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Contract Management through the lens of ECM

Contracts are prevalent and vital to any organization. Contracts have typical life-cycle stages – drafting, negotiation, execution, performance, amendment, renewal, termination, records retention, etc. A common problem is that many organizations do not know where their contracts are located, where the associated documents are, or what stage of the life-cycle they are in. Most organizations have drafts, versions, executed agreements, amendments scattered across user desktops, file shares, and other document repositories. Given the importance of such a document, contract management remains unsophisticated, decentralized, and unmanaged at most organizations, large or small.

This has major implications on the ability to negotiate and finalize the contract, perform on the contracts, find the contract, refer to information in the contract, etc. The act of getting a contract signed is not the goal of the business: it is the performance and optimization of terms within and around the contract. This is precisely why an Enterprise Content Management (ECM) lens needs to be applied when viewing contracts management. According to AIIM, ECM is the systematic collection and organization of information that is to be used by a designated audience. The three components of this definition we will discuss here are: (1) collection of information, (2) organization of information, (3) to be used by a designated audience.

Collection of Information

While it’s great that the contract is signed and somewhere, it’s also not so great that the contract is signed and “somewhere”.

As previously stated, contracts are scattered throughout the organization. In the world of ECM, information silos work against an organization. All too common is the phrase: “I can’t find it”, or “I don’t know where to look”. Prior to any contract management initiative, contracts reside in a number of places: user’s personal drives, multiple document repositories, enterprise resource management (ERM) system such as SAP, and – one that’s too common – in attorney email. While it’s great that the contract is signed and somewhere, it’s also not so great that the contract is signed and “somewhere”. The organization that recognizes a need for contract management will likely start at a first step of identifying where the contracts are likely to be. This endeavor will be required whether the project is to manage all contracts or a subset of contracts. At a minimum, the organization should determine its strategy for managing contracts, at a high-level understand where they reside and know which contracts have the biggest implications for revenue and for risk.  At the end of strategizing or inventorying regarding contracts, a centralized repository should be identified with company policy now guiding the management of contracts. 

Organization of Information

A major part of any ECM initiative is to develop a file structure, taxonomy, and metadata that aids in finding desired content. Contracts are no different. Assuming a centralized repository has been identified to house the contracts in question, workshops on developing the filing structure and associated metadata can be undertaken. Here, it is important for all stakeholders to be involved as everyone will either be authors or consumers of the contracts. There needs to be an understanding of why the folder structure needs to be this way or that way. Folder structures should be intuitive and find the right balance of granularity and simplicity – that is, a folder structure should not be too many levels deep or not enough. Regarding metadata (fields of information about the contract), key data needs to be collected either manually or automatically. Common knowledge suggests enough fields to aid in search and reporting, but not so much as to bog down end users adding contracts to the system resulting in null data fields, misinformation. A glossary and metadata library should also be developed to establish terminology, naming conventions, and possible metadata values to maintain consistency. 

Designated Audience

Management of the contracts is one side of the ECM coin. The other is the people. Who initiates the contracting process? Who drafts the contract? Who manages executed contracts? Who ensures contracts are reviewed regularly, revenue is maximized and risk mitigated? Who refers to the contracts in other lines of business? Who needs to see all correspondence, drafts, and associated documents or who needs to see only the executed agreement? Understanding the audience is key to developing proper contract processes, document management strategy, and end-user functionality. Although most audience members can be listed, they may never have been brought into a room together to discuss the management of their contracts. Usually, baton hand-offs are assumed successful along the contract life-cycle but when discussed in these sessions, gaps and misunderstandings are identified and can be addressed, almost always for the better. 

Other benefits of understanding the “who” of contracts management include development of the security and permission structure and determining “best” end-user functionality. Certain users need to be able to edit everything regarding a contract such as an in-house attorney or sales-person, and others need only view-only capabilities for the executed PDF agreement. A good contracts management solution will have multiple ways of accessing the stored contracts. Leading ECM solutions offer web-based access, desktop file integration, and outlook integration. Users will have their preferences on how they like to navigate and find information. Attorneys will almost always love Outlook. The key here is that while the contracts are stored in a central repository in a consistent and intuitive file structure, they are available to various types of users through means that work best for them. 

Wrapping Up

Contracts are a specific document type that require great focus from an organization considering their importance in outlining day to day business deliverables and requirements. They is often linked to other files including predecessor contracts, amendments, exhibits, etc. Viewing contracts through the lens of ECM will greatly streamline business processes that normally do not receive the attention they deserve.   

Axyon has provided contracts management at a number of organizations. We have helped with strategy before the project begins, guided information discovery sessions and business process analysis, solution development within an ECM solution, trained end users and provided post-implementation support. 

Wayne Day | OpenText Content Server Business Consultant, AIIM Taxonomy and Metadata Specialist, AIIM Records Management Specialist, AIIM ECM Specialist

Wayne Day | OpenText Content Server Business Consultant, AIIM Taxonomy and Metadata Specialist, AIIM Records Management Specialist, AIIM ECM Specialist