Contracts and Commercial Excellence: Building and Managing an Optimized Contract Lifecycle

Topics: Contract Management, Legal

Untitled_design_4.jpgMost organizations today manage their contract management function through a combination of skilled lawyers, processes (either manual or automated) and contract management technology (ranging from simple contract repositories to sophisticated enterprise contract management systems).

Often, organizations manage contracts in silos, with each business unit utilizing its own systems, language, workflows and processes.

Contracts and Commercial Management should be a core competency for organizations.

The focus needs to shift from contracts management as an operational, administrative function to building a strategic contracts and commercial excellence function.

Why does it matter?

  • Better financial and business outcomes: Average bottom line savings of up to 8-10 percent (Source IACCM)
  • Significant competitive advantage: Substantially shorter times in closing business
  • Enable 24/7 coverage: Improved partnering with key customers and suppliers
  • Improved risk management: Significant reduction in the frequency of claims and disputes

Effective contract management requires a multidisciplinary approach with multiple functions and business groups involved in driving an optimized contract life cycle.

Why should enterprises care about optimizing the contract lifecycle?

1. Poorly optimized processes and manual inputs lead to human error, stagnated contract cycles, limited process control, minimal risk management and limited visibility into contract performance.

Result: Missed obligations, unachieved negotiated terms, reduced revenues, increased costs and low compliance.

2. Lawyer resources are misused in editing outdated provisions and terms or managing a high volume of nonstandard terms. 

Result: Bottlenecks and delays.

3. Legal manages risk for the organization but often lacks visibility into contract terms, obligations and value. “Visibility” is not just the ability to locate contracts; it is also the ability to track changes and amendments and to assess how the deal has changed over time.

Result: Risk management is adversely impacted.

An integrated contract lifecycle management framework addresses these key challenges, delivering more efficient governance, reduction in risk, compliance management and reduction in operational costs and improving operational performance.

How and where do I start:

Conduct a contract management maturity assessment to develop a blueprint.

  • Assess current state against priorities and goals (structure, governance, processes, technology).
  • Identify priorities and desired end state including opportunities for realignment of resources and alternative sourcing, refinement of processes and improvements in technology.
  • Develop a practical actionable plan to move forward with recommended changes to process, technology and people to achieve measurable results within realistic time frames.

Set up a contracts management program and framework.

  • Define and implement a common set of standards, best practices, methodologies, tools and frameworks including template and clause libraries and playbooks.
  • Enable shared learning by developing training and knowledge repositories.
  • Create and monitor metrics and analytics to drive improvements, measurement against defined goals and objectives.
  • Execute a governance structure that defines program goals, decision-making hierarchy, program execution strategies, communications and to ensure stakeholder alignment and engagement.
  • Align technology solutions, resource management, key metrics and optimal service delivery and support models.

Implement a contract management system.

  • Choose CLM vendors that focus on your industry and your problems.
  • Before considering feature/functionality, evaluate internal requirements (deployment options, solutions for buy side, sell side or both, application integration requirements).
  • Key features and functionality to consider are contract authoring capability, template and clause library, configurable user defined workflows, redlining and version control, automated approval workflows, e-signatures, automated alerts and notification for key events, integration with ERP systems for payment obligations and with CRM systems to enable deal acceleration.

Develop a structure and process for ongoing contracts management.

  • Develop and manage a comprehensive and configurable contract authoring library with templates for contracts and clauses.
  • Develop and manage a complete obligations life cycle including an obligations library for authoring, approval workflows, expirations/past due alerts and overall status dashboards.
  • Implement and give ongoing support to a contract management system, including system, process, workflows and data management.
  • Provide ongoing support to assist with drafting, negotiation and obligation management.

Morae Legal has a unique integrated contract lifecycle management solution that can be tailored for your organization and oriented around your goals, your priorities, your challenges and your environment.

Reach out to us to understand how Morae Legal can help you build and manage a world-class commercial and contracts excellence function.

Teju has over twenty years of experience in the technology and legal outsourcing industries. She co-founded a disruptive legal outsourcing company and was responsible for strategy and building new lines of business, building and scaling the IT, training and development, project management and quality functions. She has significant experience in developing managed legal services solutions and has deep expertise in contracts lifecycle management solutions - from contract management technology evaluation and implementation to ongoing managed services. Prior to joining Morae Legal, Teju was at Intel Corporation, Sun Microsystems (Oracle) and most recently served as Co-Founder and Vice President at Mindcrest.

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