Despite the impressive amount of literature on the topic and ubiquitous flashy graphics (just Google “Contract Lifecycle Management” under “images” to see what I mean) , many companies get locked into a linear attack plan when it comes to Contract and Commercial management and forget the “cycle” part of the lifecycle. Even with the best templates, workflow and control points in the vendor selection or client acquisition processes, many companies end up creating smarter individuals with great lessons learned, but not a smarter organization and process.
The reason for this is that the process of winning and negotiating a contract naturally drives teams to a myopic focus on achieving the singular goal of closing the deal. Although this is admirable and necessary for a company to survive, it does lend itself to recreating the wheel. Furthermore, procurement, commercial and legal teams are thinly staffed, with limited bandwidth to allow for this full lifecycle management.
Here are some practical actions we provide to our customers to get the most “life” out of the “cycle” and avoid dead ends:
· Template Refresh
A template or standard is only good for 6 months. In today’s market, positions and standards are flexible and without a refresh a template goes stale quickly. In order to make the template a living document, our team can capture all of the metadata and track trends. As new commercial terms emerge, data can confirm if this is a trend or an aberration such that informed decision making can be used on templates on a regular basis.
· Clause libraries
What happens if a brilliant piece of drafting falls in the woods and no one hears it? The person who created it may remember it forever, but an organization is not an individual. Our team will capture the clause and make it available for the whole company so that everyone can learn the lesson.
· Reporting and Analytics
It is one thing to look at a portfolio and see which terms are in the deals. It is a second level of reporting to see which terms are being accepted and when. This allows management to either adjust to what is a market trend or decide to fight against a lack of discipline. Without proper tagging and reporting, the information is lost.
These tips are simple but need people and processes that enable their execution. Many companies have very intelligent resources, but to optimize it, the company needs discipline and process.