The end of the calendar year is always a time for reflection, in both our personal lives, and in business. It is a time for taking stock, for evaluating lessons learned, and for looking ahead to the next year. We often find ourselves making New Year’s resolutions as a result, in the hope that making changes might resolve some issues or tensions that surfaced in the preceding twelve months. Our resolutions indicate the desire to do better, or to improve our outcomes. With a global pandemic continuing to rage and impact our personal and professional circumstances, it may well be that the implementation of Contract Lifecycle Management (CLM) becomes one such resolution for your business for 2022.
The reason is simple. As we move into 2022, businesses face some very specific challenges in addition to the usual demands of the global marketplace. These additional pressures require businesses to be fully prepared for what lies ahead – whatever that may be. Scalability and agility have never been more important for commercial enterprise and to realize that goal calls for a thorough and comprehensive assessment of current processes, their function and capacity. In doing so, your business will inevitably reveal scope for improvement in its approach to Contract Lifecycle Management.
What is Contract Lifecycle Management?
Contract Lifecycle Management is an end-to-end approach to handling all of the legal agreements entered into by a business. The contract collection of a business begins to build from the moment the operation is created, because the documents within it govern the flow of money and resources inside the business as well as between the business and external organizations and individuals. Contracts are involved with everything from employment and stakeholder interests to premises and maintenance, from sales and client relationships to vendor management and logistics.
By dealing with each individual contract from a ‘lifecycle’ perspective, the documents can be managed in a more streamlined and efficient way. Firstly, the management process is broken down into specific lifecycle stages:
- Request – The first stage of the contract lifecycle is the initial identification of need. This may take the form of an initial order or sale and may include a project going out to tender.
- Writing – The second stage is the process of authoring the contract or agreement. This involves the use of approved language and document formats and takes into account stringent due diligence in respect of Third Party Risk Management.
- Negotiation – The third stage is the point at which the draft contract language is shared with the Third Party for the purpose of collaboration, redlining, and the agreement of specific terms and conditions.
- Approval and signature – The fourth stage sees the contract activated once terms and conditions are agreed. All stakeholders need to be in agreement before authorized signatures are applied.
- Monitoring – The fifth stage involves the continual assessment of performance and occurs for the duration of the post-authorization contract lifecycle. This includes work on adjustments and amendments to accommodate evolving risk assessments.
- Review – The sixth and final stage determines the course of action required at the end of the contract period. These actions will focus on renewal or termination of the agreement.
These stages allow for more clearly defined roles, with a Contract Administrator being responsible for the first four stages of request, writing, negotiation and approval and signature, and a Contract Manager being responsible for the final two stages of monitoring and review. Within this framework, it is crucial that each stage be closely documented so a thorough handover between Administration and Management can take place. Ensuring that Contract Managers have all relevant information pertaining to the negotiation of the contract allows for more effective monitoring and faster renewals, where necessary.
How does the Contract Lifecycle Management approach help businesses?
When a Contract Lifecycle Management (CLM) approach is implemented – whether that is at the launch of a business or once the business is well-established – the business gains a high degree of efficiency throughout the operation. Best practice dictates that CLM software platforms, such as that designed by Symfact, are the most effective way to ensure that the CLM approach is implemented effectively. Consequently, the fact that contracts are at the heart of the business and are involved with every department and every process, means that improvements are disseminated across the enterprise quickly and in optimal fashion. The processes involved in monitoring contract performance then provide further benefits.
Contract Lifecycle Management utilizes centralization, with the storage of legal agreements in a single repository location being a core principle of the discipline. This immediately increases the speed of several processes within the business. Locating contract documentation is easier and faster, and the inclusion of standardized templates and clauses within a centralized repository means that the creation and writing of contracts is also quicker. Due diligence – a vital part of Third Party Risk Management – is also faster because the centralized repository can be used as a single data source. Overall, Contract Lifecycle Management deployed through software shortens the sales or contract lifecycle – ultimately freeing up resources earlier to make more sales and increase revenue and profitability.
A contract collection can grow rapidly, quickly becoming unwieldy and difficult to manage either manually or with a decentralized system. Contract Lifecycle Management not only breaks the process down into specific stages, but also provides clarity around roles and responsibilities for personnel dealing with the contracts across the business. Clear definitions of terms and tasks provide the advantage of both increased efficiency, and reduced risk of errors, delays, or bottlenecks within workflows.
- Effective Risk Management
Contract Lifecycle Management is an effective way to mitigate risk in and of itself because it requires the business to streamline processes, engage automation, and focus on internal, external, and contractual compliance equally. Specifically, Contract Management Software also incorporates tools for comprehensive background checks and due diligence – helping to ensure that all risk-related decisions are fully informed.
- Data-based decision-making
The fact that Contract Management Software is built around a centralized repository which can then be used as a single source of data means that all decision-making can be based on the most up-to-date information. Powerful and customizable reporting tools in the best CLM platforms deliver actionable data to all levels of granularity. This provides the most productive basis for all business decisions.
