A common response I get from Procurement folks when I ask about their contract management process is: "Our contract management process is a bit of a mess. Contracts are all over the place. They're hard to find and harder to understand. But fixing that is not really a priority for us right now."
I can understand why closing the gaps in your contract management process might not always make it to the top of your agenda as a Procurement leader. It just doesn't seem like an urgent enough problem.
But here's the thing. There are very real opportunities to capitalize on and risks to avoid by improving your contract management process.
That's why we recently released a video series on 5 such risks and opportunities. Missed it? Catch up below:
#1 - Audit failure
Most organizations are subject to internal or external audits. That means being able to show that there's a contract in place for every commercial transaction and that all the terms and conditions of those contracts are being adhered to. If audited today, most companies would probably fail, often because its contracts weren't being stored properly. The solution isn't in some complicated ERP system, but in making the contract storage process more simple. The less time it takes, the more likely it is to be done properly.
#2 - Software compliance
Software companies make millions of dollars every year in compliance penalties from companies that over-deploy software or breach the terms of their contracts. It could easily happen in your organization if you don't have a good insight into what's in your contracts. And there's a simple way to make sure you do: make sure every contract has a summary. Or even simpler: use a tool (like OneView) that creates the summaries for you.
#3 - Contract renewals
Without proper insight into your contracts, you could be renewing software you don't need, or paying more than you should. Many procurement departments think that once a contract is signed, there is no more room for saving (or losing) and end up missing out on opportunities to reduce their costs. The simplest solution is to have alerts for your contracts. This way, you'll have plenty of time before the renewal to see if you need to renew and how much you should pay.
#4 - Software Licenses
Did you look carefully at what you're paying for? Organizations often pay for services they don't really need - especially when it comes to mainframe software. We once helped a client save $1,000,000 / year by simply using good contract management to renew their own contracts instead of letting the mainframe supplier handle it. That's a lot of money for something so simple!
#5 - Efficiency Gains
How long does it take you to file a contract? What about finding an old one up for renewal? If it's anything more than a few minutes, your contract management process is at best wasting your time - the time you could be using to actually provide value for your organization. At worst, it could be a liability - like one of our clients, who went from having a good handle on their renewals to a state of complete panic simply because one employee retired. A quick fix is to stop using a spreadsheet and start using a tool (such as OneView) that manages contract uploads, searches, and alerts.
If you'd like to watch all the videos (no signup necessary), just click here.
To schedule a free contract management process review, where we’ll show you how you can reduce the time you spend on contract management by up to 75%, head over to oneviewnow.com/review to claim your free session.