I have a confession to make. I absolutely love IT buzzwords. One of my favorite games at conferences is to count how many times I hear about solutions that are “on-demand”, “cloud-based”, “automated” or employ “robotics”. What I love even more is when those terms are misused. To hear my story about the individual who told me all their contracts were “blockchain” you’ll need to see me in person.
That aside, there has been another great buzzword floating around business and IT services for a while: “Digital”. And just so we don’t run into the issue I was mocking above, let’s be clear on what we’re talking about. A “Digital Service” is just that – a service (not goods) – delivered through the internet or a closed network, and virtually automated with very little or no human interaction. “But Craig,” you may say, “this is a Contract Management blog, how can such a heavily human interaction based activity such as contracting be digital?” Well, in fact there are ways today where the contract lifecycle has gone digital. Here are three examples:
- Self-Service contracting
Most companies understand the use of templates for contracting. Everyone has seen a “standard 2-way NDA”. The problem is that most companies build up templates for NDAs and other basic contracts, but restrict access to lawyers or procurement teams. And often this is for any number of good reasons, such as a lack of clear process for using the templates, the templates are not clear enough for a non-lawyer or non-contracting person to use, or the templates aren’t mature enough. But in effect, the template has very little use if only a few people who already know how to make a contract are using it. For instance, it doesn’t save me time at an airport if I have still have to go to check-in and talk to someone who knows how to check me in. What does save me time is if I have an app which allows me to answer a few questions and then check-in without having to talk to someone. Don’t get me wrong, I like talking to people, but not when I am rushing to a flight – as is often the case.
So, simple contracting can be “digital” if you take the template, make it easy to use, easy to read and process, and easy to follow for signoff and enactment. It can even go digital with a clever platform and some clause libraries or other authoring capabilities. There are many tools on the market that have some good modules for this, including some great next generation tools (I know a guy in Berlin) that are really pushing the digital agenda.
- Cognitive Extraction
As mentioned above, basic contracts can be digital. But what about managing complicated contracts or understanding the unstructured data found in contracts? There is a wealth of information to be found in a company’s contracts (i.e., what terms help with cash, what terms lead to losses, or even more basic items like ensuring they are all correctly signed and enforceable). Non-digital processes require companies to either manually pull the metadata or obligations out of contracts or do nothing and therefore know nothing. But those options don’t work if we want to get digital. There are now a few tools on the market, which can use some cognitive automation to effectively “read” the contract and pull out the relevant information to put into a structured database for analysis later on. Pushed even further, these tools function like a “Google” interface for your contract portfolio allowing anyone in your organization to get the information they need with minimal clicks. Of course, there needs to be some consulting and transformation to make that happen, (I know a guy in London) but the principle and output is really revolutionary.
- Automated Revenue Assurance
So with our digital platform of tools and processes, we now know how to create the contract and manipulate the data held within. How do we get performance and profit under control? Well, there are a few – and I really do mean few – tools which can take these data from contracts, interact with the ERP and other systems, and do everything from performance management to invoice validation with a few clicks. I’m not talking about just seeing where the performance of a vendor falls within the red/amber/green framework. I am talking about calculating whether or not there is a penalty based upon “change order #30 with modified SLA Schedule 2.1”, for example. Or whether all of those project documents will fall within expected invoicing outcomes based upon the fee schedule for different types of work. These are the types of things that are often missed and can lead to revenue leakage or overpayment. And yes – these fixes can be digitized too. And yes – I know some people.
Can the contract lifecycle be digitized? Of course it can. In fact a lot of companies can and are doing this today. And it’s not just buzzwords.