I know most people like common or round numbers, so just in case you are wondering why I don’t cite 5 or 10 reasons instead of 7 -- well, I could. But I like to work outside my comfort zone. Your other question might be “why focus on the reasons for not purchasing a contract lifecycle management system (CLMS)?” Simply put, most consultants or system suppliers focus on devising compelling reasons to buy a system and may even portray those collectively as a “solution” to all your contract management problems (yes, I said “problems”, not “challenges” as most consultants like to say).
Such a solution will not work! Speaking from first-hand experience, I can tell you why. My mission is not to convince or dissuade you from buying a CLMS. It’s simply to help you consider a balanced decision-making process. So, with that, I’m sticking to my 7 reasons why a CLMS won’t solve your contract management problems.
- We have no contract management processes. This can be a topic of an entire whitepaper and range from -- having no processes to having theoretical processes which don’t work -- to having inefficient and inadequate processes. In any of those circumstances, your CLMS will not help you avoid having processes.
Instead, a CLMS should force you to look at your processes. Before determining a CLMS that will work for you, you should create or enhance your processes. You should select the appropriate system based on the requirements described in your processes and then implement them as a tool to streamline those processes.
- We are short staffed. Many companies go into a system selection thinking they can eliminate staff or at the very least, not have to hire staff to fill the gaps. In my experience, I haven’t seen significant overall personnel reductions possible. However, I have seen functions eliminated in lieu of establishing new functions and roles shifting, depending on the system implemented.
You can reduce many manual processes and data gathering functions or eliminate them entirely, providing you system was implemented properly in the first place. Roles can shift to more strategic, value add contract creation, negotiation and management roles, as well as system administration. You can establish more efficient operating which together may bring down the overall cost of the contracting function.
- We can’t find our contracts. A CLMS system will not help you here: it needs contracts to operate. Some contract discovery tools are available to help you find your contracts hidden within a sea of documents located on a server or in the Cloud. But you will need at least a general idea of where your contracts are located.
- Client satisfaction issues. Depending on the cause of the client dissatisfaction issues, a CLMS may give you visibility into some of the common reasons for dissatisfaction. For example, consider what happens when the scope of a project is not delivered! A system may provide visibility into the scope and deliverables, but performance of those activities will still be controlled by a person, not the CLMS. This can cause confusion and lead to disputes.
- Supplier performance issues. Similarly, if your supplier is not performing in accordance with the contract, having the visibility a CLMS may give you into where the disconnects are happening between the contract and performance is not enough to solve the issue. Such visibility will shed light on the predicament but won’t solve the problem. Discussions with the supplier along with a clear remediation plan will must take place to fully resolve the issues between the parties.
- Too many internal approvals delay contract execution. Many CLMS suppliers proudly tout the system benefits in “time to contract.” Although I agree that a system can facilitate time to contract if done properly with streamlined processes in place, the system alone will not solve this problem. If the process is broken, the best a CLM system can do is automate a broken process.
- Reports must convey meaningful data. Ever heard the adage “garbage in, garbage out”? A CLMS could provide an enormous amount of information and statistics. But it must get the information from somewhere. If your system contains erroneous or outdated information or is missing critical data, your reports and statistics will reflect this erroneous, outdated or missing information.
My overall advice is this: do not abandon your plans to implement a CLMS. Instead, before selecting your CLMS, perform some pre-planning and analysis perhaps with the assistance of a practitioner or consultant knowledgeable in CLMS implementations. Go into the project with realistic motives and expectations. That will be the key to the success or failure of any system.
The opinions and views represented in this article are the authors alone, and do not constitute legal advice
ABOUT THE AUTHOR
Nancy Nelson is responsible for providing innovative and practical contract management solutions for companies interested in implementing contracting best practices. She has over 35 years of contract and commercial experience in a variety of industries on both the buy and sell side. She has led global teams for most of her career and today leads ABiz contract and commercial managers in the U.S., India and Bulgaria.
ABiz Corporation brings clarity and innovation to full lifecycle commercial contract management - architecting business models, managing contracts and educating to unlock value, create efficiencies and reduce risk. Featuring a leadership team with more than 50 years of combined contract management experience across a wide range of industries, our consultants and associates have a deep knowledge of all aspects of the contract lifecycle and contracting best practices with expertise based on actual experience combined with theory. We work to uphold our three core values in every client engagement – and – delivering innovation and superior results – every time. See original article in HubSpot link.
Content reflects views and opinions of the author and do not necessarily reflect the views and opinions of World Commerce & Contracting.