No matter how long you’ve had your existing contract management system for (and whether it is a formal system or not), it is important to regularly evaluate it to ensure that it is meeting your needs and numbers as they change over time.
Sometimes an evaluation will be prompted by something bad happening – a contract being missed, a renewal slipping through the cracks or a simple human error that has large repercussions. Best practice, however, is to commit to regular assessments every few years and pre-empt or stop the mistakes from occurring.
Gartner has a well-regarded Contract Lifecycle Management Maturity Model, which helps companies determine how effective and sustainable their current contract management system is. Broken down into five levels, systems are evaluated in terms of infancy versus maturity.
Level 1: Ad Hoc
At this level, the company has some contract management processes and rules in place, but the management system is in no way formal, consistent or particularly helpful. Individual staff have their own methods for contract organisation, and money, time and effort are being wasted.
Level 2: Basic
A few company-wide processes and some contract documentation exists, but they are not used regularly enough to make an organisational difference. Contracts are created, reviewed, signed off, completed and stored locally and manually.
Level 3: Structured
Contract management processes and standards are developed and compulsory, with different processes for each contract type. Contract templates, a central repository and review systems may be in place, and it is mainly senior management that takes charge of the system.
Level 4: Integrated
Contract management systems are integrated with other key business processes, and many different people use the system, including management, employees and customers. The system is constantly monitored for performance and for best practice, with features including alert systems, auditing and risk management.
Level 5: Optimised
The contract management system works like clockwork! It is analysed for its effectiveness across the entire business and improvements are constantly being made, with goals to further streamline processes. All stakeholders are actively engaged and invested in the system and the benefits it provides.
Below are some questions to help evaluate your contract management system:
- Do workflows reflect current business processes (which typically evolve as the business grows/adapts)?
- Are contract management licences used cost-effectively?
- Are clauses modern and up to date? E.g. modern slavery policies
- Could other areas of the business benefit from a contract management system?
- Are areas of the contract management system missing or used ineffectively?
- Is the business keeping up with the latest industry standards for compliance and risk management?
- Is the contract management system the best tool available in terms of automation, efficient workflows, and time and cost-saving benefits?
SaaSam can help assess your current contract management system and offer improvements that will save money, reduce risk and make life so much easier. Click here to get in touch.
