Supply Excellence — Navigating the Contract Management Solution Selection Process

Navigating the Contract Management Solution Selection Process

July 28th, 2006 · by Tim Minahan · No Comments · contract management

With profitability, compliance, and risk management high on executive agendas, demand for contract management automation has been climbing steadily for the past three years. Two recent benchmark reports from my alma mater Aberdeen Group indicate that businesses’ appetite for these solutions continues to grow. (Click here for free copy of the full report. Registration required.)

More than half of the nearly 200 supply management executives participating in Aberdeen’s benchmark reported using or plans to invest in contract management solutions within the next two years. And for good reason: In previous studies I executed while at Aberdeen, contract management solution users reported improving compliance by 55%, increasing rebate and discount capture by 30%, and halving contracting cycles, among other benefits.

With this heightened interest in contract management automation came an increase in the number of enterprise requests for advice on how best to evaluate available solutions and providers. (I still get these requests, despite having hung up my analyst cleats.) While a blog isn’t the ideal forum to deliver a deep dive into contract management (I’ll leave that to Aberdeen’s Vishal Patel), here are some recommended areas to consider in your evaluation of available solutions:

Contract creation: Assess ability to support collaborative negotiation, redlining, and authoring, contract templates and clause libraries and approval routings and workflows. Also, for compliance purposes, ensure the system you select has document check-in/check-out and full audit trail capabilities. Mandate deep and native integration into Microsoft Word and Excel, which remain the most-used “solutions” for contract management.
Contract repository: Ensure the solution includes the ability to develop and manage an electronic repository for all your contracts, clauses, and associated business documents and information.
Contract administration: Look for solutions that help you automate and control contract management processes, including compliance management, amendments, and renwals.
Reporting and analysis: Demand automated exception and milestone monitoring supported by alerts and escalations so you can track operational performance as well as termination and renewal dates, insurance, non-compliance, and other certifications. Also look for analytics capabilities to evaluate the risk of existing agreements and proposed clauses.
Integration and support services: Ensure your solution provider has the ability to integrate with your back-office ERP, transaction, and legacy systems. Also examine support services, especially those for deployment and contract conversion.

Considering increasing inquiries on contract management automation solution selection (and the need to spend time doing my new day job), I am excited that my current employer has joined an industry initiative to develop a request for proposal (RFP) template for contract management automation solutions based on industry best-practices culled from actual RFPs and consultations. The Excel-based template is available for free (although registration is requried) and can be configured to match any unique requirements of an individual enterprise.

To be clear, the template is intended to provide a foundation for contract management solution selection and by no means reflects every unique nuance of your organization. I would recommend that enterprises augment their solution evaluations with input from other resources, including industry analysts and industry associations, such as the International Association for Commercial and Contract Management (IACCM), which is a co-sponsor of the Contract Management RFP Template.

(NOTE: The 2006 Contract Management RFP Template is just one of four templates aimed at helping enterprises navigate through the selection process for supply management automation solutions. Other templates offered for free through the initiative support evaluation of the following solution types: spending analysis, e-sourcing, and supplier portals and supplier management. Check back here for more guidelines for solution selection.)

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