Every business is different and uses a wide variety of contract types. Even those organisations operating within the same industry will use variations of systems and processes to deal with Contract Management needs. These variations stem from the development of strategies over time, in response to specific evolutions of market forces and business growth. The nature of Contract Management means that there are also commonalities, however, and it is this combination that makes it so important to understand your Contract Management systems requirements before implementing solutions.
For modern businesses, Contract Management solutions take the form of software platforms, which often have technical systems requirements of their own. However, before examining the potential compatibility of any software package, you first need to define the specifics of what the software package needs to achieve for your business. This is an essential step in the improvement of all Contract Management systems because it involves a comprehensive assessment of need. It is this type of assessment that reveals the commonalities of Contract Management processes and how they apply to your specific business model.
What commonalities are likely to be found?
When assessing Contract Management needs, most businesses are likely to find some areas of commonality, even across different industries. These commonalities relate to process as well as compliance.
- Monitoring and tracking contracts is vital
Regardless of the type of contract – whether it is employment, tenancy, procurement or sales – the data contained within must be monitored and tracked. Doing so helps to ensure that deadlines and obligations are met and fulfilled which, in turn, reduces the possibility of costly delays. Efficiency and compliance are supported by the process of monitoring and tracking contract data and performance.
- Security is a priority
As technological advancement has made the global marketplace more closely connected, security of data has been prioritized. This is reflected in regional and industrial legislation and regulation and means that any Contract Management solution needs to accommodate multi-jurisdictional data security.
- Scalability is necessary for success
All businesses need to build scalability into their operational model if the enterprise is to proceed with a secure commercial future. With increasing volatility of global markets, businesses require the functional resilience to withstand fluctuations in demand, impacted by both environmental and public health factors, among other elements.
With these commonalities as context, it is possible to build a checklist of requirements.
What are the Contract Management System requirements?
Understanding that security, data tracking and scalability are fundamental needs for any Contract Management System helps businesses begin to stipulate exactly what is required of any Contract Management platform. It is essential to make these determinations at the earliest stage because Contract Management resides at the heart of all operations. The processes involved intersect with all areas of the business which means that making the right choice regarding the system will deliver significant improvements that will quickly become evident across the enterprise. So, with security, data tracking and scalability as main points of commonality, we find that there are seven main system requirements for a Contract Management System:
- Cloud technology
In modern business, any Contract Management System should be utilizing cloud technology. The reason for this is two-fold. Firstly, cloud technology adds an additional layer of security to the data contained within the system, because the security protocols employed by the service provider apply to the content as well as the security protocols employed within the business. Secondly, cloud technology supports business continuity and scalability. Cloud technology allows personnel to access the platform from any location that has an internet connection, meaning that business can continue even in the face of environmental problems or public health emergencies. It also enables operations to scale up or down more easily in response to fluctuations in demand, including faster and easier expansion into new, global markets.
- Permission-based access
Providing access to authorized personnel only is a vital part of the data security protocols for any business and is especially important for Contract Management processes. In addition to enhancing data security, permission-based access ensures that all activity is logged and tracked, thereby creating audit trails and increasing accountability and transparency. In this way, permission-based access supports compliance as well as security.
- Centralization with a template library
The implementation of a Contract Management platform invariably delivers a centralized repository. This is the gathering of all documentation into a single digital storage location – improving security and speeding up Contract Management processes. However, it is important to ensure that the centralized repository provides scope for the development of a template library, in which approved and standardized language and clauses are made available to personnel authoring contracts. The utilization of a template library in this way has several benefits for the Contract Management System. It makes the creation and negotiation stage of the Contract Life Cycle faster, while also increasing compliance levels. Furthermore, it becomes easier to track and control versioning of contracts, supporting the creation of audit trails and ensuring that personnel always have the most up to date information.
A Contract Management System that incorporates a high degree of automation is essential for modern businesses. Automation is an effective risk management tool because it decreases reliance on human input which, in turn, decreases the possibility of human error. This type of strategy effectively reduces the likelihood of conflict and delay – both of which can be costly in terms of financial penalties, resource wastage and lost revenue. Automation is also a fast and effective method of increasing efficiency. By reducing the need for humans to undertake basic administrative tasks, these processes are made faster with an approach that is more well-structured. Processes that are well-suited to automation include reporting, the creation of audit trails, and the management of workflows. Automated workflows are specifically important to risk management efforts because they ensure that the right task is flagged up to the right person at the right time. Workflow bottlenecks are largely avoided, which further reduces the likelihood of delays in the fulfilment of obligations, or the meeting of deadlines.
- Risk assessment and profiling support
While it is vital to build risk management into every administrative process in the business, a large proportion of increased risk comes from Third Parties and contracts signed with others. These agreements, while necessary, create points of significant vulnerability as the business must rely on the Third Parties to ensure their own levels of compliance – otherwise the failures of those Third Parties can cause a notable negative impact in terms of financial penalty and reputational damage. For this reason, it is also vital to employ risk assessment and profiling tools, in order to protect the integrity of the business. These types of tools are closely related to the centralized repository and template library, as Intelligent Questionnaires can be created and stored alongside contract documentation, made available for due diligence. It is also necessary for this due diligence to include the undertaking of comprehensive background checks, in order for the business to make fully informed decisions about the connections it makes. This requires access to leading external databases such as Refinitiv, Dow Jones, Dun & Bradstreet and LexisNexis. Implementing such robust risk management measures supports the security and compliance levels of the Contract Management System.
- Compliance support
The increasing connectivity of the global marketplace means that compliance is essential for business. Ensuring that the operation is able to comply and respond to regulatory and legislative requirements on a local, regional and international level helps the business create agility and scalability while adhering to guidelines that promote strict data security measures. In this way, compliance also relates closely to risk management protocols. For this reason, any digital Contract Management System must provide a wide range of compliance support measures for the business. This includes - but is not limited to - automated workflows, policy management, configurable security measures, and automated incident capture and reporting tools.
Contract Management processes are important for business, but simply ensuring that contract data is tracked and handled is only half the requirement. With all documentation centralized, Contract Management Systems need a powerful reporting function in order to transform the content into a valuable source of actionable data. Centralization affords standardization and categorization, which means that contract materials can be filtered to all levels of granularity. Documents requiring remedial action can be quickly identified, and new, previously unexplored sales opportunities can be surfaced. Most importantly, reporting tools can provide the necessary data to consistently monitor and track contract performance, allowing for early action to be taken where needed. This further mitigates risk, boosts efficiency and supports compliance.
The Symfact system
Symfact’s Contract Management Software is an end-to-end platform solution that meets all of these system requirements. Built around a centralized repository using cloud technology and high level automation, the software package provides all the tools needed for effective and efficient management of the whole Contract Life Cycle. Contact Symfact today to arrange your software demonstration and learn more about how the product delivers on any Contract Management Systems requirements checklist.