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WHITEPAPER - Manage Contractual Obligations The Right Way NEW

David Montgomery — Fri, 30 Apr 2010 22:00:00 GMT

Download the full version of this document here: Managing Obligations The Right Way.

The Contract Lifecycle Management (CLM) industry and its solutions are being assessed incorrectly. Supply Chain Management, Buy-side solutions, Sell-side solutions are each artifacts of the past, unnecessary categories and terms which should be eliminated from discussion and benchmark measurements of CLM solution feature sets. This terminology is a result of the historical perspective of what Contract Lifecycle Management currently is, contrasted to what it should be.

It’s time for change.

A Contract is simply an agreement between two or more parties that establishes a set of obligations defining each party’s compliance requirements. Furthermore, obligations, outside of party-to-party compliance, are required by government sources, such as city, state, federal and international regulations. Note: one party’s obligation may be another party’s right. Meaning, if one party has the obligation to pay compensation, then the other party has the right to receive that compensation. For purposes herein, the terms “obligation” and “right” are synonymous and are considered one and the same.

A CLM solution should be unconcerned with its direction of travel: Buy-side, or Sell-side. Instead, these solutions should be concerned with the stated obligations, provide features to ensure obligations are met by both parties, and be accessed as such. To provide framework, new terminology is proposed:

Obligation Management is the ability of an organization to manage its obligations throughout the delivery of its products or services.

Obligation Traceability is the ability of an organization to trace and monitor the Policies, Processes, Procedures, Contractual Clauses, and Personnel who are involved and accountable for the delivery of obligations.

What are Obligations?

An Obligation is a requirement, a bond, a promise; something that must be done. Legal terminology stipulates the use of “shall” and “must” to state firm obligations in a contract or regulation. The terms “will” and “may” are also used to indicate less firm commitments, but are none the less important for each party to track. Contracts and regulations state obligations which should be managed and monitored throughout the contract lifecycle, and frankly, across the entire business.

A contract must contain two essential components to be legally binding: 1) an agreement, and 2) consideration. Broken down, these include an assortment of provisions that encompass the legality of the contract: Terms, Conditions, and Performance. Each of these are stated as firm obligations, implied obligations, discretionary obligations, or entitlement obligations. Furthermore, as mentioned previously, some may refer to a party’s rights.

Contract Lifecycle Management solutions should be measured in total by how well they manage obligations and how well each provides Obligation Traceability in the organization. As important, CLM solutions should be accessed by their ability to be incorporated and integrated into existing legacy systems. Obligation Management and Traceability span the organization; henceforth, a CLM solution should be required to have agile and numerous integration strategies that can be used in provider/consumer data exchange models with other functional components throughout the organization.

Contract Management Today in Business Operations

Most businesses today view contracts and contract management as a file storage of paper documents, from file cabinets, to expensive document management systems. Their contracts and their contractual obligations are not necessarily integrated into business operations. At best, most have manual procedures and document stores to track expirations dates with maybe some technology-assisted alert mechanisms. But, expiration dates or renewal dates are only a small fraction of the complete set of obligations stated in a contract. All obligations are important.

Human analysis of contracts is performed to ensure process-centric business operations meet all of the required obligations. However, this is done without a direct link connecting the process, the policy enforcement and the obligation, because the contractual document is not directly interacting with the processes taken as a whole; it is stored separately from the cross-departmental operational processes put in place.

Best Practice Teams can only do their job after the fact; spending significant time manually reviewing contract terms, trends in using contract terms, and post analysis of operational costs associated with the use of such terms.

Fundamentally, here is the current way most businesses view contracts and contract management within their organization, as a contract repository:

Note the lack of interoperability between a contract repository and the other operational processes in a business. There is a complete lack of visibility into how a single contract obligation affects other business operations and cost. Unfortunately, visibility of this information is achieved using manual efforts of teams of people reviewing line-by-line contracts within the contract repository, or data mining methods across several legacy systems.

