Welcome to our blog series on Contract Risk Management. This blog series will discuss how contract management has evolved towards managing risks proactively, the type of contractual risks, ways to mitigate them, and more.
To kick off the series, let us first discuss the risks inherently associated with the most common contract management platforms used today.
Most companies today utilize one of the below-listed contract management platforms:
1. Microsoft Word shared drives, and spreadsheets
In this group, contracts are maintained in a completely digital format and are stored in files or a Microsoft Access database.
Biggest contract management risks/complications using this method:
- Data corruption, loss, theft, or misuse
- People making unauthorized changes to templates, logs, or registers
- Not being able to search effectively through contracts, particularly .pdfs
- Maintaining a strict filename naming convention to keep contracts organized
2. Document Management Systems or Homegrown Systems
Companies in this group either use a homegrown system (or series of disparate systems) to manage contracts, or have implemented a simple contract management database system, like Microsoft SharePoint which seamlessly works with a suite of Microsoft products.
Biggest contract management risks/complications using this method:
- Paying more than expected in purchasing additional features and functions
- Compromised ability to make modifications to the system without going back to the vendor
- Data security and service dependability concerns
- Additional costs required with plug-ins for advanced features
Learn More: Post Award Risk Management Solution
3. Contract Lifecycle Management Software
Enterprise contract lifecycle management is powerful and advanced software specifically created to manage a large volume of contracts and complex contract processes. Those in this category of contract management have moved beyond contract storage; contracts instead “live” in a secure contract repository where they can be searched comprehensively, including at a clause level.
Biggest contract management risks/complications using this method:
- Companies need to meticulously vet solutions and partner with the right contract lifecycle management vendor to ensure all current and future needs are met. With this type of software—and particularly for organizations with complex contract processes—companies don’t want to get trapped by baseline functionality they might grow out of and need to replace.
- Companies need to carefully consider the pros and cons of using suite vendors. Naturally, the price is right, CLM comes as part of the suite, and the user experience is likely familiar to what has been used before. However, some organizations require even stronger, more configurable contract management systems, and for that, they need a vendor that serves up automated contract lifecycle management as their core business and can handle any and all levels of complexity.
The next parts in this series explore the best practices to proactively manage common contractual risks:
Learn about Zycus’s Post Award Contract Risk Management Solution
Contact us at info@zycusicontract.com and get all your contract lifecycle management questions addressed.
