November 20 by Samir Bhatia
Many companies struggle to keep their contracts in a central repository accessible to those who need it. New contracts are negotiated, executed, then filed away and often forgotten in a drawer, or folder on the computer of the business person in charge of negotiating the contract. The people responsible for managing and meeting the obligations within the contracts are typically not the keepers of the paper.
As companies grow, this problem can become insurmountable. Multiple versions of contracts are often strewn across various parts of the organization. Even if they are collected and housed in a central repository, the key information in these contracts remains inaccessible.
A Contract Lifecycle Management (CLM) solution helps companies optimize contract performance, especially in procurement and sales. They provide full visibility to all aspects of your contracts. CLM solutions have gained in popularity as companies have deployed these systems enterprise-wide, and across global organizations. Not only does CLM give you the ability to see into your legacy contracts, but you also get complete visibility into all new contracts as they are stored, tracked, and managed by CLM, so you never have to go digging for data again. These tools enable CFOs, CIOs, business unit owners, and legal professionals to reduce costs, more accurately forecast revenue, and improve regulatory compliance.
When we talk about systems we often end up talking about data, which is like the heart and soul of the business. Repeatedly, it has been observed that some companies feel their newly installed CLM is not yielding enough benefits – you dig in a little and you’ll discover that not enough data is uploaded into the CLM to generate meaningful reports or raise alarms for an upcoming expiration date. It’s the data that gives a shape to a CLM system. It’s like having a beautiful home without furniture in it.
Here are 4 important considerations before starting contract migration initiatives:
• What documents need to be considered for migration and reporting?
There can be an enormous volume of documents and contracts floating around in your organization, so you don’t want to over load your new system with irrelevant or trivial information. You must decide what documents you need to upload into the CLM. Divide them into batches, information from your most important documents should go into the CLM first and then move to the progressively less important ones.
• What reports need to be generated from the CLM after migration?
Talk to the stakeholders and see what their expectations are from CLM. Understand their information requirements and the business use case of this information. Are there specific reports they will need to generate?
• What data points need to be extracted and in what format does each business unit require?
Identify the data points needed to be extracted and in which format. For example, a date can be captured in any of these formats i) dd/mm/yy ii) dd/mm/yyyy, iii) alpha numeric format. There may be more formats, but if you need to infuse this information into another system, you should match the format of the other system to avoid any conflict or waste of time.
• How can you phase the extraction and roll out?
The complete extraction project can be classified into following six phases:
i) Prioritize and organize your documents – It is normally done within the company with the help of internal resources, however if there’s too much mess then external help can be sorted.
ii) Define the data fields – In this phase project lead with the help of other stakeholders should define the data fields to be extracted, again to be done internally.
iii) Document the Rule Book – A Rule book is document stating rules and guidelines on how to interpret, extract and format the data. It is generally prepared by the vendor with the help and consultation with the client.
iv) Configure the system – If vendor extracts the data using a software this is the stage where they should configure the system for extraction as per the requirements stated by client.
v) Extract – Vendor to extract and review the data, share the extraction with client for their review and acceptance.
vi) Ingest – Once the data is reviewed and accepted by relevant stakeholders, data is good to go into the CLM system and at this stage data migration into the CLM takes place.
When strategizing for an improved contract management effort, do thorough research and comprehend your internal requirements first. Next look for different solutions available in the market and shortlist the ones that match your requirements. Ask solution providers if they only sell a CLM system or if they can also help with the extraction and migration of information from your legacy data into the CLM. Work closely with the extraction team, explain and document your requirements and how your internal business units interpret different clauses within a contract.
Brightleaf provides a technology powered service to extract information using our own proprietary semantic intelligence/natural language processing technology, our own team of lawyers to check the output, and our own Six-Sigma process to deliver end-to-end, highly accurate, extracted data.