The term ‘scalability’ can sometimes sound like a buzzword, scattered through conversations about ‘future-proofing’ business operations. As a concept, however, scalability is at the core of ensuring your operation is able to thrive – not just in the future, but also in the present.
What is scalability, and why is it important?
Scalability is about adaptation. As a concept, it applies not just to business, but to any system or process. It is a measure of the ability of systems or processes to adapt to fluctuations in levels of demand. When we apply this to a business setting, scalability becomes a measure of the adaptiveness and flexibility of that business in response to market fluctuations, and internal changes. That means dealing with both increased levels of demand for goods or service, and periods of decreased levels of the same. It also means dealing with staff turnover and shifts in management and governance.
While growth is a potential benefit of scalability, it is not the end goal. The goal of scalability is to use streamlined operational processes to reduce expenditure in relation to revenue increases. In this way, the business as a whole becomes leaner, and more responsive to internal and external fluctuations in demand. A leaner, more responsive business operation is equally able to scale down operations as it is to scale operations up, while also providing continuity of service. Most notably, the types of efficiencies involved mean the business is able to achieve this scaling while maintaining a healthy profit margin. This is what insulates the commercial enterprise from the effects of global market fluctuations and internal changes.
In general, scalability is important to maintain competitiveness, efficiency and, ultimately, the professional reputation of your business, but it is specifically important in today’s business marketplace. In the current time, businesses of all types and sizes are weathering a number of storms that are both financial and logistical in nature. The Coronavirus pandemic has caused vast amounts of disruption to commercial operations around the world, as has Brexit. The transition from LIBOR to SOFR also looms on the horizon. Each of these scenarios, individually, requires adaptiveness in business. With all of them happening simultaneously, scalability is a prerequisite for commercial survival.
How does scalability relate to Contract Management?
Your contracts are the heart of your business. They facilitate the flow of money, resources, responsibilities and obligations throughout your organisation, and between your business and its customers, suppliers, other third parties. Any move to build scalability in your business must include a focus on your Contract Library, because this collection of documentation represents the point at which two key factors intersect: It can take up a vast amount of resources when inefficiently managed and, conversely, it can distribute efficiencies throughout your organisation when optimised.
An inefficient contract system includes agreements that are underperforming, out of date, and incurring increased risk. This arises when performance monitoring is slow and inaccurate, and when there is a lack of clarity surrounding roles, responsibilities, and timescales. Failing to maintain strict oversight, and failing to implement standardisation of contract language, terms and conditions also increases the risk of legal challenges and contractual breaches. If contracts are scattered through different departments, significant amounts of personnel time and skill can be taken up trying to locate, edit and amend contract documentation when necessary – something that is only exacerbated by the inevitable missing of deadlines and milestones. These are all symptoms of a contract system that is unwieldy, inefficient, and poorly managed.
These inefficiencies in the contract system consume valuable resources at an excessive rate, as personnel time and skill are required to try to keep a handle on your growing contract collection. Where contracts are manually managed, or managed through unconnected spreadsheets, the resources used include premises and equipment costs, as more computers are required for contract storage. This higher rate of expenditure places great pressure on your bottom line, making a larger profit margin even harder to achieve. Scalability, in this circumstance, is almost impossible.
How does Contract Management Software help you build scalability?
Scalability becomes achievable with the high degree of automation delivered by Contract Management Software. By automating the fundamentals of efficient Contract Management, the consumption of valuable resources in terms of personnel time and skill are greatly reduced. The very best Contract Management Software packages, such as Symfact, feature a wide range of automated tools and processes, in order to increase the efficiency of your Contract Management system. This automation is built around a centralised Contract Repository which stores all contracts and supporting documentation in one cloud-based application. The automated features include:
- Workflows – Automated workflows ensure that documentation gets to the right person at the right time, every time. This means that approval times are reduced, and remedial work is defined and undertaken in schedules that are more easily managed. It also increases visibility and accountability, which makes the path toward greater efficiency much clearer. Visibility creates comprehensive audit trails, which enhance risk management strategies and reduce the incidence of costly disputes.
- Reporting – Automated, configurable reporting enables you to analyse data, from an oversight position to a granular level. This allows for increased risk mitigation, and a proactive approach to Contract Management. Reports delivering actionable data regarding contract performance, as well as advanced search functions for remedial actions around large, unprecedented events give you the tightest possible control of your contract collection, using minimal resources.
- Notifications and alerts – Automated notifications and alerts provide comprehensive oversight of contract milestones and events. As the document moves through its workflow, the personnel in question are alerted to tasks and deadlines. This ensures that work is completed in a timely fashion, and potential issues – such as bottlenecks in the workflow – are highlighted. This feature therefore gives you greater control over timescales and enables a proactive approach to improving specific areas of inefficiency.
Automation is key to achieving scalability, because it reduces the amount of personnel time and skill required for effective Contract Management. The browser-based nature of Contract Management Software expands further on this resource reduction by allowing authorised personnel to access the information they need securely, and from any web-connected location. This means that staff can get started on contract creation and amendments while visiting client sites, without using resources – such as time and fuel - to travel back to the office base. Additionally, during global events such as a pandemic, business can continue without interruption while staff work from home. Most importantly, the use of a web-based software package reduces premises costs, because physical storage space for your Contract Library is no longer needed.
Such careful resource management leads to a reduction in expenditure and creates a contract system that is optimised and efficient. The centralised Contract Repository then ensures streamlined practices reach every aspect of the organisation, because contracts are involved in each department in different ways. These efficiencies include:
- Standardisation and risk management – The use of a centralised Contract Repository enables the business to standardise language and clauses throughout the contract system. This mitigates risk and reduces the amount of legal costs incurred throughout the contract lifecycle.
- Data analysis – Configurable reporting enables the consistent, standardised analysis of actionable data. While this can be used for contract performance monitoring - as part of risk management strategies and governance, as well as compliance efforts - it can also be used to identify further opportunities for sales and business expansion through use of additional sales leads and the intellectual property owned by the organisation. The fact that this particular feature boasts a level of versatility that allows for it to be applied in different ways means that a variety of efficiencies can be achieved with a single tool. This is the very essence of scalability.
It is the fact that the system itself is scalable that makes Contract Management Software the ideal choice for building scalability in business. The implementation of such a software package is an investment that delivers two related benefits. Firstly, the optimisation of your contract processes ensures that your operation becomes more productive through increased efficiency, and greater productivity means a healthier bottom line. Secondly, the reduction of resource use in conjunction with increased productivity builds scalability, which allows room for commercial, operational, and economic growth in a sustainable way - insulating the business in question from external and internal fluctuation in circumstance.
When we look at the range of challenges currently facing businesses in our globalised marketplace, it can be easy to see an intimidating and seemingly insurmountable set of obstacles that have the potential to halt the growth and progress of all types of organisations, right now. However, by seeing these obstacles as opportunities to implement new solutions, your business can be made more efficient and more productive, even in these difficult economic times. This is how scalability is built, and it is scalability that will enable your business to thrive in the future.
Call Symfact today to discuss your Contract Management needs and arrange a free software demonstration.