We are not inventing something new here. If you are an in-house lawyer, a procurement or a finance professional, you are intuitively aware of the idea behind contract intelligence.
Now, if the same ability can be instituted in a technology product using the aggregated data and trends reflected from contracts that have already been signed by your enterprise, it will surely be more accessible and less human dependent. And it will always be available for posterity.
Contracts form the backbone of every commercial transactions that an enterprise undertakes. But most enterprises open executed contracts only upon a crisis or a dispute. They approach them like blackbox mysteries preferring to conduct business through great common place understanding. However, common place understanding, business realities and expectations of management collide often and during these frictions, contracts often come out of the cabinets, email folders and similar storages.
Soon after, the hustle and bustle to make sure that complete records are available begins, and often leaves you frustrated with the time wasted in just figuring out where things are! Then comes the big discovery - that the relevant contract in writing is not entirely consistent with the enterprise expectations and business realities; but, what to do at that stage – a signed contract is a signed contract.
Smart enterprises are now looking to do things differently. Visibility over the blackbox approach has now become the mission. Control, risk mitigations is the new trend and the reactionary measures & mad rushes are out.
Some early visionaries are employing contract intelligence using technology products to easily find the thorns in the flesh and help save their organisation either a lot of money, time or at the minimum the tediousness of browsing through millions of pages.
Here are a few stories of what's causing the change.
A rising star in the services industry business used a variety of SAAS-based CRM applications to manage their customer relationships. These applications would auto-renew unless a notice for opting out was received at least 45-60 days before expiry. When Covid hit, this enterprise decided to optimise costs on these software licenses. The invoices for renewals were received in February 2020. In March 2020, the enterprise gave notice of cancellation to the SAAS providers. The application providers pointed out the auto-renewal clause and the fact that opting out notices were not received in prescribed timelines.
The Auto-renewal clause came as a big surprise, could be oversight at the time of subscription or just no way to track. Unwilling to be caught in a standard subscription agreement, the enterprise decided to approach lawyers. Legal notices were issued, lengthy arguments made and equally strong responses were received from the SAAS providers.
Senior executives who had built relationships with the SAAS providers had to step in to negotiate. The matter was resolved to a certain extent, although not before expenses on lawyers were incurred and management time was spent in resolving something that could have been easily visible through contract intelligence.
The introspection - Do we know all the agreements where there is an auto-renewing clause and when should I give an opt-out notice?
A manufacturing company employed a number of service providers; however, it was an important requirement that all service providers comply with relevant regulations applicable to them. It was not sufficient to just obtain annual compliance certificates but also to obtain documentation to back up the certificates received from the service providers.
A team comprising a legal secretary and a junior procurement professional went through each contract, identified all the relevant obligations, mapped them to the relevant suppliers, created an excel sheet and reminded themselves to send an email every year to obtain the relevant documentation and certificates. And they lived happily ever after.
Until, over a period of time, people changed. But knowledge was transferred and instructions were documented, but some of it fell through the cracks as there wasn't one single source of truth. There was an excel sheet somewhere but the reminders were like messages in a bottle thrown in the ocean.
The introspection - Can my contract management and task management be integrated and impervious to changes in personnel?
Technology offers great opportunity to create and access enterprise contract intelligence. Technology can serve contract intelligence on demand and based requirements faced from time to time. In addition, with the help of technology, multiple departments like finance, sales, marketing and legal can simultaneously access contract intelligence – something that is quite difficult in excel based contract intelligence efforts.
Digitisation of contracts and creating a single source of truth for all contracts are two key elements of contract intelligence served through technology. This means contracts instead of being stored in silos of departments, personnel and systems, will move to a common platform which is completely searchable. It also means that the platform provides for an enterprise to record the metadata and other useful information from the contracts in a user-friendly manner. Technology also enables access to contracts based on need and creates a platform for collaboration amongst employees so as to maximise the objectives of contracts executed by them.
The digital journey can be initiated by anyone inside an enterprise. The in-house legal team could take the lead and in collaboration with finance, procurement, and sales departments decide all the use cases that can benefit from digitization and 360 degree view of the contracts portfolio
General Counsels of leading companies are driving the digital transformation of contract data through a pro active role. Riverus can comprehensively assist enterprises in the digitisation journey leading to ready access to contract intelligence.
Ask us how and download Riverus Contract Management Brochure
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