What is a contract?

file cabinetsWhat defines a contract? Does it need to be a piece of paper?

A contract used to be a piece of paper or parchment or some writing on some thing that outlined the commitments between two parties. The launch of the iPad the other day, however, led me to think about another kind of contract that may be in our future. [Full disclosure: The Exari Boston office is one block from the Apple Store and you couldn’t miss the line outside.]

Couldn’t a contract simply be information about a commitment that has been distributed to the appropriate people at the right time and the right place? A contract as a piece of paper in a drawer or a file in a document management system just doesn’t empower your organization to truly optimize the commitments in your contracts.

For example, what if two companies were to write up an agreement on an iPad and send it out for esignature. Then the company that was going to deliver the services would receive the delivery instructions and service level agreements in their ERP system, the payment information in their accounts receivable system and the renewal information and pricing in their CRM system. The company that was receiving the services would get the payment information in their accounts payable department and the delivery information in their Supply Chain system. Is that still a contract?

Digital contracts that can be created as part of the document assembly process and that leverage technologies such as XML allow companies to distribute the right information to the right people in real time so that they can optimize the commitments in their contracts. Creating contracts digitally also allows companies to risk-rank their contracts as they are being created to incent sales and negotiation personnel to course correct and create the best long term asset for their company.

This enables companies to create better commitments, get paid faster, ensure relationships continue to prosper and renew on time, ensure that shipments go out on time and that the people who manage these processes have access to the right information.

What do you think? Are you capitalizing on the digitization of contracts at your company? Do you use document assembly or contract management today?

Now back to that iPad. Do you buy it now? Wait for 3G or wait for version 2.0?

Write a Reply or Comment

Your email address will not be published. Required fields are marked *

Achieve 100% Contract Certainty™