contract management system (CMS) for over a decade. First used as a document repository, with the help of our vendor partner we’ve evolved (and continue to evolve) the CMS into an Enterprise Contract Management system.
As we explore this positive impact, there are four key areas within Enterprise Contract Management that have improved with technology: access to contract data and information, reminders of key dates, workflow tools and interfacing with other corporate systems.
Access to contract data and information
The deployment of the right SaaS solution can be a cost-effective method of providing access to contract data and information. Scanned copies of the contracts and any related documentation (termination letters, assignment notices) are attached to each contract record for easy access and review. Email capability from the CMS enables sharing of the documents with business owners and other stakeholders (audit, regulators, etc.). There is a necessary discipline to the CMS data entry to ensure data integrity, and, in turn, create actionable information. In addition, the CMS can become the repository for your contract clauses, eliminating the endless Word documents or emails with alternate language or revisions to existing clauses. Some CMS tools provide a Microsoft Word plug in with access to a clause library for quick redlining of vendor documents. This is a real timesaver, precluding the need to switch between Word documents during the redlining process, which can easily introduce errors.
Reminders of Key Dates
A contracts repository becomes a data management tool when users enable the functionality for tracking renewal or expiration dates. The level of automation can be simple (an email to a central mailbox) or complex (an email directly to the business owner with a copy of the current contract and instructions on next steps and deadlines to decide if the contract should expire, renew or be terminated). Just as with CMS data entry above, the contract dates and terms must be properly determined and input to ensure contracts do not expire or auto-renew inadvertently. In the event that your CMS is also tied to accounts payable, management of the contract effective and expiration dates will impact payment of invoices, since invoices won’t be matched to expired contracts.
Over the last several years, technology has enabled the integration of multiple workflow tools into the CMS. E-signature has revolutionized the contract execution process, eliminating express mail packets and duplicate originals. Contrast the effectiveness of e-signature capability with tracking down a senior executive on the last day of the quarter for a wet signature, then express mailing the contract documents to the vendor and hoping for a countersigned original.
Keeping an open mind to the changing environment and supporting our internal business partners are key to continuing to exploit these technological advances in the future
In addition, workflow for contract creation, redlining, review and approvals within a CMS tool delivers tracking and status capability that prevents youfrom having to track revisions with a file name that becomes so complicated that you often forget which document is the latest. These time saving functions mean the Sourcing professional can worry less about administrative tasks and focus more on managing risk, price negotiations and the total cost of ownership of a vendor engagement.
Interfacing with other corporate systems
The contract management system as the single source of truth for contractual obligations becomes the hub for information related to financial commitments for budget forecasting, financial reporting, and payment obligations. Integration with a Procure to Pay (P2P) system enables the vendor to invoice directly based on the contract fees and payment terms. Mismatched invoices are automatically detected and rejected back to the business owner to determine why the payment terms on the contract don’t match with the invoice. No more having to review a copy of the contract to check if the invoice is correct. This single source of the truth enables most invoices to be matched to contract terms, verified by the business owner and then paid well within the payment terms window.
These are just a few of the technology developments that have positively impacted Enterprise Contract Management. There’s more on the horizon, with data mining and analytics related to artificial intelligence (AI). Just as with the other developments and innovations, the value of AI is to be determined. Keeping an open mind to the changing environment and supporting our internal business partners are key to continuing to exploit these technological advances in the future.