Historically, businesses have struggled with successful adoption of Contract Management systems across their entire enterprise. Often times, only a small department will use the system around their specific processes, leaving other areas of the business in the dark. While this may increase process efficiency for one group, it does not solve the issue of contract certainty across all disciplines and all contract types.
The problem is that in the past, Contract Management has always been an extension of another solution (ie ERP or CRM). The systems also relied heavily on customized workflows, as they focused more on contract processes instead of the contract itself. These systems have failed adoption for various reasons, such as:
- Lack of proper visibility across the entire enterprise
- High risk of duplicates due to multiple systems for each department
- Complex customization for each users requirements
- Fragmented process of managing and storing data
Exari has taken a completely different approach to Contract Management from the start. We think of contracts as golden sources of data for your business, not just a trigger for a workflow. We offer a stand-alone Enterprise Contract Lifecycle Management Platform, NOT a thrown together feature spun off of an ERP or CRM. The Exari solution allows all disciplines within an enterprise to leverage the system without forcing them into an unnatural process, or make them duplicate their efforts.
Legal can stay in Word, Sales can stay in their CRM, Finance can stay in their ERP-but while still continuing to leverage the system. Having a centralized platform that can seamlessly share data with other systems across the entire enterprise has proven to be CRITICAL for adoption.
Stop siloing your data and increasing maintenance costs for fragmented processes. Join the 21st century and achieve 100% contract certainty across every contract type in your business with Exari Contracts™ Enterprise.
Once organizations reach a certain size, companies will have to face a constant balancing act: deciding whether (and how much) to bring legal staff on as full-time employees. As in-house counsel, I recognize the unique value outside lawyers bring to the table. They can provide important expertise, offer a second opinion, and jump into a project when in-house counsel get swamped. At the same time, companies are becoming increasingly aware that it makes sense not only to have smart lawyers on speed dial, but to actually bring them into the office and embrace legal automation.
Hiring in-house counsel has several clear benefits. It gives you a dedicated person who is always available when you need and who becomes a part of your company’s culture, tailoring processes to your organization’s needs. These are people who can spot legal issues early and who can keep their finger on the legal pulse of the organization. Most importantly, if you have a steady flow of work, it just makes sense budget-wise to allocate that work to a dedicated member of your staff. Especially with rising legal costs and the advent of legal automation technologies, in-house counsel in many instances present an attractive alternative to the high hourly rates of outside counsel.
I think we will continue to see organizations expand their in-house legal departments. With costs of outside counsel as compared to inside counsel, and with technology bolstering what can be handled internally, it seems inevitable. More and more, what has long been necessary drudgery can now be automated, freeing up in-house counsel to do substantive work, and making them more productive than ever.
And with that comes an opportunity for companies like Exari to advocate for bringing our contract management solution to growing legal departments. As Exterro’s 2016 In-House Legal Benchmarking Report explores, most in-house counsel surveyed plan to expand their departments. A full 77% said that they expect to perform more legal services in-house in the immediate next two years alone.
Along with that plan for expansion comes a bet on technology improving formal processes. A solid contract management system will be a key part of handling the day-to-day work of these additional employees, which is why I’m so proud and excited to work at Exari (and make use of our own products). Legal automation is the future—not replacing, but rather supporting growing in-house legal departments.
Today we issued a press release about Silicon Collar, a new book written by noted industry analyst Vinnie Mirchandani. Vinnie has been independent for a while now, and has penned a number of books including The New Polymath and SAP Nation. Vinnie always brings a pragmatic view to his topics, and this new book is no exception.
In his book, Vinnie provides what he calls “an optimistic perspective on humans, machines and jobs”. Basically, Vinnie writes about the rise of automation and how it will and is affecting the economic foundation of developed countries as well as accelerating economies in undeveloped countries. Exari is featured in the book as we explore the concept of “virtual contracting”. Today, we can use technology to help companies drive 100% contract certainty into their drafting, negotiation and contract execution process, but contracts still require significant legal department intervention.
As machine learning and Artificial Intelligence technologies evolve, we can see how contracts can move toward complete automation. The business terms of a deal, when properly extracted and understood, will be able to automatically form a legally binding contract in real-time. Understanding contract assets is a key part of reducing corporate risk, maximizing revenues and lowering costs. More importantly, it’s a vital part of the global commerce engine. Technologies like Blockchain (distributed ledgers) will require “smart” contracts that can be automatically formed based on the particulars of a transaction.
