Understanding your contract landscape

February 24, 2011

Understanding your contract landscape should be the first key stage of an enterprise contract management strategy.

Contracts are central to the way that business is conducted. As business-to-business transactions become more international and complex, so too have the contracts that support those transactions. Contracts contain a myriad of milestones, commitments and obligations that need to be identified and tracked in order to manage contracts effectively.

Lost or hard to find contracts
Unfortunately for many companies, much effort is put in to the negotiation of terms and conditions and less attention to what happens to the contract once it has been signed. Contracts that should be proactively tracked and managed end up lost or hard to find in file shares, computer desktops and other repositories.

Three key questions to ask yourself
Here are three questions that should be asked as a litmus test to assess the level of visibility and control over contracted commitments:

  • Do you know exactly how many active contracts your company has?
  • Do you and other key stakeholders in your company have visibility of all contract milestones, commitments and obligations?
  • Can you demonstrate to your senior management team that all contract related commitments and obligations have been complied with?

For most General Counsels, there are two options to address the issue of legacy contract visibility:

  1. do nothing
  2. conduct a time consuming, complex and expensive audit using specialist external consultants.

Dolphin AutoCapture – the legacy contract discovery engine
Dolphin AutoCapture is the first legacy contract discovery engine that uses search and artificial intelligence-based technologies to:

  • Rapidly locate lost or hard to find legacy contracts in Windows File Shares and computer desktops
  • Automatically extract key contract milestone data from contract documents
  • Present key contract related data to senior managers in a simple management dashboard.

Dolphin AutoCapture automated contract audits are significantly faster and cheaper than conducting manual audits with external specialist consultants.

Understanding your existing contract landscape should be the first stage in your contract management strategy.

Free webinar
Join Dolphin Software for a free-to-attend web seminar to find out more.  Visit http://dolphin-software.com/lp_contract_landscape.htm for further information and to register.

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Internal Controls audits and Contract Management

February 3, 2011

Infraco, the South African government-owned Broadband and long distance telecommunications provider, has been cited in a recent Deloitte audit report for a failure in internal control processes in the company’s procurement and contract management environments.

“Although there are set policies, procedures, guidelines and processes to effectively effect the contract management process, we noted in many instances that these are not complied with, unintentionally or otherwise”, stated the Deloitte report.

An increasing number of companies all over the world are failing internal controls assessments conducted by independent auditors as auditors become increasingly concerned over the lack of visibility and control that many companies have over existing contracted commitments and overall contract management procedures.

The majority of companies put most of their effort in to the negotiation of contract terms and conditions, but do not dedicate the same level of attention and oversight post contract award.   This is largely because legal and business executives still do not consider contracts to be mission critical or strategic to their businesses.  For many, a contract is viewed as an insurance policy for when things go wrong.  Clearly auditors and industry observers, like the IACCM, see this as an outdated view and one that will only lead to increased scrutiny by auditors and regulators.

Contracts are strategic documents that outline how two parties are to collaborate with each other and the terms and conditions that govern that collaborative relationship.  For those companies that are able to manage and control their contracting processes efficiently, greater competitive advantage can be achieved through cost savings in the pre-award contracting process and better exploitation of contract terms, conditions and obligations in the post award process.

Dolphin Software would argue that the most effective way to bring about total control of the contract management process and ensure that contract obligations are properly complied with is to follow clearly defined contract management procedures, to appoint a senior executive to oversee contract management from a strategic position and to automate inefficient manual processes and control contract milestones and commitments more effectively with technology.

CFOs will rapidly understand the strategic importance of effecive contract management if their auditors refuse to sign off their accounts.

**24 February 2011 – update**

Broadband Infraco CEO and Non-Executive Director resign

Dave Smith, CEO of Broadband Infraco, the South African state owned entity tasked with bringing down the cost of broadband, and Non-Executive Director Tumi Magasa have resigned with immediate effect as a result of their recent contract management woes.

In October last year audit firm Deloitte was commissioned to conduct an urgent internal audit “to review the controls in relation to the contract management function, evaluate the adequacy and effectiveness of key operational and financial controls, and test compliance with the applicable legislation, policies and procedures”.