Contracts are the lifeblood of every business. They have a tremendous impact not only on an organization’s bottom line and brand promise but also on society, which relies on well-functioning trading relationships to succeed.
Yet contracting is often underappreciated and treated as a back-office activity. While robust data analytics and continuous improvement have long been ingrained in most other business processes, only recently are companies waking up to the value they are losing by not doing the same for their end-to-end contracting process. Indeed, most organizations are lagging behind in the technology journey and still leveraging fairly basic tools — like Excel spreadsheets and SharePoint sites. This forces them to managing their contracting process manually, in pieces and silos.
That said, the proliferation of contracting technology, including and beyond contract lifecycle management (CLM), over the last few years is staggering. In addition to a wide range of capabilities, these tech solutions are also easier to integrate with technology already in many law firms’ environments. These solutions are even more cost effective because of the cloud.
The challenge then becomes how to pick the technology solutions that work best for your organization’s needs. With all of the information out there — from vendors and consultants to experts and those pretending to be experts — where do you start?
Having been part of several contracting technology implementations during my years at Hewlett Packard and also having the benefit of meeting with many vendors, consultants, and buyers of contracting technology in my current role with the International Association for Contract & Commercial Management (IACCM), I would offer two suggestions before you start shopping:
1. Do your homework on the problem you are trying to solve
Two contracting challenges that I hear about most today are i) that it takes too long to close contracts; and ii) that the outcome achieved fell short of what we thought we were buying.
If the challenge facing your organization is speed to contract, you really can’t decide on the right technology solution without answering some basic questions, including:
- Where are you seeing delays?
- In the approval process?
- In the negotiation process?
- In the signature process?
- If the delay is in the negotiation process, are your team members:
- Using the wrong templates or backup positions?
- Negotiating the wrong issues?
- Taking positions that are no longer market competitive?
Where the challenge is failure to achieve the desired business outcome, it may be that the contracts are too difficult to understand and use, the handover process is non-existent or poor, and/or the tracking of progress toward the desired outcome is not consistently and efficiently done.
Regardless of whether you are facing these or other challenges, be sure you have a good grasp of your end-to-end contracting process and the gaps and friction points that result in a less-than-optimal contracting process before you go technology hunting. Remember… adding technology to a poor process is not a winning strategy.
2. Determine whether technology is the best next step
It is tempting to focus on finding a technology solution quickly, once the problem has been identified. But in many cases, the first step to solving the problem involves some level of people or process improvement in order for any new technology initiative to have the most impact.
Let’s say the problem you have is one of the following:
- The signature process takes too long, and you think an eSignature solution is the right answer.
- The wrong templates or backup positions are being used, and you want to implement a solution that directs people to the right documents and clauses.
- The delivery teams aren’t achieving the desired business outcomes, and you want to implement a tool that extracts obligations from executed contracts for use in performance evaluation management.
You are likely correct in your view of needing a long-term technology solution. But in order to get there, you have some work to do that technology cannot do for you.
For eSignature, for example, you will likely need to make some decisions about who the right signatories are for which deal types, and what happens if they are not available. To ensure your people use the right templates and clauses, you should map out a process-flow that ties your transaction types to the appropriate templates and clauses. And to help your delivery teams use the executed contracts, you might want to consider designing your contracts with the users in mind by simplifying your language and using visualization where it makes sense.
In all these cases and regardless of the problem you’ve identified, you should consider whether people and process changes are needed first; and if the answer is yes, then ensure these changes are well implemented and communicated before embarking on the technology solution.
When you are ready to shop for the right contracting technology for your environment, I would offer one final piece of advice — leverage your network. Most organizations are looking at how technology can help them in the contracting space, and your contacts have either gone through something similar or know someone who has.
You’d be amazed at how much people are willing to share in terms of what has and has not worked for them, and how helpful their advice can be… often for no more than the price of a cup of coffee!