The most important point made herein is that obligations are the driving force in everything a business does, in every policy stated, and in every process executed. Contracts should not be hidden in file cabinets or document storage applications. Contract obligations should be integrated into all business operations. Obligations should be traceable across the entire organization to obtain the corresponding cost impact of policy and process decisions. Obligations are the topmost performance metric all organizations should follow.

Obligations are the driving force in everything a business does, in every policy stated, and in every process executed.

What is needed is a direct linkage between the obligation and the business operations. What is needed is a direct linkage between the contractual obligations and customer relationship, financial, supply-chain, and operational processes. What is needed is a direct way to ensure obligations are being met, where they are being met, how operations may be improved to meet them, and a means to measure and reduce the cost of meeting each contractual obligation.

What is Happening Today and Why it is Wrong

Business operations are overly concerned with their processes. Executives are focused on Business Process Improvement and Business Process Reengineering to maximize efficiencies. Unfortunately, this approach has limitations as this focus is incomplete and is solely at the execution-level of the organization. We need to ask ourselves: “Why do processes exist in the first place?” Business processes exist to meet obligations and to enforce policies in a repeatable, auditable way. Obligations (regulatory, contractual and board directives) are stated requirements; bound commitments.

There is no decision-making process surrounding stated obligations; each is a business requirement. But, business policies are designed to ensure obligations are met. They are defined by executive-level decision makers. A policy statement is the result of a decision-making process. Today, how do executives know their crafted policy statements are correct, are the most efficient, and are integrated into their organization’s business processes, if at all? What are today’s methods and technology solutions for Policy improvement?

Acknowledging that obligations are business requirements, and policies, processes, procedures and personnel assignments are organizational designs, how do decision-makers measure the effects of their decisions? The design could be incomplete, wrong or inefficient. Furthermore, these designs translate into organization costs. There needs to be a way for executives to measure the organizational costs and efficiencies associated with their policy and process decisions. There needs to be a way for executives to determine how much it costs to meet an obligation; or said another way, if the obligation were no longer required, what would the financial impact be to the organization? For example, what is the organization’s obligation cost associated with meeting Federal Acquisition Regulation (FAR) 28 dealing with insurance and bond provisions? Or, if FAR 28 were no longer required, no longer an obligation, how much money would the organization save? I highly suspect the answer to this type of question is: “I don’t know.”

It is amazing how much the simple answer to a Yes or No question, while going through the contracting process, ultimately affects organization cost and profit margin. Organizational leaders today need to insist on answers to what should be simple questions. They should require solutions to drive transparency and traceability into the obligations met through the contracting process and those that ultimately affect organization cost and profit margins.

There needs to be a way to determine how much cost is associated with each and every company obligation. The only way to do that is to directly link each contractual obligation to its policy statements, policies to the business processes and procedures that enforce them, and personnel to the processes and procedures. This perspective puts obligations “on top” of the business execution model, and is in fact what Obligation Management with technology-assisted solutions is all about.

The Obligation Management Model

What we need is a new model to provide a benchmark framework for accessing CLM solutions, centered on Obligation Management and Traceability and the solution’s ability to facilitate integration strategies. The answer lies in the CLM solution’s capability to embrace Obligation Management and Obligation Traceability, and as a result, Obligation Cost Improvement. The following illustration depicts this new model:

By putting Obligations on top, with the vision of Obligation Traceability, business leaders will have a better view of just how much it cost to implement a negotiated obligation, a regulation, a self-imposed contractual obligation (board decision), a clause in a contract, and where those costs occur in the organization.

While this article focuses on CLM solution capabilities and features, there are obvious parallels to other business operations in general, accompanied with associated benefits. The core of the Obligation Management Model infers shifting the focus from Business Process Improvement to Obligation Cost Improvement.

Obligation Cost Improvement

Given the Obligation Management Model, business executives will now have the ability to trace the impact of a contractual obligation throughout the organization by policy definition and enforcement, cross-functional processes, and procedures. They will be able to establish policy and measure just how much the policy decision drives obligation costs in their organization; whether the obligation be regulatory, contractual, or board directive.

