What’s in My Contracts and Where are They? Arrgh!
Categories: Contract Management, Supplier Risk and Compliance Management | Tags: Process and Best Practice
Contract lifecycle management looks so easy when you see the solution provider’s demo – check in, check out, modify a clause or add a change order, badda-bing-badda-boom, and you’re done! Meanwhile back in the corporate jungle, your contracts are negotiated and executed on other companies’ paper, amended in emails, with final versions left sitting as hard copies in file cabinets, and then you probably have acquired a plethora of group companies with dubious contracting histories. Technically speaking, you should also be concerned with sell-side contracts. What is the risk exposure?
Starbucks recently had to pay Kraft $2.8 billion in damages as the result of a dispute settled by the terms of a 10-year-old sell-side contract. If all of this isn’t causing you to lose sleep at night, it should!
Let’s say that you have done a great job with the contracts that have gone through your procurement team’s hands. But as you can see from above, you just know there are many contracts executed outside of procurement, where you have little to no visibility. Let’s also say that you have a CLM solution in place, perhaps even a good one, but what percentage of all actual contracts have you onboarded?
Even the rare company with a good grip on a large percentage of their contracts still live in an ever-changing world – with new regulations promulgated daily, throwing your best (by now historical) efforts for a loop. When your general counsel and your GRC team need to know about your exposure to the risk flavor of the month – how do you effectively poll all your contracts as you produce reports on what goes on inside your contracts and go about implementing changes to your terms and policies? It’s an overwhelming challenge for most, one that carries substantial risk.
One company’s sell-side is another’s buy-side, and having ongoing and detailed insight into every contract is critical. Consequently, deep contract analysis – and ongoing contract discovery efforts, including extraction of key terms, and bringing the information into your key enterprise systems – is necessary.
Spend Matters’ upcoming webinar will take a deeper look at this challenge, specifically with:
- A brief introduction to contract discovery and analytics – and the business value
- Common pitfalls for failed CLM, CRM, and other enterprise system projects
- Current best practices in: Contract discovery & metadata extraction; contract review; and handling the details of contract migration