Managing the contracts to get optimal results.

Discovering the success of any company can seem hard at the initial stages, but it can be achieved with a streamlined approach towards every contract. In this complex business evolution, under the various aspects of Contract Management, including SLAs (Service Level Agreements), KPIs (Key Performance Indicators), target costing, contractor performance, and more, organisations aim to achieve their final goal or acquire the desired profit.

There are various challenges a company faces while going through the process of generating profits and preventing risks. Potential problems can lead to ineffective results that may hinder the overall growth and success of any organisation.

Let us go through a company’s process of dealing with some significant contract management challenges and its approach to dealing with them.

Case Scenario

Contract Management Success Story of a Global Technology Firm

Problems Faced

Global Technology Firm has faced the following challenges while managing its contracts.

• They were unable to keep track of the contract’s renewal date and deadline, which resulted in them failing to generate a profit and prevent potential legal risk. 
• This firm was facing contract terminations, which were leading to missed contract renewals and deadlines.
• The firm was facing various inefficiencies in contract creation, negotiation, and approval. This led to a slowdown in turnaround, resulting in a loss of company revenue.
• It was the lack of coordination among many vendors and suppliers that hindered an effective relationship, causing complexity and misunderstandings.
• Their Contracts contained vague, non-measurable KPIs or unrealistic SLAs that led to performance disagreements and enforcement challenges.

The Global Firm was continuously entering into Non-Disclosure Agreements (NDA) with its vendors and partners, which required an automated system to generate the NDA creation process. 

Solutions

To solve the problems faced by the firm, they implemented some of the strategic tactics that led to positive results while managing the contracts effectively.

• The organisation implemented a Contract Lifecycle Management (CLM) system, or a centralised digital contract repository integrated with automated alerts and reminders.
• It also accomplished an Automated Contract Management and Workflow System to solve the issues of inefficiencies in contract creation, negotiation, and approval.
• The Global Firm framed and executed an automated NDA generation system integrated with a contract lifecycle and document automation platform.
• It implemented an Automated NDA Management Platform integrated within a CLM system. It provided a role-based access to ensure that only authorised personnel can edit essential sections.
• Used Integrated System for Vendor/Partner Management. This seamlessly linked NDAs to each vendor/partner record for easy access and tracking.
• The firm incorporated simplified measurement and comparison across vendors using uniform KPI/SLA templates across all contracts.

Strategic Value of CLM

Effective Management Performance

Enhanced profitability through better contract performance tracking and renegotiation opportunities.

No more losses

It also prevented missed renewals, avoiding service disruptions or lost revenue.

Smooth Coordination

Accelerated vendor and partner engagement through integrated vendor/partner management for eliminating delays in NDA execution.

Seamless Process

With shorter contract cycles, the firm can close more deals more quickly, leading to improved revenue generation.

Prevention of any Risk

Reduced legal and financial risks by ensuring timely compliance and renegotiation.

Easy Risk Alleviation

Effective monitoring of compliance with contractual obligations and deadlines (e.g., renewals, expirations).

Optimisation of Revenue

Led to the successful execution of revenue-generating contracts.

Conclusion

The Global technology firm faced numerous challenges in managing its contracts effectively. However, their strategic and results-oriented approach towards each problem led to a successful outcome. A Contract Management System (CMS) is the most preferred and enhanced system that addresses all types of issues related to contract management, playing a vital role in the overall functioning of business activities. Any firm can achieve successful and profitable results by thoroughly addressing the issues of contract management within its organization and implementing more effective solutions. There are various Contract Management Course available that build a strong foundational basis.