- Accuracy in forecasting and planning
Having a centralized data source along with powerful reporting tools enables businesses to forecast and plan with the highest degree of accuracy. This ensures scalability and agility when analyzing market trends against the framework of business risk appetite and tolerance which, in turn, boosts scalability and agility in daily operation.
A Contract Lifecycle Management solution for the specific challenges of 2022
As we leave the difficulties of 2021 behind, it is important to look ahead and prepare for the very specific challenges that businesses are likely to face in 2022. In doing so, we can see how the implementation of a Contract Lifecycle Management solution could provide stability and support growth in a time of great uncertainty. Challenges are likely to stem from circumstances including:
- Coronavirus pandemic – Though this pandemic has already been raging for two years, it continues to evolve and impact business. The emergence of new variants of concern compound residual issues caused by the initial waves of infection. This issue causes two main challenges. Firstly, business continuity becomes more difficult due to staff illness, lockdown restrictions, and supply chain disruption. This has been the case for the past two years, but the continuation of these challenges combines with the financial difficulties already created, leading to a potentially disastrous situation for those businesses that are unprepared. Secondly, it makes forecasting and planning exceedingly difficult. With the situation shifting constantly in each territory and jurisdiction, the global market is hard to predict. This necessitates caution and additional due diligence on the part of businesses in order to minimize risk.
- Extreme weather and environmental issues – Climate change is having an expansive impact on countries around the world with instances of extreme weather increasing in both frequency and severity. Catastrophic flooding, widescale wildfires and destructive storms and tornadoes are combining to create a situation that grows more unstable as time goes on. In terms of specific challenges, this situation can be damaging in terms of business continuity and in maintaining the integrity of supply chains. Physical damage to infrastructure can disrupt the business operation itself, as well as the supply of goods and services. This can have a devastating impact on revenue, compounding losses already incurred by the Coronavirus pandemic in 2020 and 2021.
- Cyber-crime – The Coronavirus pandemic has seen a significant rise in the cyber crime threat posed by criminals and fraudsters around the world. Cyber-crime methodologies and strategies evolve to keep pace with technological advances and take advantage of globally destabilizing situations. This means that compliance and Risk Management have never been more important.
The Contract Lifecycle Management software solution designed by Symfact is the ideal choice for tackling the challenges of 2022. As a bespoke, customizable platform, it is the fully scalable toolkit that enables businesses to meet current challenges while preparing for the road ahead.
- Cloud technology
The use of cloud technology enables remote working and increased cyber-security. By harnessing the power of web-based services, this Contract Lifecycle Management software allows authorized personnel to log-in to the platform using permission-based access protocols. Not only does this keep the business moving while premises are unavailable, but it also ensures that all activity is logged and attributed through the creation of audit logs. This increases transparency and accountability and adds a further layer of security to data storage and use.
- Risk Management Suite
Symfact’s Contract Lifecycle Management software provides a comprehensive suite of Risk Management tools, enabling the business to identify, assess, and monitor all types of risk. These tools include links to external databases, including Refinitiv, LexisNexis, Dow Jones and Dun & Bradstreet, which allow for thorough and detailed background checks on individuals and organizations. Using these links, the business can review any potential Politically Exposed Persons or individuals with allegations of fraud against them, as well as the details of the business practices – both current and historical – of any Third Parties. The Risk Management Suite also allows the business to create intelligent questionnaires, which help to surface, categorize, and prioritize specific risks relating to Third Parties and also business decision-making. In relation to the challenges ahead in 2022, the Risk Management suite provides invaluable insight into the likely impact that Coronavirus, extreme weather, and cyber-crime could have on the status and capacity of any existing and potential Third Parties, thereby ensuring that decisions remain as informed as possible.
- Automated workflows
The automation of workflows supports both business continuity and cyber-security. This customizable feature flags up the right task to the right person at the right time, ensuring that milestones, notifications, and deadlines are met in a timely fashion, and that a comprehensive audit log of activity is created. Personnel can continue their role remotely when necessary, maintaining the necessary level of service for customers and ensuring that contracts are managed effectively, even under challenging circumstances.
- Customized reporting
Data is key for effective business management, and instability and unpredictability in the global marketplace makes data analysis even more crucial. The more granular the analysis, the more stringent the preparations and planning can be in terms of meeting the challenges of 2022. Symfact’s Contract Lifecycle Management software features powerful reporting tools that utilize the centralized contract repository and transform it into a valuable data source. When the contract collection has been standardized and categorized with the consistent application of metadata and data tagging, all situations can be met with accurate, data-based decisions.
The year 2022 will be a difficult one for all kinds of business, with existing challenges exacerbated by new ones. With the implementation of Symfact’s Contract Lifecycle Management software, however, businesses can rise to these challenges, and continue to thrive. Contact Symfact today to find out more, and to book your free demonstration.