Scripting the Contract Story

Scripting the Contract Story

Contracts encapsulate the entire process - right from contract negotiation to drafting to signing the contract to running the business within the purview of the contract. Contracts are a lot like movie scripts that give substance and provide a framework for the procurement teams to conduct business. Just like if the script is not well written and adhered to, the movie would not be a pleasure to watch, if the contracts are not well defined and adhered to, the business dealing would suffer. Contracts can either make or break a huge sourcing project thus having a significant impact on the organization.

Why did Batman & Robin fail at the box office?

(Dont get confused the whitepaper is still talking about Contract Authoring!!) Movies like Batman & Robin (1997), Gigli (2003), Catwoman (2004) etc. had it all great actors, best of the directors and production house, extravagant budgets, yet they lacked one thing i.e. a good script which ultimately resulted in the demise of the movie. Big corporations have projects which run into billions and are helmed by best of the leaders in the industry. Yet many businesses have contract management systems that are marred by poor contract drafting and management capabilities. Organizations often rely heavily on MS word to write the contract and emails to collaborate with concerned stake holders i.e. the legal team, procurement executives and the suppliers for finalizing the contract. This process is often time consuming due to constant back & forth and also prone to error as many times the change may be lost in different versions of the word document that is doing the rounds. This simply results in a longer contracting cycle. Technology when picked and used correctly makes the authoring process simple and time efficient. Technology is that camera, using which the procurement function can shoot or in our case help author a good contract.

Which camera meets your requirement the best?

Procurement executives should look for a technology that provides the following:

A library, which stores pre-approved clauses. Additionally possess

an ability to create, import and store contract templates

An approval workflow, which defines a hierarchy that will

be followed for contract approval. This ensures information passes through the correct channel and is accurate. The approval workflow may vary depending upon various parameters. For instance, if the contract amount is beyond $50,000 approval from the director is mandatory. However, for amount less than $50,000 the contract can be approved by head of department

Integration of MS word with the authoring tool which

provides the ability to import/export word document

Collaborative authoring with concerned stakeholders as

defined in the workflow, which facilitates editing the contracts based on the input from different stakeholders

Audit trail for comparing different versions of the word

document for the red lines. The tool should provide an option to quickly compare side by side all the changes done to different versions of a contract even if the changes are done in word document

A defined ownership, that provides control access to

contracts based on contract category, contract type or business units / departments

Easy integration with existing ERP or any other system

being used by the organization

A user friendly UI, that would attract users to adopt the

solution. Since, even if the authoring tool provides the best of the functionality but if they are not easy to use then the purpose for automated contract management is defeated as users would eventually opt for manual means

So what should the contract authoring process be like?

Technology can make the process of contract authoring, SIMPLE! The process flow below shows how easy it is to author contracts with the correct technology.

Define basic contract details like contract title, type, category, region, etc.

Based on the details, select from the already existing templates or import a new one

Give in-depth information like contract value, currency, start date, expiry date, if the contract is evergreen, supplier details etc.

Send the contract for approval based on the pre defined hierarchy

Post internal approval, mail the contract to the supplier

Review and address the red lines sent by supplier by uploading the contract sent by supplier into the tool

Sign the contract manually or using e-signature

Benefits
n

Standardized contracts
Pre-approved clauses and templates ensure the terms and the format used to author contracts are consistent

n 2

Higher adoption rate

User friendly interface makes it easy to access the different functionality of the tool, eventually resulting in a higher adoption rate

n 3

Security
Ability to provide folder based access control ensures the confidentiality of the contract is maintained

n 4

Reduced cycle time

Collaborative authoring platform, ability to conduct side by side comparison for different versions of the contract and standardized templates all account for an authoring process which is quick and accurate

Conclusion
Low budget, less known actors, not so famous directors can pull off a great movie if the storyline or the script of the movie is interesting. Procurement teams can function smoothly if all their contracts are in place. Large organizations with offices across the globe will have thousands of contracts that need to comply with rules and regulations of the respective jurisdiction. Manual ways of authoring contracts does not provide that much value as it often eats into valuable time. Automating the process makes contract authoring less time consuming, thus making the contracts more relevant. To end with a quote by Tim Cummins, director of IACCM Organizations which dont manage their contracts effectively will be at a tremendous competitive disadvantage.

Z
About Zycus

At Zycus we are 100% dedicated to positioning procurement at the heart of business performance. For more than a decade we have been the world's most trusted leader in Spend Analysis. With our spirit of innovation and a passion to help procurement create even greater business advantages, we have evolved our portfolio to a full suite of Procurement Performance Solutions Spend Analysis, e-Sourcing, Contract Management, Supplier Management, and Financial Savings Management. Behind every Zycus solution stands an organization that possesses deep, detailed procurement expertise and a sharp focus on being responsive to customers. We are a large 600+ and growing company with a physical presence in virtually every major region of the globe. We see each customer as a partner in innovation and no client is too small to deserve our attention. With more than 200 solution deployments among Global 1000 clients, we search the world continually for procurement practices proven to drive competitive business performance. We incorporate these practices into easy-to-use solutions that give procurement teams the power to get moving quickly from any point of departure and to continue innovating and pushing business and procurement performance to new heights.

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