Category: The Hub
Every day we talk to companies about their enterprise contract management systems, and every day I hear substantially the same thing. Help us automate the drafting of our contracts and we’ll be all set.
Contract Management is not about business process efficiency. Sure, you can be more efficient by using a template system, but contract management is really about risk. What’s in your contracts is more important than what’s on the paper.
The reason many contract management programs struggle is that they fail to deal with the elephant in the room; legacy contracts represent the current risk view, not future contracts. Without addressing your legacy contract assets, you’re not addressing the areas of risk most likely to jump up and bite you.
Unfortunately, most contract management systems focus on document automation and workflow. While companies need these things, they are often the most difficult to implement because they represent change- change in both processes and organizations- and they can be VERY expensive.
That’s why we developed the Contracts Hub. The Hub gives you the ability to store, report and analyze your legacy contracts regardless of how they were created. Once you have that mastered, you’ll be able to see the areas of risk in your contract assets. That’s step one in our maturity index. The Hub is cloud-based for easy implementation, fixed price for both implementation and number of contracts so it’s easy to budget for. The end-user reports are pre-built so a user can be viewing contract data in less than an hour of training.
Make your life easier. Start where the risk is greatest- and the value.
Bill Hewitt is Exari’s CEO. Reach out in the comments or @billhewittCEO.
Lots of people talk about Return on Investment, ROI. They also say that the bigger the risk, the bigger the reward. So what’s your Return on Risk?
Most people view risk as a bad thing, but calculated risk can be very rewarding. Without big risks, there would be no great leaps forward. I recently worked with a company that would cut down a project into four management chunks rather than doing it as one big project that would take at least three years. Not all 4 month efforts took 4 months, but at the end of three years they had accomplished more than any one big project had.
What is the risk of an enterprise contract lifecycle management (CLM) project? It’s mostly has to do with changing behavior. The high degree of business process re-engineering makes people uncomfortable. That’s one of the reasons we think of CLM as a journey; you should start with the highest value/lowest risk component. That’s why we developed the Contracts Hub. It’s a relatively small step in terms of behavioral change, but will give you significant benefits. It gives you one place to store and analyze your contracts. It’s SaaS based and totally secure. And you can starting seeing results in a few weeks, not years. Small steps that lead to measurable results ease the journey and the risk.
Risk is for daredevils. You need results.
Bill Hewitt is Exari’s CEO. Reach out in the comments or @billhewittCEO.
- Deep conditionality and complex business flows. Many of our clients think their contracts are in good shape and straightforward until they dig deeper and get better insight into how their documents are actually drafted, negotiated and approved.
- General document quirks. When automating documents everything becomes a lot more dynamic. What was a simple list, cross-reference or numbering scheme now needs to handle a variety of different conditional possibilities.
- Handling counter party paper. Even when you have your creation and management processes under control, eventually you’ll hit agreements that were not drafted your way or using your terms.
With the right tools these very tough problems disappear. And when they disappear, contracting and business processes improve and require less money and time making lawyers, business-people and clients alike very happy. Exari Hub gets you organised and on the road to understanding your contracts and negotiating processes. Exari Contracts takes the next step and allows you to control everything from creation right through to signature and archive. Come learn what we mean by contract certainty and why we’re pretty happy with what we became when we grew up.
*Editor’s note: This statement has some notable exceptions; automating contracts ultimately lowers the costs of legal work for clients making it more accessible. In a world where the average consumer or small business may struggle to afford necessary legal work, we believe that any measure that reduces the cost of access to the law is a noble pursuit. How’s that for a dinner party spiel?
I’d love to hear from you at @liptonj or leave a note in the comments.
Justin Lipton is CTO and Co-Founder at Exari.
Welcome back for installment two of The 5 Scariest Questions Your CEO Could Ask About Your Contracts, based off our recent webinar of the same name. In Part 1, we detailed the first three situations in which not knowing your contracts inside and out could make you shake in your boots: 1) an M&A event 2) a rogue vendor and 3) an MFN clause. Let’s dive into the rest.
The Data Breach
“Why is the Times calling me for a comment on a data breach of one of our biggest vendors? They would’ve told us about that, right?”
This unpleasant question will make you scramble for a complete picture of your relationship with the vendor. You’ll need to find out if your contracts impose on them meaty and timely disclosure requirements so as to determine if their apparent non-disclosure puts them in breach.
Seeing as your business’ and clients’ sensitive information may be compromised by a breach of a vendor, you will also need to have an immediate and comprehensive understanding of your disclosure obligations to all of your customers. Which events require you to disclose what, to whom, and within what timeframe? Did you make promises to customers that have already – albeit unknowingly – been broken?
Companies often believe that implementing comprehensive cyber security protocol internally is enough to protect themselves from the many liabilities that stem from a hack or data breach, forgetting the exposure caused by third party vendors.
The Risk Riddle
“What are the 10 riskiest contracts and what are we doing to manage that risk?”
This is a riddle indeed, as it may seem easy enough to answer but it turns out you need more than just an educated guess to answer with certainty. Your CEO probably does not want a vague, opinion-based, “it depends,” which doesn’t instill a high degree of confidence and, frankly, looks lazy. So how would you go about reassuring the CEO that their risk and legal experts have a handle on the riskiest contracts ?
To start, you’d need an accurate, high-quality, objective way to measure contractual risk across your contract portfolio. You may intellectually and instinctively know which vendor or customer relationships wave red flags (that Caracas-based company, perhaps?), but your contract language may tell a different story. If you do not have a way to assess risk embedded in contract language, there’s a good chance those high-risk contracts are not receiving the attention they require. And if you can’t articulate risk measurements when asked by the CEO, you’re essentially neglecting your responsibility as a legal or compliance officer to be on top of your risk. In other words, this little question may in fact be the scariest of them all, as it exposes not only your business risk, but your own weakness.
So what to do? Here are a few general rules to follow:
- Deal with early termination risk ahead of time; due diligence is too late
- The devil is in the details in strategic contract relationships – keep an eye on gaps
- Beware the MFN – it amplifies bad pricing unless very carefully managed
- Don’t wait for a crisis to manage risk; be proactive
But how, you ask? You’re right, it’s probably impossible to remember the precise details of every pricing and disclosure clause, to monitor every vendor and partner, and to monitor all your risk.
The one tried-and-true way to gain control and visibility over your contract portfolio is to invest in contract management software that organizes and reports on contract data so the answers to your CEO’s scariest questions are just a few clicks away.
The best software on the market today is the Hub™, an out-of-the-box solution that allows users to store, organize, access and report on the content of and risk in all of their contracts in one central place.
Answer the CEO with Speed and Certainty
Imagine your boss were to ask you one of the five scariest questions this afternoon. Let’s take the one about the most favored nation clauses. You know you have to identify the worst pricing you’ve ever granted along with any price variation and discounts included in the agreement. With the Hub, it’s as easy as opening Exari Hub to the main dashboard:
You can then search for all the contracts with Most Favored Nation clauses, adding filters (such as geography, value, etc.) as you require. With the Hub, what may have been a desperate hunt for contract data becomes a simple click and search.
Special thanks to Jamie Wodetzki, whose webinar inspired and informed much of these blog posts!