S-Business: Contract Management (page 4 of 4)

The NAPM also indicates that companies are managing 20 percent more contracts today than five years ago. [Friedman, Jamie, Steven Kahl, Thomas Berquist, and Chris Debiase. 2001. Technology B2B software. Goldman Sachs report (February).]

Fact: Surveys show that 99 percent of companies still don't have electronic or automated contract management systems in place. [Caplan, Jennifer. 2001. Contract automation: Digitizing the party of the first part—Companies turn to web-based applications to better manage corporate contracts. CFO, CFO.com (October 17).]

Fact: Almost 80 percent of business-to-business sales are codified in contracts. [Nyberg, Alix. 2002. A little sanity comes to clauses—After the ink has dried, an expanding array of offerings helps cut down the tedium of tracking the deal. CFO, CFO.com (April 03).]

Fact: Gartner analyst Andrew Kyte predicts that the contract life-cycle management market will be worth $20 billion in 2007. [Kyte, Andrew. 2002. Contract life cycle management: A $20 billion market. Gartner, Inc. report (April 16).]

What You Need to Know
When considering your options for contract management solutions, there are a variety of factors to consider.

1. Does the solution offer a versatile set of tools to help sales managers, contract administrators, purchasing departments, support organizations, and executives effectively negotiate, create, manage, and renew thousands of different types of contracts? While realizing the connection between service departments and contract management is important, it is every bit as important to remember that the best contract management software solutions provide a view into contracting processes for any and all necessary parties within a company.

2. Does the software provide automated support for contract renewals and extensions? While it is important to empower service representatives to serve as contract renewal salespeople, companies should not lose sight of their service reps' main job: providing service. If up-selling and cross-selling contracts and contract renewals takes away from service representatives' ability to effectively do their jobs, then no competitive advantage is really gained from the system.

3. Does it provide constant real-time evaluation of profitability and performance? This is perhaps the most overlooked aspect of contract management, and for that matter, service management software. Far too often, automated systems are designed to gather all kinds of information, but little thought is paid to what information companies should extract from them. One of the biggest gains companies can realize from contract management software is a real-time view into contract compliance and leakage, enabling organizations to enact proactive measures to reverse undesirable trends before they hurt the bottom line.

4. Does it provide sufficient flexibility to support relationships with multiple customers and suppliers operating under partnership and sub-contract agreements? Today's world of business is not an exercise in managing a demand or value chain, as was often implied in the late '90s. Instead, reality has proven that business is actually an orchestrated effort of managing complex relationships between customers, partners, suppliers, and employees. Any contract management solution you deploy should be able to reflect that reality.

5. Does it provide accurate invoicing and contract compliance to maintain and expand existing relationships? As explained above, the most advanced service organizations are realizing that every customer interaction represents a sales opportunity. Only by ensuring that interactions are executed, recorded, and billed properly can companies unlock the selling potential service departments contain.