How To Make Contract Management A Success

Please welcome this guest post from Daniel Ball, director at Wax Digital

According to PWC, the average organisation has 20,000-40,000 contracts, and if they’re not managed effectively the consequences can be disastrous for businesses. Being unaware when contracts are up for renewal and not having full visibility of supplier T&Cs can put organisations at serious financial and legal risk.

Our survey of 200 procurement professionals on the benefits they’re experiencing with eProcurement found that 60% use contract management software, and it turns out they’re clear about what they want to achieve from it:

  • Efficiency: The most common reason why procurement professionals digitise their contract management is so that they can store contracts in a single, secure environment. 73% claim that being able to easily and quickly access information such as expiry dates and service level agreements (SLAs) is one of the top three benefits for them.
  • Negotiation: The majority of procurement professionals are keen on the software alerting them when contracts are due for renewal and supporting them with the supplier negotiation process. 58% want contract management to help them monitor existing arrangements with suppliers and assess if they need to negotiate with them for a better deal or look elsewhere.
  • Compliance: 55% use contract management software to help ensure that they remain compliant and that their suppliers have the correct health and safety certifications in place.

But while procurement professionals are clear on the benefits they want to achieve with contract management software, there will inevitably be some obstacles to overcome when looking to implement a new process. And, gaining employee engagement with this new way of doing things could be the first big hurdle.

Without buy-in from employees, including both senior managers and junior staff, contract management is unlikely to be embraced by the organisation as a whole and the benefits simply won’t be achieved. That’s why it’s key to involve senior management from the very beginning of the implementation. Procurement teams will then be in for a better chance of gaining support for the change from leaders of the business, and that buy-in will happen with employees across the organisation.

Training too is essential, as only with adequate guidance on how to use the software will users fully appreciate the benefits it will deliver. Showing all potential users the functionality offered by the system will enable them to take full advantage of the software and ensure the business makes financial efficiency gains and remains compliant.

It’s not just employees that need an introduction to the new approach to contract management; suppliers too will be affected by this change, as contract management software acts as a collaboration tool to help both parties agree the finer details on contract terms. Some suppliers will have experience of the software, others may not, so take steps to engage them in the process and help them understand how they are set to benefit from it too.

Measuring its success is also important. Establishing the intended benefits prior to implementation will give businesses a clear idea of what to keep track of, before measuring it and reporting it to the board. This doesn’t just have to include quantitative data; gaining feedback from employees on how the platform has supported them will also demonstrate its success. For success measures, think of the value of all contracted spend safeguarded with the tool, or the percentage of all contracts on it.

There’s a lot to gain from contract management software, but it will only be a worthwhile move for the business if it’s underpinned by a well-thought-out implementation plan. Getting all key stakeholders involved is how to win hearts and minds that will drive the software’s success.

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