A single source of the truth – If you are not in control of your contracts, you are not in control of your future

A single source of the truth - If you are not in control of your contracts, you are not in control of your future

As information is the most important asset for many industries and organisations, the race to manage information, in a proactive way has never been more challenging. The biggest challenge of all emanates from the sheer volume of information inside any organisation today.

Over recent years, contract management processes within global enterprises have become increasingly important and more complex. Many drivers have contributed to this change, such as increased business-to-business transactions and the need to lower supplier risk, due to potential corporate litigation and penalties for breaching industry regulations.

A major challenge for most is poor visibility into contracts and a lack of tactical and strategic intelligence, combined with the fact that contracts today typically do not reside in a central repository. More likely these contracts reside in multiple locations, in both digital and hard copy files, in paper archives, and even in some cases, outside the organisation’s physical boundaries.

Contract visibility creates a paradox for most organisations. On the one hand this requires management and monitoring of access and protection to ensure accuracy of data. To ensure integrity, contracts need to be locked down from a security perspective. But, on the other hand, contracts must be accessible to support the business and to make sure the contracts are adhered to, with visibility both inside the organisation, and at times, also for parties outside the organisation.

It is not hard to imagine and appreciate the challenges this could create in large or midsize organisations, with thousands of contracts spread out across major divisions/departments, over geographically disparate locations. The issue of contract visibility, security and risk management is beyond the scope of management by humans, with only fragmented manual processes to support them.

Contrary to the famous saying, “What you don’t know can’t hurt you”, this approach to performance management leads to “under-the-radar” problems, hidden costs and liabilities, which can remain unobserved within an organisation for years. These time bombs can have major impacts in reducing profitability; by increasing cost through inefficiency and leaving the organisation open for unsuspected disputes or litigation.

The picture doesn’t need to be so dark, there is hope and help for all. The Aberdeen Group has in a recent customer study http://www.seal-software.com/aberdeen_group_press_release.php shown what Best-in-Class organisations do compared to the laggards. The study outlines some very pragmatic and straightforward actions that in most cases are readily achievable and provide a rapid return on investment (ROI).

Once an organisation has implemented a contract life cycle management (CLM) system, that provides both total transparency and visibility to contracts and their key metadata, together with some well defined processes for review and approval of contracts, you have created a Single Source of the Truth!

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