Fundamentally, business process improvement by itself is simply not a high enough focus to provide reasonable improvements to organizational efficiencies. Obligation Management, combined with Obligation Traceability, tells executives exactly where the costs are, where they need to be improved, gives them input for policy improvements, and gives them visibility into employee skills and hiring requirements.

Business decisions will be more effective, profit margins will improve, and properly skilled personnel can be hired and positioned. In addition, metrics can finally be gathered to answer questions such as:

1. “If I increase the cost it takes my organization to meet an obligation by hiring more personnel, will that improve my product/service throughput and increase my margins?”

2. “If I reduce my obligation cost, does that negatively affect throughput?”

3. “Can I improve my business policies to elevate efficiencies?”

The Affect on Contract Lifecycle Management

So why have CLM solutions been bound to buy-side vs. sell-side evaluations? History explains why. Many contract management vendors have evolved from their legacy technology and have tried to fit their solutions into a Contract “Lifecycle” Management story. Being bound by their prior R&D investments, they jumped into the CLM market space trying to get return on their investments with a less than complete feature set. And further investment has not resulted in return, causing several contract management vendors to have significant financial commitments. Historically, being addressed as such, buy-side solutions and sell-side solutions became a benchmark measurement. Many CLM solution providers have extensive hardcoded software built on decade-old technology and simply cannot afford to start over.

In an article I wrote October 2007, I explained the need for Policy-centric solutions. In this article, I explained the evolution of contracts and how they have been managed. Process-centric solutions are simply not enough for a business needing to enforce policy. Their policies are embedded “somewhere” in a business process with little or no direct linkage for monitoring. Significant dollars have been spent on SAP, Oracle, Seibel, and JD Edwards-like solutions to implement enterprise Process-centric execution into the organization. Policies, as they change over time, require companies to invest more dollars on these hardcoded process-centric solutions to implement the new/changed policy.

Contrarily, Policy-centric solutions constructed to define and track policies facilitate not only the evolution of policy change, but also provide business leadership with traceability and greater knowledge of where a policy is being implemented in their organizational processes. Understanding how business management has matured over time clarifies why Contract Lifecycle Management solutions are currently misevaluated. Many have categorically missed looking at the bigger picture.

What if contractual obligations were individually linked to every policy-centric operation in a business? What if this direct linkage could provide visibility into the operational costs associated in meeting the obligation? What if this technology-assisted insight were available to help businesses improve their policies, their processes, and their costs?

One of the primary missions of a CLM solution is to orchestrate obligation management and traceability tasks as these thread across the organization.

With the experience of working government contracts for 8 years, Requirements Definition and Requirements Traceability became engrained into my mental thought process. The importance of requirements traceability throughout a development project then drove me to create technology that would automatically manage and monitor requirements as they were defined and as they flowed through the development process - ultimately being verified in the delivery of the project’s solution. This same model applies to managing business obligations. These are requirements that have been or need to be stated, monitored, tracked and verified throughout the process of delivering the company’s obligated product or service, and in the process of buying products or services from a supplier. As a result, I would offer a revised definition of Contract Lifecycle Management:

Contract Lifecycle Management is the formation of multi-party agreements combined with the management of a company’s obligations and their direct relationship to company policies, processes, and organization personnel that execute their procedures, review and approve work, negotiate, and execute a contract while acknowledging the importance of cross-functional integration to achieve total concept of operation.

A contractual obligation is stated in a binding agreement. So Obligation Traceability must be driven down from executive-level policy decisions to the exact clause or clauses that are put in place to ensure obligations are met. Business leaders do not yet have the ability to ensure obligation delivery down to contract clause-level statements. Analogous to government contract development, where Requirements Management and Traceability are necessary to connect a system requirement to a software module, Obligation Management and Traceability are necessary for commercial businesses to track obligation fulfillment throughout their organization to the specific costs and role-based resources that are responsible for meeting the obligation.

