This is the first in a two-part series outlining pre vs. post-award contract management solutions.
We recently attended the IACCM conference in Las Vegas and had the opportunity to talk with and learn from procurement and contract managers from a wide variety of sectors. A lot of our conversations, not surprisingly, centered around the common problems that contract managers face at all stages of a contract life cycle and if it's feasible to think that software can help solve these problems.
Additionally, there was quite a bit of talk about which solution does what, and how to tell the difference. In that light, we've posted an excerpt from our recent white paper covering that topic. This white paper was based off of research conducted by interviewing over 100 companies. In part 1, we'll cover the benefits of post-award contract management and the problems it aims to solve.
Post-Award Life Cycle: Less Costly, Easier to Implement
98% of the companies we interviewed during our research were using Excel as their contract management solution. The 2% using contract management software had not been able to implement the solution at their company. A post-award solution has a strong benefit in that it is much easier to implement and realize value from.
Post-Award Required Features
Of the companies looking for a contract management solution, the primary interests were accessing a secure contract repository and in setting up email alerts and reports based on custom parameters for contracts in order to monitor:
-Cost Reduction: opportunities to renegotiate contracts.
-Revenue & Milestones: Provide budget visibility and focus on key clients/actions.
-Compliance: Maintain compliance items to avoid costly penalties/liabilities.
-Time Expense: The symptom for managing the above was time wasted.
Other desirable features included role-based access management so that employees and others only viewed what was relevant to their position.
Ease of Use is the Most Important Feature
Ease of use was cited as one of the biggest items under-appreciated by companies that tried and failed to implement a contract management software solution. One company had spent a couple of years and over $80,000 trying to implement a full-life cycle solution. These companies that failed to implement a system identified complexity and lack of ease of use as the primary adoption barrier within their company.
Unsaid but visible to us was that while software was part of the problem, internal disagreement, lack of a champion within the organization, and lack of a project lead had also contributed significantly to the failed implementations.
For the vast majority of companies looking for a contract management solution, it made sense that they were looking for a better way forward than Excel and sought:
-Incremental improvements that solved 80% of their objectives.
-Easy cost and time expense justification.
-Easy adoption for all users within the organization, with little time for training.
To use an accounting analogy, contract managers using Excel were looking to trade up to something like Quickbooks; something easy, affordable, and easily adoptable, but a long way short of the full-blown complexity of an ERP solutions like SAP.
To determine if a post-award solution is a fit for your company's needs, the key is to identify where the highest revenue, cost, or risk lies in your current contract process.
If most of your revenue increases, cost reduction opportunity, and compliance risk mitigation lies in managing the contract after it's signed, then you can look at a post-signature only solution. These tend to be easier to use, faster to implement and more affordable than a full CLM solution, but are a big step forward from using Excel.
Next, we'll cover pre-award contract management.