Coming to work. Opening your contract drawers, maybe the one with the key. Nice and tidy. All in paper. All signed. All there. But something feels wrong. What is exactly in there? How many contracts? Are they all still valid? When do I have the next renewal I should cancel?
If this happened to you, then you are on the right page. (In case you have already decided you need a Excel contract management tracking system, click here)
1. Why introducing a contract management system?
What is a contract management system?
Contract management system definition: contract management is the management of contracts made with Business Partners (customers, suppliers, partners or employees). It is the process of systematically managing contract creation, repository, execution, and analysis. Contract management includes at minimum:
- Contract “Metadata” database for analysis
- Contract implementation tracking
- Contracts change monitoring and versioning
- Contracts repository
You can extend contract management to following aspects:
- Managing the contract templates
- Maintaining a negotiation guideline
Commercial contracts covers a wide range (purchase orders, NDA Non disclosure Agreement, Consultancy, Licencing, Representant office,….) and are only the tip of the iceberg of all contracts that may be concerned (Employee contracts, intellectual Property, asset management,…).
A contract management system, is a framework ensuring contract management. Obviously, It can have many forms, all of them not excluding each other:
- Process / Guideline (like ISO for e.g., archive system,…)
- External provider (such as lawyer), where your contract management is a subset of their infrastructure
- Software (Excel, SaaS, ERP,…), such as SAP for e.g.
The system is ensuring primarily 3 functions: the searchability, the auditability and the repository. Obviously, many additional features are possible, such as templates, signing and notifications. This is why you need a checklist for contract management implementation.
Where to download the Checklist:
Go directly at the bottom section of this article.
Contract Management system as part of SRM
While contract Management is covering all business aspects, we will focus on contract Management concerning suppliers, vendors and partners. This is basically the same for customers or employee, but would make this article too broad. For instance employees contracts have some specificities which I do not want to focus on here. Unless you are a very large company, there is a high probability that your department will manage their contract separately.
So let’s have a look on how Contract Management is supporting your Supplier Relationship Management.
Why should a contract management system be introduced and what are the overarching goals?
Well, I crossed this bridged some years ago, when I realized that I had lost myself in poor Contract Data Management. I missed contract deadlines, I spent hours looking through .pdf files for a date. The very day I lost face in a meeting, needing about 5 loooong minutes to know what was the status of a specific supplier contract, I decided it would not happen to me again. Here are the many reasons why you should move, some might being more important to you than others, but all having their relevance:
|Better deadline management||Transparency across Depts.||Efficiency|
|Protect Business Relationship||Avoid contract breach||Minimize risks|
As contract volume and number of contracts increase, effective contract management becomes more crucial for your business strategy. Don’t spoil the time and resources you have spent negotiating contracts: contract management – having contract monitoring, deadline tracking and implementation dashboard – will support you in successful implementation.
2. Checklist before taking decision on your contract management
Implementing a contract management system is not a decision to take in 5 minutes. This is why I have built a contract management framework template. You shall go through it before taking any decision on your contract management software, and even before you start the project.
The check list has 4 areas:
- Project objectives
- Contract Management Framework
- Features expectations
What this checklist does not have, is an assessment on how mature you are with contract management, and what are your current contract management processes (signing policy, 4-eyes principle,…).
Contract Management: project objectives
Contract Management Framework
Contract Management: Features expectations
Contract Management checklist template: Summary
Conclusion and Benefits of the contract monitoring checklist
Having a check list will help you making the right choices, adapted to your needs. And this may not be the fancy SaaS you saw on internet. Maybe you need more, maybe you need less. Check it out and download my checklist for free. To download, register your email below, and upon submitting you will get a link to download.