The future is not that far off; many companies are using this technology today to extract information, which basically only reduces the cost. Exari intends to be at the forefront of this revolution in creating the first virtual contract. It’s exciting stuff.
To buy “Silicon Collar”, click here.
In Cambridge, just across the Charles River from Exari’s Boston headquarters, MIT’s Bengt Holmström and Harvard’s Oliver Hart have spent decades researching contracts, both how they look and how they shape our world and daily lives. On Monday, they were awarded the 2016 Nobel Memorial Prize in Economic Science for their research into “Contract Theory.”
Reflecting on the work of Dr. Holmström and Dr. Hart, The Royal Swedish Academy of Sciences, which awards the prizes, explained “Contract theory provides us with a general means of understanding contract design. One of the theory’s goals is to explain why contracts have various forms and designs. Another goal is to help us work out how to draw up better contracts, thereby shaping better institutions in society.”
The work of both economists isn’t merely theoretical, but carries every day, real world implications. Dr. Holmström’s work explores the effects of human behavior on employment contracts, identifying what type of contracts best balance incentives, compensation, and risk. Meanwhile, Dr. Hart takes a more macro view, exploring the actual structure of contracts, concluding that contracts must remain “incomplete” insofar as they should outline how a decision should be made since it’s impossible to develop rules for every eventuality.
By recognizing their seminal research, the Academy has shone a spotlight onto both the universal importance of contracts themselves and the many contracting issues facing businesses as new technologies and best practices revolutionize a generations-old system.
As data has replaced approximation, CXOs are demanding complete and immediate visibility into every corner of their businesses. Risk mitigation. Regulation compliance. Revenue recognition. Spend control. Accelerated sales. There’s no part of a business that isn’t governed by contracts, which have turned enterprise-wide contract management from a “nice” feature into an absolutely necessary one.
In the closing of their announcement, the Academy explains that thanks to Dr. Holmström and Dr. Hart, “we now have the tools to analyze not only contracts’ financial terms, but also the contractual allocation of control rights, property rights, and decision rights between two parties.”
Thankfully, those tools are available. At Exari, we’re obsessed with helping companies understand the vast amount of complex data residing in their contracts. Our patented contract management software is so effective at transforming contracts into data, we consider it providing 100% Contract Certainty™. If you’re interested in learning what Contract Certainty can mean for your company, you can contact us here or have a look at this quick video.
Mat Calabro is Exari’s Marketing Specialist. Reach out in the comments or on twitter @ExariMat
Here’s a strange comparison for you: contracts are like concrete. But what do legal agreements have to do with building materials?
Think about a concrete foundation. If a foundation isn’t rock solid, whatever is constructed on top of it could collapse without warning-the same is true about any company. A business is only as strong as the contracts it’s built upon and its ability to fully understand and comply with those contracts. Things like weak liability and intellectual property protections, missed contractual milestones, inadvertent breaches, and misunderstood termination for convenience clauses are all recipes for disaster.
What if your company could eliminate that unpredictability and achieve total certainty over what’s inside 100% of its contracts? At Exari, we see this as a simple three-step process.
Step 1: Gain visibility into your existing portfolio of contracts.
Whether your company has dozens of contracts or thousands of them, it can be nearly impossible to keep track of every single requirement, restriction, and deadline. When your company’s revenue and reputation are on the line, staying ahead of your obligations and out of breach is imperative. But how could you do this without having to read every clause in every contract?
The answer is simple: Turn your documents into data. When contracts are imported into the Exari system, the most important clauses and information are pulled from the document, allowing business users to visualize and analyze this data in seconds with the help of dozens of standard reports.
Step 2: Gain visibility into your contractual risk.
Every contract contains several important risk factors…termination clauses, IP protections, payment terms, liability limitations, etc. Could you assess precisely how much risk is contained in a particular contract? How about the risk contained in your entire contract portfolio? Unfortunately, for many companies the answer is “no.”
That’s why Exari created a revolutionary algorithm that analyzes more than 20 specific contractual data points, determines the contract’s risk to your organization, and assigns it a simple risk score. And since these scores are based on a uniform set of data, you can compare apples-to-apples and fully understand the risk (or lack thereof) across your entire enterprise.
