How Contract Management can be as messy as a teenager’s bedroom

As a parent of a teenager, I have made rules for myself to protect my sanity. One rule is that I do not check my teenager’s bedroom. But I broke that rule last weekend and what I found was not a surprise – an absolute mess. After my son claimed he had ‘cleaned’ the bedroom, I discovered that his idea of clean was very different from mine, making me realize that I needed to be clearer on the process, his responsibility, and my expectations.
I relayed this story on a recent call with the CPO of a large multinational. We were having a frank discussion regarding her organization’s current contract management program. She was frustrated that she could not trust the data in the company’s new Contract Lifecycle Management (CLM) platform, indicating that it was ”a classic garbage in, garbage out situation”. Like my son’s messy bedroom, she realized that even though her team had been trained on how to use the tool, the output did not align with the objectives.  More specifically, the most basic purpose of the new system was to ensure that all contract renewals were identified in a monthly action report, but the reports often missed contracts that she knew were up for renewal. Upon further inspection she discovered that many contracts just were simply not even loaded into the tool. It was evident that while the tool worked, there were flaws that affected the outcome. 
A closer inspection revealed a few common issues in the deployment of her organization’s CLM platform:
  1. Process flaws – the intent was to have an intuitive contract management process that would be self-sustaining. What she got instead was a process that was open to interpretation. In other words, no process but instead an unreliable set of suggestions and a lack of clarity.
  2. No accountability – responsibilities for loading contract data was assigned but there was not a mechanism or control to hold those responsible for the data they uploaded into the system.
  3. Lack of quality control – without accountability the natural result was quality suffered. Contract data was incomplete or worse yet incorrect.
I’ve seen this situation with other clients and in my experience the best way to address the issue is through a disciplined cycle based on the following best practices: 
  1. Implement the best process possible. Consulting those who have successfully implemented a process before will give you a better chance at success.
  2. Train your team on the process. People learn through repetition so make sure to make training on the process a long-term endeavor.
  3. Assign contract owners who are responsible for each contract. Every contract needs to be assigned one owner. Make sure you plan for the changes to the team (new assignments, new joiners or attrition).
  4. Monitor the contract data and identify process or data quality errors. 
  5. Feedback into the process and retrain as appropriate
a. If a process error is identified then revise the process and then retrain
b. If data quality issue is identified then retrain the individual responsible for the contract with the error.
Similar to keeping a teenager’s bedroom clean, contract management can be an unpleasant chore but with a proven process, clear accountability and a quality control follow through, your organization can avoid some of the common pitfalls when implementing a Contract Management platform. 

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