New revenue opportunities for law firms in Contract Management-as-a-service

Law firms around the world are experiencing some of the toughest times in recent history, with billable work declining as a result of the recession.

Some innovative law firms are beginning to think out-of-the-box when it comes to new business development and revenue generating ideas.  Dolphin Software has been working with a number of law firms and legal process outsourcing providers to offer corporate clients a software solution for managing and automating their contracting processes, combined with the value-adding legal services that the law firm provides.

Focus on streamlining the contracting process, which remains a largely manual and inefficient process in many organisations, has become more important for both private and public sector organisations as they strive to reduce costs, avoid unnecessary contract-related penalties and maximise revenues.

Contract work remains the staple service offering of many law firms and there is a growing trend to providing a more complete and value adding service through the use of Contract Lifecycle Management software solutions.

Contract Management-as-a-Service
By providing Contract Management-as-a-Service to their clients, Law firms can find new ways of generating revenue.   

Contract Lifecycle Management solutions help organisations to streamline their contract drafting, approval and archiving processes, as well as allowing key business managers to manage key contract milestones and obligations more effectively through the use of advanced reporting and analytics.

Maintaining a portfolio of contract templates and legal clauses can be a significant overhead for in-house legal teams and is an area where law firms can identify potential new revenue streams by outsourcing this work on behalf of their clients.

Through the provision of a Contract Management service, law firms can gain predictable on-going subscription revenue from their client base and a platform to promote other value-adding services.

Dolphin Software provides a cost effective Microsoft SharePoint-based Contract Management solution for law firms that can be easily installed and configured, and is made available on a revenue-share model.

Aberdeen Group survey: Contract Management as critical as Customer Relationship Management

A recent Aberdeen Group survey conducted with CRMToday highlights the strong feeling that many respondants have about the need to streamline and manage the sell-side contract management process to maximise revenue opportunities.

Aberdeen Group suggests that around 18% of a typical sales cycle is spent in contract creation, internal approval processes and external negotiation.

The Aberdeen study shows that on average respondants to the survey estimate that 9% of sales revenue is lost due to regulatory penalties, missed deadlines and obligations, lost sales orders, ‘maverick’ pricing and transactional errors. 

According to the research, a one day reduction in the sales cycle of company is worth $80,000 on average (this increases to $215,000 for larger organisations).  Best-in-class organisations have sales cycle times that are 10-15 days shorter than other companies.  So you can begin to see how an investment in streamlining the contract management process can have a major impact on the bottom line.

Aberdeen recommends that companies take the following actions to improve the ‘quote-to-cash’ cycle time:

1. Migrate all current active contracts in to a contract management system and make use of functions like contract clause libraries to streamline contract negotiation
2. Streamline the quote-to-cash process by integrating your Contract Lifecycle Management system with your CRM and Finance systems.
3. Use contract management software to track contract milestones and obligations
4. Utilise reporting and analytical tools to measure contract performance regularly

Contract Lifecycle Management solutions, like Dolphin Contract Manager, provide comprehensive contract management functionality across each stage of the contract lifecycle, allowing sales teams to:

1. streamline the contract creation process
2. automate internal reviews and approvals
3. provide a central repository for all contracts and related documents
4. provide secure external workspaces to speed up external contract negotiation
5. allow key stakeholders to proactively manage contract commitments and obligations through alerts and management reports
6. integrate contract data with back-end systems like CRM and ERP solutions.

In the business world we have become accustomed to identifying manual and inefficient processes and automating them with technology solutions.   However, in many organisations, critical business processes like the Contract process and Quote-to-cash process remain largely paper based, slow and wasteful.  Contract Management software solutions, as the research from Aberdeen Group has shown, have the potential to create a significant and immediate positive impact to the bottom line of a company. 

As companies continue to struggle and compete in a challenging economic climate, now is the time that you should start to think more strategically about how you are managing your contract process.

Aligning IT with the business: The holy grail of IT – does Contract Management software make it possible?

A great article written by Windows IT Pro magazine recently indicates that there is possibly light at the end of the tunnel for beleagered IT managers hoping to achieve the seemingly impossible goal of aligning IT with the business – in the form of Contract Management software.

Is contract management a problem?
Well yes, for many organisations, who spend 3.4 weeks on average (according to Forrester Research) drafting and negotiating contracts, often involving expensive external lawyers and highly paid senior managers, only to effectively throw away the contracts into departmental filing cabinets, computer hard drives or electronic repositories once the contract has been signed.  That is a problem because all of the obligations, commitments, milestones, penalty clauses and bonus payments that comprise an organisation’s contract landscape are now effectively hidden and lost to the enterprise.

