Your poorly managed contracts are costing your organization time and money. Just how costly is the problem? According to McKinsey & Company, “suboptimal contract terms and conditions combined with a lack of effective contract management can cause an erosion of value in sourcing equal to 9 percent of annual revenues.” Or, about $2.5 trillion in value. Thankfully, it doesn’t have to be that way.
The Value of Contract Management Software
Dedicated contract management software can help organizations better manage their entire contract portfolio. How? Through improved organization, customized access, enhanced security, milestone alerts, and much more. Contract management software provides organizations with greater control of their contracts, and that can translate into improved revenue, reduced costs, and more operational efficiency.
Choosing the Right Contract Management Solution
It’s true that there are a number of contract management software options. So how do you choose the right solution to fit your needs? The first step to successfully approaching contract management services is to assess what you’re currently doing. This can help to determine whether there are any risky gaps in your processes.
Some important questions to ask as part of this assessment include:
What is the breadth of our current contract portfolio? (If you don’t even know how to locate existing contracts to determine this, that’s your first sign your process needs an overhaul.)
How are we leveraging our learnings from past contracts to strengthen the terms in new agreements?
Who is responsible for each task that needs to be performed during a contract’s term? What does each party need to perform their tasks?
How are we tracking contract performance once agreements are signed?
What information do we need in order to determine whether a contract should be renewed or terminated? How much time do we need to make this decision?
Establishing Goals and Strategies
The only way that a company can ensure that it selects the right contract management solution is by first taking a long, hard look at its existing contract management strategy. There has to be an internal audit and honest assessment of what is actually working and what the existing inefficiencies are within the contract management process.
Ultimately, the evaluation of a solution’s advantages and disadvantages depends on the company’s pre-defined contracting goals and objectives, so it’s helpful to regularly revisit and revise your list of contract management software requirements.
Dream Big, But Stay Realistic
The key to selecting the right contract management solution is to be realistic about your company’s contract management needs within the context of your budget to ensure you only pay for contract management software that has all the necessary features and functions.
Ready to delve deeper into the world of contract management software? Check out our Buyer’s Guide to Contract Management Software and get some strategies that will help you choose the right solution. You’ll learn how to assess your current contract management strategy, how to determine you contract management needs, and discover what selection best practices will help you find the perfect solution.