Step 3: Gain visibility into your contracting practices.
The easiest way to make sure that your company is creating low-risk agreements is to develop a standard procedure that promotes good contracting practices and prevents so-called “rogue contracting”. The question then becomes, how do you both tightly control your contracts while still providing the flexibility necessary to prevent legal department bottlenecks?
Exari’s DocGen™ allows all business users to do just that with an innovative and streamlined document automation system. Using a simple question and answer “Wizard” interview, DocGen™ lets any user create pre-approved, ironclad contracts, while integrated workflows loop-in the correct people, as needed.
Achieving 100% Contract Certainty™ has never been easier for businesses large and small. Think of it as reinforcing your wobbly foundation. You’ll be glad you did.
And since a picture’s worth a thousand words, please take a couple minutes to enjoy our newest video “100% Contract Certainty.”
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.
From Body Parts to Nuclear Reactors – How Document Generation is Helping Lloyd’s Reshape Risk Management
For over 300 years the Lloyd’s market has been one of the most innovative sources for risk management solutions. From body parts to nuclear reactors, Lloyd’s is a one stop shop for the world’s specialty insurance and reinsurance needs. It’s an ecosystem where close personal relationships, proximity of brokers and underwriters and actual paper policies still matter – and for those willing to work within the square mile of the City of London, it’s incredibly efficient.
There is, however, a very clear and challenging problem that is facing the London insurance market. In the race to expand business and diversify revenue streams there’s an increasing need to tap into technology to connect producers to brokers and ultimately the underwriters of risk.
Although the high touch of the Lloyd’s market works well for underwriting vast amounts of risk for large companies, it isn’t as practical for higher volume, lower value business. With the growing need to tap into these markets, but lacking resources, it is clear that a more automated document generation approach will help to drive productivity, resulting in innovation and growth.
Steve Jobs once told Wired Magazine that, “Creativity is just connecting things.” If that’s the case, then Lloyd’s brokers and, indeed underwriters, are getting creative. If the world is getting smaller it’s technology that’s driving us forward.
This is why we at Exari have created our Submit, Quote, Bind solution, for agents, brokers and underwriters.
Using DocGen™ , Exari’s document generation software, agents are now able to quickly and accurately capture risk information to help generate quote and policy documents. We removed the operational barriers and increased efficiency to make the job easier, reducing time, cost and risk.
This solution is as easy as 1, 2, 3 – with the help of the most advanced document generation software on the market.
- Submit: Using a web based interview the broker can gather all risk information and with the push of a button, create the submission document
- Quote: Carrier can create a quote or decline to quote using the automated system
- Bind: Once the quote is accepted it is set to bind! The underwriter can automatically create the documentation and the invoice.
Exari’s SQB solution is empowering Lloyd’s Syndicates with a source of new business, enabling Agents to quote and bind business locally, with compliant and pre-approved documents from the Insurer, who ultimately accepts the risk. Now, reporting and audit is fully transparent with unprecedented visibility into all data.
SQB is already being adopted by the US, Asia-Pacific and Nordic regions as all insurers are seeking more business in the most efficient way they can. To learn more check out Exari’s Submit, Quote, Bind webpage.
This week, DerivSource interviewed Alexandre Bon, Senior Solution Architect at Murex, to discuss the growing needs of an Enterprise View of Data in Financial Service firms. He explains how it is essential in order to comply with both the FRTB and SA-CCR requirements, as firms need full visibility into client and trade data. By concluding Bon’s Q&A, here are the important steps you need to be aware of and follow in order to better comply with these regulations.
1. Improving communication between all departments will build a better enterprise view of risk and capital
By bringing departments together with full transparency into all information, regulation-related strategic decisions can be more efficiently built out. For example, by bringing together the credit, collateral management, treasury and trading departments, will link together how collateral management operates and how trading desks will price the effect collateralization of new transactions. In return, this will provide traders with the information they need to efficiently evaluate which entity they should execute a trade with.
Bon stresses the importance of full transparency into all data at an enterprise level view. Banks need to move to a real time view of their regulatory capital positions in order to properly comply with the FRTB.
2. The SA-CCR has an implementation deadline for many firms
The new standardized approach is scheduled to take effect January 1, 2017. This includes a comprehensive approach for measuring counterparty credit risk associated with OTC derivatives, exchange-traded derivatives and long settled transactions. For more information on what you need to consider in order to comply, you can find it here.
