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All business-to-business companies today develop, sign, and store their fair share of contracts. While these contracts hold valuable information about partner relationships, incentive structures, and payment timelines, contract management is rarely seen as a crucial source of value.
Instead of viewing contract management as a vital part of the corporate infrastructure, companies tend to accumulate contracts in large data stores, managing them through paper filing, disparate electronic repositories, or makeshift solutions being labeled contract lifecycle management (CLM) systems. Not only are these rudimentary systems cumbersome and time consuming, they offer little contract visibility, poor access capability, and pose serious threats for organizations — such as lost contracts, missed milestones, compliance risks, and significant revenue leakage.
Comprehensive CLM systems, however, organize contracts in secure, searchable repositories, and pose an obvious advantage over contracts housed under paper or basic electronic filing systems. While many companies choose CLM systems in an effort to administer more contracts, the greatest value you can receive is related to the visibility of your actual contract performance — understanding if your contract is driving organizational revenue.
While the speed at which contracts are closed is important, understanding the success or failure of each contract is equally pivotal. In order for companies to truly create impactful and fruitful contracts, they must implement a contract management system with in-depth analytics capabilities. Here's why:
Benefits of CLM with analytics
- Tracking the value of high-impact incentives — Many B2B companies rely on channel partners to grow revenue and improve market share. Often companies develop complex incentives to encourage successful channel partner relationships. While incentives can boost revenue, companies often lack the visibility needed to know which programs succeed and which flop. By employing a CLM system with a robust analytics platform, companies can better track incentive value and develop impactful future programs.
- Visibility to alerts and milestones — Organizations often house important contract milestones in basic contract management systems that lack the ability to proactively alert organizations of upcoming renewal dates and milestones. In some cases, this can lead to thousands in revenue losses. For example, one company housed more than 300 contracts in disparate information silos, such as spreadsheets, databases, and local desktops. Due to limited visibility into automatically renewing contracts, the company lost more than $750,000. With the implementation of a CLM solution with analytics, the company identified and eliminated six-figure losses associated with automatic contract renewals.
- Increased partner value — Finally, by implementing robust analytics, companies can not only assess contract value but measure the value of each channel partner. Organizations can compare and contrast current partner contracts, and then view the agreements with the most favorable terms. From there, organizations can use those terms to develop more profitable agreements in the future. By identifying partner value, companies can strengthen overall partner relationships.
Best of breed contract analytics systems
While analytics are crucial for effective contract management, not all analytics systems are created equal. Organizations should seek analytics solutions that are built into their contract management system. Stand-alone analytics platforms lack the system expertise and data structure understanding required to easily develop and modify reports and dashboards. Instead, companies should seek a contract management solution with integrated analytics and out-of-the-box functionality. These systems come with built-in reporting and full analytics dashboards to provide the greatest insights in contract management processes organized by customer, partner, vendor, or product.
Analytics are key to an effective contract management system. While companies can extract insights from contracts housed in spreadsheets and automated data repositories, the analyses tend to lack depth and are prone to error. Companies serious about developing impactful contracts in an effort to boost revenue must implement a contract management system that contains a robust analytics platform.
“Stand-alone analytics platforms lack the system expertise and data structure understanding required to easily develop and modify reports and dashboards”
@Joe: I agree with you on this. An integrated analyics platform built into all kinds of systems (including the CLM system) is the key to success in the market. While you may have analytics tools that exist in isolation, I don't think they give the required speed and flexibility that companies need. What's needed is seamless integration and interconnectivity.
I read with interest a report from the Supply Chain Council that said:
Accounting for an incredible 60 to 90% of overall expenses, supply chain costs can be a significant lever for driving bottom-line performance. In fact, it's estimated that a 5% reduction in supply chain spending can increase net income by over 40%.
It seems that better use of analytics makes capturing this sort of reduction.
Contract management sounds really an exciting field. What analytical techniques do you use for the software program. I know that it might be a trade secret but i just wanted to know whether these techniques are well known techniques or you have IPs protecting the software tool.
I agree more should be done to address the shortage of women in the supply chain workplace. We could learn a lot from the Scandinavian countries and how they deal with the work life balance and more specifically how they treat women in the workplace.
@Flyingscot, I agree…and it's clear that it would be a win/win for everyone. Until organizations realize that there's real benefit for them, it will be a hard sell.
Hiring of females in an organization in different departments will benefit alot because women have the ability to mingle with people and to perform multiple tasks at a time. The combination of male and female talent will bring positive change in company's overall performance and it's really appreciative that companies are taking measures to promote women to higher positions which in turn motivate females to work hard.
Female talents should indeed be treated equally and not discriminated against in the company, but I don't think they should be promoted to higher positions if they don't have the required qualifications.
@FLINGSCOT: It is difficult for many women to be able to balance profession and family. But this can be mitigated with the government support for childcare and other incentives.
@Hospice: Its possible for 1st World countries. Most of the 2nd World and the 3rd World are the ones who struggle. I do not see any possibility of the governments of these countries will be able to support partially even in the near future.
@Hailey: I think its time for organizations to look deep into this. If they are not supportive then things will not be easy at all.
@nimantha.d: I understand your point, but in most developing countries, raising kids is not as demanding as in the developed countries.
@Nimantha, this is a complex issue. I think most organizations are nominally supportive but the reality may not bear that support out. What does the organization think about job sharing? Working from home? Flex time? These are all really important to anyone, male or female, in search of good work/life balance. Good workers will pay back this sort of flexibility with a lot of hard work, dedication and loyalty. At least that's been my experience. Very often the fears of the organization around diminished produtivity are highly over blown.
I prefer policy of no-intereference. This is healthy for business and its survival. In long term bias with good intention boomerangs with unpredictable results.
I am strong supporter for female talent and is good for one and all. Any prejudice against them is totally unacceptable. But why do they need special favour?
My wife and daughter are with indomitable spirit. As I have seen them, they never asked or needed this type of bias.
“I am strong supporter for female talent and is good for one and all. Any prejudice against them is totally unacceptable. But why do they need special favour?”
@_hm: I agree with your point that a free market is what's best and no interventions are needed as such. However, at this point we do need intervention to “correct” the market which is suffering from a lack of female involvement given the policies in the past. Once the preferential treatment corrects the injustice of the past, then I don't think any further support will be needed. A free market can then prevail.
@_hm: “But why do they need special favour?” Good question, but the answer is simple – women still suffer discrimination and are treated as second class citizens in many countries.
To start with, i am all in favor of female colleagues. My concern is why supply chain and do we really have to worry. The neuroscience study quoted in the article is clear that Men and Women are different in the way they think and companies or job domain in general look for a good fit so that there is some degree of interest and innovative thinking while on job. So, not every industry or job is for everyone and we should leave it to respective gender to decide what field they are interested in rather than pushing for arrange marriage.
I believe women has strong will power and indomitable spirit. As a parent, one should further harness these virtues. And as a co-worker, you should adore them.
But, special favour or bias for them, is perhaps a big unwanted and forced disgrace to them. Do not do it.
Certainly promoting women who aren't trained properly or who dont have the right skills will niether help the organization, the individual or the overall cause. In fact, it just gives the nay sayers something to point to.
@Hailey: I think you should not promote anyone unless they have the capability to perform. Regardless whether what the gender is you should focus on the capabilities.
@Rich, LOL. Let's not go there then!