Obviously, the concept of Obligation Management spans the entire organization. Whether selling or buying products or services, there are enterprise pieces to the solution. CRM (Sales/Support) and ERP (Finance) activities are necessary in executing buying and selling transactions. Binding contracts are prevalent and necessary in both directions and these activities need to be integrated and work together as part of an overall Obligation Management solution.

Note how the above diagram illustrates the direct relationship with key organizational and functional components.

What is needed is a CLM solution, an obligation management function, to manage, monitor, collect and disperse obligation/policy-centric data with the other functional components in the organization. A CLM solution with obligation management and traceability features is an integral component on par with Sales and Finance components. It is proposed that one of the primary missions of a CLM solution is to orchestrate obligation management and traceability tasks as these thread across the organization.

Obligation Traceability means the obligation needs to be stated and linked to business policy, process, procedure, and personnel. Government regulatory requirements are as well stated, for example FAR requirements or Generally Accepted Accounting Principles (GAAP). Business leaders need technology-enabled visibility into the organization mechanisms that provide insight into how their business meets, tracks, monitors and audits its obligations - which is the essence of Obligation Traceability.

A Contract Lifecycle Management solution should provide greater visibility into these direct relationships.

Contract Lifecycle Management Benchmark Analysis

Industry leaders who follow the CLM space should embrace the bigger picture and assess how well CLM solutions provide the ability to manage obligations and policies. Is the CLM solution configurable such that the solution can deliver these features? Adaptability across business lines, industries, and business operations is critically more important than analyzing if a solution can address the features of sell-side contracting. It’s time to step out of what has been, and step into what is needed.

For discussion purposes, business operations are herein viewed by size and maturity. Small businesses manage their operations with either verbal or written procedures to follow. Without consciously knowing, they are establishing procedures to meet their business obligations. Mid-size businesses manage their operations with cross-departmental processes to establish chronological flow, checkpoints, lower level procedures and duties among the personnel involved with the given process. Without consciously knowing, or maybe so, they define and implement processes to meet their policies.

Mid and large size businesses manage their operations by establishing policies, implementing processes to meet policies, and employing department-level procedures to fit into the process model. Without consciously knowing, or maybe so, they define policies to make sure their business obligations are met: be they contractual, regulatory or business obligations established by board-level decision-makers.

How do business leaders ensure obligations are being met? Do they have organizational visibility into who, when and where these obligations are being met? What is their confidence level that obligations are met? To reiterate a central point, it does not matter if the obligation is buying or selling; it is fundamentally and simply an obligation.

Contract Lifecycle Management: The Future of Business Contract Operations

The Obligation Management Model proposes a different framework for accessing CLM solutions. It proposes a structural change in the way business requirements are managed and information is gathered. It is a different perspective of the industry. It is profound in that it moves contractual and business obligations out of filing cabinets and into the executive office, while directly providing in-depth visibility and metrics for business improvement and return on investment. Obligations are the reason why businesses do what they do. Obligation Management, Traceability and the capability to provide visibility into Obligation Cost Improvements are new key fundamental concepts in business operations and in future CLM solutions.

Acknowledging the need for policy management and implementation, more advanced technology solutions have created the ability for a business to define and establish policy-centric contracting solutions, without the need for custom code. The next evolutionary step is Obligation Management and the need for business leaders to have the resources to ensure obligation fulfillment.

These forward thinking solutions also address the Obligation Traceability functionality, critically important in providing leadership with organization visibility. Our future will complete the delivery of total Obligation Management and Obligation Traceability from all sources, whether the source is contractual, regulatory, or board-level directives. The question now becomes: How are you going to manage your company’s obligations?

30-Apr-10 5:00 PM

No Umbrella Required. NEW

Darrin Poole — Thu, 22 Apr 2010 02:00:00 GMT

Download the full version of this article here: No Umbrella Required.

Contract management is a lot like a rainstorm. When it’s just a sprinkle, it’s easy enough to keep track of each individual contract. But what happens when the drizzle becomes a deluge, and contracts begin falling into different departments and different locations simultaneously?