Contract Management software
Contract Management software solutions help organisations to streamline their contract drafting, approval and archiving processes, as well as allowing key business managers to manage key contract milestones and obligations more effectively through the use of advanced reporting and analytics.

Dolphin Contract Manager
Dolphin Contract Manager  from Dolphin Software provides all of these functions within the familiar environment of Microsoft SharePoint and Office 2007.  Dolphin Software’s Contract Management system provides role-based access to the system, allowing both contract-specialist users and non-specialist business users to use the system. 

Microsoft Office Business Applications (OBAs)
For the 60,000 organisations that have licenced Microsoft Office SharePoint Server 2007 (MOSS 2007) around the world, solutions like Dolphin Contract Manager provide a compelling business context to SharePoint.  Dolphin Software has used SharePoint as an application development platform that exploits the existing functionality of SharePoint and enhances it to provide a world-class contract lifecycle management solution.

Is SharePoint ready for high value business applications like Contract Lifecycle Management?

With over 100 million user licences sold to date, Microsoft Office SharePoint Server, is undoubtedly the most prolific web-based workgroup collaboration suite out there. 

SharePoint’s success however, can be perceived by some to be its limitation as well.  Since many organisations licence SharePoint as a cost effective corporate intranet or workgroup portal solution.

But that was before Microsoft Office SharePoint Server (MOSS) 2007 was launched; and with the new 2010 edition recently announced by Microsoft, SharePoint and Office will be viewed in a much more integrated and collaborative way than ever imagined.

While many organisations deploy SharePoint as a corporate intranet solution today, a growing number of seasoned SharePoint customers are beginning to deploy the other core functions of the SharePoint suite (like Document Management, workflow, electronic forms and business reporting services) in place of incumbent solutions.

Independent software vendors like Dolphin Software have gone one step further and are using Microsoft SharePoint as an application development platform.  Dolphin Software will be launching a new Contract Lifecycle Management application based on the SharePoint platform on the 5th of May 2009.

Ronan Lavelle, Dolphin Software CEO says:  “We wanted to spend our development time building strong contract automation and contract management functionality, not developing core components like a document repository, workflow engine or reporting tool.  For us, the decision to base our Contract Management application on the Microsoft SharePoint platform was an easy one.  Our customers will benefit from the ease of use of the system, integration to Microsoft Office and the ability to extend their investments in Microsoft technology in a compelling business context”.

Dolphin Software is amongst a growing number of new software companies, like NextDocs who are using their specialist knowledge to transform Microsoft SharePoint from being a generic enterprise collaborative suite into a highly valuable platform for the delivery and management of business critical content.

To answer the question above:  Yes, with Microsoft Office SharePoint Server 2007 and with the recently announced enhancements expected in the 2010 edition, SharePoint is ready for high value business applications.

Are you sure you are compliant: inaccurate contract metadata could land you in hot water

Mike Fernandes, writing in the Sarbanes Oxley Compliance Journal, wrote an excellent article recently on the impact of inaccurate document metadata and the correlation this has with corporate governance and industry regulatory compliance.

When we talk about compliance, it is too easy to think about Sarbanes-Oxley, but there is a raft of other national and industry-specific regulatory requirements that both public and private sector organisations need to comply with.  Failure to do so can sometimes lead to financial penalties, the revoking of operating licences, or in extreme cases, custodial sentances for corporate executives.

In content-centric business processes, like the Contract lifecycle process, it is too easy to think about contract documents and metadata in a seperate linear context.  It is a fact of corporate life that certain internal stakeholder groups take more interest in the ‘document-process’ side of contract management, like Legal for instance; while other groups take a more active interest in contract related data, or metadata – like the Contract or Commercial group or Procurement.

In many cases, using contract metadata as the basis of user alerts or management reports is how contracts are managed.  Without doubt, the process of authoring, reviewing and approving and archiving contract documents needs to be properly defined, managed and audited as part of an overall compliance strategy; but it is contract metadata that is so fundamental to the intelligent interrogation of a contract environment and that allows an organisation to keep track of potentially hundreds or thousands of contract milestones or obligations.

So what happens when the contract metadata is out of sync with the contract document or documents?   One common issue with ECM solutions is that metadata is often created at the point of document creation.  In a process where the document metadata relates to specific attributes, like contract milestones, commitments or obligations, and where the final version of the document may be significantly different from the first draft, keeping metadata in sync with the document attributes is of critical importance.

