Contract Life-cycle Bottlenecks & How To Curb Them: Part I

It is often perceived that an organization’s sales and marketing are major contributors to its bottom line, however contract administration has an equally crucial impact on the organization’s performance.

Big organizations have many teams comprising of legal and contracting professionals, procurement contract managers and so on.

In addition to these teams, there is often the need for other employees to deal with contracts on a day to day basis — For example, a marketing person, who might not have the legal authority or knowledge about contractual clauses would be talking to vendors and executing contracts with them.

Now, this of course gets reviewed by a legal professional within the organization before the contract is signed.

Hence, one can observe that people from multiple departments contribute to a organization’s contract administration, directly or indirectly.

This comes with some challenges that can drown your contract processes if not addressed efficiently.

Here’s a look at the top 3 challenges:

1. No Single Source of Truth — Contract administration involves a lot of steps across various hierarchies and departments, as opposed to the belief that it involves only legal professionals. This leads to a lot of manual steps resulting in stagnated contracting cycles, human error and higher risk.
2. Lack of visibility — Contract visibility includes the ability to track changes and amendments associated with each contract, and monitor contract utilization. Legal is not the only stakeholder requiring such visibility.
3. Non Standardized Approach — With multiple stakeholders working on contracts, there is a lot of outdated legal language and high volume of non-standard terms being in circulation across the organization.

• Apart from legal professionals, teams of paralegals and contract managers often use inconsistent legal language.
• There has to be a library for standard and updated legal content to maintain consistency across the organization.

We will discuss the prerequisites of contract administration and the key to contract process optimization, visibility and management in Part II of this blog.

Also, there are various technology providers who provide comprehensive contract management software applications.

Forrester evaluated 14 most significant vendors on 28 key parameters in its report named The Forrester Wave™: Contract Life-Cycle Management, Q3 2016.

The report shows how each provider measures up and helps decision makers make the right choice from three dimensions: buy-side dominant, sell-side dominant, and all contract life-cycle management.