Information would be splattered everywhere. Critical data would be so spread out that it would be virtually inaccessible. Then factor in the added layer of complexity when the client relationship is complicated such as clients who are also vendors or partners.

Contract lifecycle management brings order to the chaos by standardizing your current process and better organizing your contract information. Much like funneling the heavy rain into a water
collection barrel, contract lifecycle management collects all your vital information into one place and makes it accessible to all relevant parties. Bottom line? Efficient contract management is tied directly to profitability. Implementing an efficient contract lifecycle management process shortens cycle times, which means you get paid faster.

Coventry Health Care, a national managed healthcare company based in Bethesda, Maryland, recently lived through one such contract management deluge. With 500,000 existing contracts and a creation of about 3,500 new contracts monthly, the company’s overall financial performance was shaped by its insurance and managed care contracts within the provider networks. Coventry knew things had to change, or their company would be harshly affected financially by such disorganization.

“Through acquisition, we had 17 health plans, and each had its own different flavor of contract boilerplate and contract processes,” said Kevin Sears, Vice President of Coventry’s Network Development. Sears spearheaded an enterprisewide initiative to develop and implement contract lifecycle management.

“You have to have some tool or system that makes sure these processes work to the advantage of the organization,” said Sears. “Without it, you can create a financial problem very quickly.”

In today’s marketplace, information is power – but it can be crippling if the necessary information is inaccessible.

“It becomes a mixed bag of stuff that’s out there, and confusion can develop,” said Bill Pugh, president of CLM Matrix, a contract lifecycle management solutions provider. “Your wires can get crossed, decisions get delayed, and down time slows your business cycles.

The Check's in the Mail

Most companies, on average, wait 60 days to collect on receivables, according to Pugh. If the cycle is reduced by a mere two days (two days = millions of dollars in cash collected), that money can be used to meet expenses of the business.

“Time is money, and the more time you spend doing inefficient things, it’s costing you money,” said Pugh. “The automated system puts rigor into the process, forcing a more productive and accelerated timeline. It also conditions your customer to what your negotiation process is.”

In Coventry’s case, the new contract lifecycle management solution cut their internal negotiation cycle time in half – and improved the experience of all parties in their widespread network.

“It allowed us to drive through the contracting process within a timeframe the organization deemed to be appropriate,” Sears said. “All reminders, escalation processes and the things that you need to keep the ball moving were implemented, which resulted in a lot less down time than we had previously.”

Time is Money

The benefits of contract lifecycle management are multi-fold. According to Pugh, customers of CLM Matrix often turn to automated systems for reasons other than reducing contract cycle time,
such as risk mitigation, financial reporting or compliance with government regulations. More efficient processes mean time and money saved.

In addition to significant reductions in business cycle times, full contract lifecycle management creates transparency across the enterprise. Sales, financial and legal executives can monitor contracts through every business phase, including negotiation, execution and expiration.

Public companies are also able to ensure compliance with rigorous regulatory standards, shrinking financial reporting cycles with heightened confidence in the accuracy of their numbers. CLM Matrix has helped clients reduce the time it takes to complete SEC filings from as many as 10 days to three to five days.

Other advantages include:

Standardized contract creation using legal clauses that include most favorable terms as defined by the company
Significant cost savings through more efficient workflow
Enhanced collaboration through online negotiation and information exchange
Easier access to the contract repository with defined metadata that enables greater search and retrieval
Enterprise risk management through reporting across clauses and terms
Quicker, more efficient payment resulting from clarity of contract terms

Storm-free Business Relationships

Relationships are the driving force behind virtually every company in today’s economy. Contract lifecycle management empowers companies to get the most from their relationships - and everyone involved in the process wins. “An efficient contract management program can optimize your relationships and keep the company protected in today’s changing business environment,”
said Pugh. “It certainly helps better manage the impact of those sudden rainstorms and keeps you from getting drenched.”

