Supply Excellence — The Trouble With Contract Management May Be You

The Trouble With Contract Management May Be You

September 12th, 2007 · by Tim Minahan · No Comments · best practices, contract management

In a new study of contract management practices and performance of more than 400 organizations, the International Association of Contract and Commercial Management (IACCM) uncovers an oft-overlooked issue that few enterprises will want to hear: your company may be its own worst enemy when it comes to contract management efficiency and effectiveness.

In the Contract Management Software: Market Sizing and Status Report, IACCM states that, despite mounting pressures to improve contract visibility and risk mitigation, “…contract management remains one of the most manual, under-systematized” and ill-defined areas of business operations. Report author and IACCM President and CEO Tim Cummins fingers poor process definition and the lack of clear ownership or accountability as chief reasons that enterprises are underperforming in the areas of contracting and contract management.

“In most business and public sector organizations, contract management remains one of the last undefined areas of activity,” writes Cummins. “While there are certainly rules, policies, and authorities related to the form, content and creation of contracts — and there may even be resources operating with job titles like ‘contract manager,’ this does not represent a process with clear ownership or accountability for performance.”

The good news? IACCM’s research reconfirmed that contract management software is highly effective at addressing these issues. Specifically, IACCM found that organizations using contract management software reported measurable improvements with contracting and contract management controls, efficiency, and effectiveness. Study participants reported additional benefits in workload reduction, risk management, innovation and cost and revenue improvements.

While Cummins has long been a vocal advocate for the value skilled contract negotiators and relationship managers bring to the table, findings from this latest study revealed that contract management software can extend (and standardize) the best-practice negotiation and agreement management approaches used by top-performers across the organization.
“The key question is whether process definition will ever occur without the discipline of the software implementation, and also whether its benefits are sustainable without the controls and data capture that the software enables,” writes Cummins. “The available evidence suggests that this is not the case.”

We will examine IACCM’s recommendations for successful contract management software deployments in a future post. In the interim,
Supply Excellence readers can for a limited time access a complimentary copy of IACCM’s full Contract Management Software: Market Sizing and Status Report here.

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