3 Steps to Help you Begin your Contract Management Journey
The concept of contract management can get quite complex. There are many different contract-related challenges facing the modern enterprise, and they don’t affect all people the same way. The best way to get started is simple, yet highly effective – we call it the three O’s of contract management: Organize, Operationalize, and Optimize. You can move on to bigger challenges later, for example automation of contract drafting, approval workflows, and negotiation processes. But starting with the three O’s will give you a strong foundation on which to build:
1. Organize. Store all of your contracts in one place. Whether you keep them in a folder on your shared drive or somewhere in the cloud, the key is to identify major gaps and surprises (e.g. missing or expired contracts) and any major contractual risks that could expose you to unexpected losses or brand damage (e.g. uncapped liability, regulatory failures or rogue vendors).
2. Operationalize. Next, make sure the right people know about your contractual commitments and the commitments your suppliers have made to you. By extracting data about obligations and similar operational issues, you can share it, track it, and avoid the pain of poor compliance. This will mean fewer missed milestones, fewer pricing and payment errors, fewer disputes and fewer cost overruns.
3. Optimize. Finally, armed with better information about contractual risks, terms and process, you can make better decisions and streamline the way you do business. You’ll be able to find and eliminate bottlenecks in the contracting process, leverage past deals to drive better negotiation outcomes, and respond with confidence and speed during a crisis. Put simply, better contract insight will help you build a stronger, more valuable business.
Daunted by making changes in a large organization? Consider thinking globally, but acting locally. Your department or division is a great place to start your journey towards contract certainty and contracting excellence. It starts with better knowledge and insight. But as you grow and evolve, greater benefits emerge from automation and process improvement. It pays to think ahead and make a plan for where you want to go.
For more information about contract management, how it can benefit your organization, and additional resources please visit our contract management page to learn everything you need to know.