Since a deadline is quickly approaching, more and more firms are beginning to put budgets into place to either build their own system or evaluating enterprise solutions for adoption (take a read through our Build vs. Buy whitepaper for more information).
3. How to integrate departments and getting over that initial challenge “hump”
Integrating departments can be extremely difficult, as further discussed by Bon. It’s no surprise that he mentions the challenges that firms will face, such as how they all operate and run differently, their data sets are incompatible or out date or can be duplicated with inconsistencies. The worst of it- they have no central data repository. He mentions that some firms have built their own regulatory reporting systems on top of data warehouses, but they just don’t cut it.
Implementing a central data repository to allow for full visibility into all data and reporting for every department is essential. It will help establish clear data management processes for maintaining clear, consistent data across the entire enterprise. By moving toward an enterprise view, the information can be used to rationalize processes, understand which businesses are most profitable, and divest those that are not.
Firms will not only be in compliance, but looking further ahead they can develop enterprise-level risk tools for analyzing positions and capital data in a much more efficient way. Banks need to adopt a more innovative approach for dealing with the high cost of regulations, such as managing the total cost of trading. An Enterprise Contract Management System is just that approach.
To learn more about how an enterprise contract management system can help you reduce your firm’s risk, download our Contract Risk Playbook: Risks Hiding in Plain View, an advanced guide for corporate boards and senior executives today.
DerivSource is an independent information source and online community for OTC derivatives professionals globally, with a community of over 15,000 members globally.
*DerivSource, SA0CCR and FRTB: Compliance Drives Renewed Push for Enterprise Data Management. 2016. http://derivsource.com/articles/sa-ccr-and-frtb-compliance-drives-renewed-push-enterprise-data-management-0
It was a beautiful afternoon in Boston as Chief Compliance Officers from the area convened to discuss the changing role of compliance at their financial services firms. The venue, Top of the Hub, is situated at the highest point in Boston – amazingly appropriate given the conversation quickly gravitated towards visibility and the difficulty of transforming ISDA Masters & CSA’s into data that can be more easily analyzed and operationalized.
Conversation was lively with several topics resonating with all participants. A significant theme of the conversation was around the changing role of compliance within the business. Compliance leaders are now asked to sit at the negotiation table with clients and have become a key member of the team. With the regulators playing a more resident role in corporations, compliance has become a more visible component of daily activities. There was a general theme that the integration of compliance into the business functions has also integrated the role of Chief Compliance Officer.
When speaking about ISDA Master Agreements, many felt that this was an area for ongoing automation and restructuring. Specifically, the harmonization of the ISDA-related data would reduce cost and risk for many firms. The advent of tools in this area is an opportunity for the teams to improve their process. The process of collecting the ISDA detail is very manual today. Once automated, however, this data would better enable companies to address questions regarding most favored nation clauses and other contract call outs.
The general consensus is that there are many regulations for the buy side firms to cover. It is easy for things to fall through the cracks as many companies cannot cover all regulations with a SME. The attendees discussed that the maturing of the processes was key to success, with several recommendations offered. Three of these suggestions included:
- lobby ISDA collectively to request more structure,
- designate key staff members to be SMEs in areas of greatest concern and,
- agree on a standard CSA
The attendees discussed how to best direct their limited resources, thus being a main concern. One recommendation was to provide incentives to the organization for meeting guidelines. A detailed conversation was held recommending teams to review the operations logs on a regular basis to spot check for any opportunities open for improvement.
Firms at the table had many different types of risk: fiduciary vs. deposit risk, while some companies were faced with both risks and answered to multiple regulatory bodies, that often had conflicting recommendation or reporting. Additionally, the impact of international regulation was discussed as an area of rapid change that is also causing workload on these teams.
Overall, there seemed to be consensus about ways to improve:
- Implement a central repository for all important agreements
- Capture key contract terms related to risk and compliance
- Provide proactive visibility for business users that quantify the indicators they find most valuable
The event ended strong with many of the participants exchanging cards and committing to continued sharing of best practices. Many thanks to the participants for such a lively discussion and to Exari for hosting an amazing event!
Justin Lipton is CFO and Co-Founder at Exari