This is where Microsoft Office 2007 and SharePoint start to become invaluable business tools.  SharePoint users are able to link particular parts of a Word 2007 document with an associated metadata field, so that if the document content is changed, the relevant metadata field is updated automatically.  Magic.  With version controlled metadata, a complete audit trail of both the document and metadata heritage can be produced to satisfy the regulator, while keeping track of key contract obligations at the same time.

Realising Greater Value from your Contracts

Contract Lifecycle Management can help maximise revenue, minimise costs and reduce risk

Most organisations are unable to manage their contractual relationships effectively. As a result, they are unable to realize the value that they have negotiated.  Effective management over the lifetime of contracts enables the organisation to maximise the revenue-generating potential intended, minimise the costs of negotiation, minimise spend, reduce risk through poor wording of terms and prove compliance.

Research published by the International Association of Contract and Commercial Managers (IACCM) in February 2009 (www.iaccm.com) suggests that managing contractual commitments and obligations is more important in an economic downturn.

Managing contracts is nothing new and Gartner Group estimates that 60-80% of business-to-business transactions are governed by legally binding contracts. Most organisations have put in place some sort of contracts management policies but, people invariably forget about the contract once it is negotiated and signed.  In many cases they end up in a departmental filing cabinet or an archive offsite. Even if they are stored electronically, the document still has to be found, retrieved and read to establish key terms and renewal dates.

Technology has been very poor at supporting this vital management process. Crude spreadsheets have been widely used to log details of contracts and commitments. However, these are cumbersome and the volume of contracts logged soon exceeds the realistic scope of the technology.  I once came across a large Utility company that had previously tried to manage 10,000 contracts through a single spreadsheet.

Some organisations move to databases, which allow filtering and rudimentary reporting, but flounder because there is no control over the documents themselves. There is no repository and no standard operating procedures to show to regulators.

Even document management systems offer little management support once the contract has been signed. Organisations can spend months negotiating contracts, tying up top managers, legal staff and specialists, but the major problems start when the contract is signed.

Organisations are increasingly looking more strategically at the whole contracting process. They want standard operating procedures and software to support them. Standard operating procedures are vital to control who can negotiate and approve contracts; to protect the organisation against unscrupulous suppliers putting in over-advantageous terms; or over-optimistic or maverick sales staff offering uneconomic prices or discounts.

Technology solutions have recently started to come of age and viable enterprise-wide contracts management systems are now being successfully implemented. They are designed to support the entire process of creating, reviewing, approving, storing, negotiating and managing legally binding contracts.

These systems can handle all types of contract, not just suppliers and customers. They cover human resources, including contracts of employment; commercial, especially revenue-generating contracts, such as alliances, partnerships, joint ventures and licensing; and property contracts, such as buying, selling, renting, leasing and sub-letting.

A Contract Lifecycle Management system essentially needs to be able to manage and automate each stage of the contract process, including:

·         Contract authoring

·         Internal review and approval

·         Contract repository

·         Third party negotiation

·         Reports and alerts

A Contract Management system should be simple to use for the business user, yet support them with sophisticated underlying clause libraries, powerful search and business analytics. Along with specialists in the organisation, such as legal, procurement and finance, they have instant access to documentation, management information and alerts. The Contract Management system will produce reports of all contracts for which the manager is responsible that expire in the next three months or financial year and provides alerts in good time as each approaches its renewal date.

The system reduces costs by automating the drafting process and eliminating expensive internal and external legal time. Once signed, it assists cost control through reporting actual contract spend against forecast and provides supplier performance data. Increased control over terms reduces the risk of increased costs through unrealistic terms, including ‘evergreen’ auto-renewal on the other party’s terms.

The powerful and intelligent reporting allows more aggressive terms to be negotiated, as compliance can be monitored and enforced. Such terms could include early payment discounts, timeline penalties and performance bonuses. This enables the organisation to maximise the potential value of the negotiated terms and conditions over the life of the contract through revenue opportunities or cost savings.

Most of all, the document management features behind a contracts lifecycle management system allow the organisation to prove to regulators and contract partners that it has complied completely with all its contracting process and obligations.

Contract Lifecycle Management software has come of age at a time when organisations are seeking to standardise their contracting and reporting procedures and to extract greater value from contracted relationships.  By gaining control of contract processes the organisation can manage contractual liabilities and ensure complete compliance with regulations. This will create value by maximising revenue, reducing costs and mitigating risks.

Ronan Lavelle is CEO of Dolphin Software, a provider of a Contract Lifecycle Management solution for the Microsoft SharePoint platform.