21-Apr-10 9:00 PM

SharePoint 2010 and Office 2010 - White Paper

Darrin Poole — Tue, 09 Feb 2010 01:00:00 GMT

To read the full white paper contents click here: Business Productivity at it's Best.

Abstract

This paper shows how two products, Microsoft® Office and Microsoft SharePoint®, contribute to the powerful architectural design of the Microsoft Business Productivity Infrastructure (BPI). The BPI stack approach suggests that only by thinking at a capability level (for example, “What do users want to do?"), and then adding the right aspects of capability in each place (client, server, and services), can we create desktop applications that also deliver rich server and services capabilities to information workers.

This paper describes how the 2010, 2007, and 2003 versions of Office work together with the 2010, 2007, and 2003 versions of SharePoint technologies. Although we provide an overview of Office and SharePoint features working together in past versions, this paper focuses on the integration features of the Microsoft Office 2010 experience with Microsoft SharePoint 2010.

The scenarios outlined in this paper show examples of how the power of SharePoint 2010 and related servers can be combined with capabilities of one or more Microsoft Office 2010 applications to deliver rich, intuitive, and easy-to-use capabilities directly into the hands of desktop users.

The scenarios cover the following value areas:

Collaboration Without Compromise
Bring Ideas to Life
Anywhere Access
The Practical IT Platform

The paper concludes that to realize the best user experience with Office and SharePoint integration features, organizations should upgrade client programs to Office Professional Plus 2010 and server technologies to SharePoint 2010.

Introduction

Microsoft Office has always been about automating tasks and providing people with choices for how they get things done at work, at school, and at home. When Microsoft Office products were first introduced, they helped people move beyond manual processes and tools to automated processes on computers. Over time, Microsoft Office has evolved and is now the primary vehicle by which people experience Business Productivity Infrastructure capabilities, such as collaboration and content management. Microsoft Office helps enhance business productivity by offering rich server capabilities that are tightly integrated into its user experience.

Many analysts support the notion of an integrated productivity environment for information workers. Gartner Group’s "Smart Enterprise", Forrester’s "Information Workplace", and Yankee Group’s "Extended Enterprise" frameworks all combine these capabilities to create the next-generation workplace for information workers. The introduction of Microsoft Office 2007 was the first time a solution of client, server, and service products, with tight design integration, could deliver the functionality that would have previously required 6–10 "best-in-class" products for a full BPI platform. The 2010 release of these products takes this integration to the next level by providing more flexibility in delivery and new capabilities to help save the business time and money.

The focus of this paper is to provide an overview of the specific capabilities enabled through Microsoft Office and SharePoint working together as key components of the BPI stack in the 2010 release.

8-Feb-10 7:00 PM

Mitigating Risks with CLM Matrix

Darrin Poole — Mon, 26 Oct 2009 13:00:00 GMT

Download the full version of this article here: Mitigating Risks with CLM Matrix

When Hurricane Katrina honed in on the Louisiana Coast in the Fall of 2005, companies headquartered in New Orleans weren’t alone in their exposure to the impending destruction. CEOs in lots of places – Chicago, New York, London, Munich for that matter – had plenty to ponder as well. It wasn’t that these CEOs had branch offices or subsidiaries in New Orleans that they were worried about. They were busy trying to determine if any of their customers and suppliers were located on the Louisiana Gulf Coast.

Did they have customers who would fail to meet contractual obligations? Did they have a distributor in Slidell who got their product to key customers? Did they rely on a company in Houma to keep their supply chain intact?

In order to understand the risk to their business – and make a plan that would keep them operating – corporate officers needed access to all the contracts they had with companies where Katrina might wreak devastation, in this case from the Florida Panhandle all the way to the Texas Gulf Coast.

If they couldn’t get that information, they were sitting ducks.

With the typical Fortune 1000 company maintaining an estimated 20,000 to 40,000 active contracts at any given time, it’s virtually impossible to get an accurate assessment of risk exposure without an enterprise-wide system to manage the active contract portfolio. Finding every contract from the Florida Panhandle to the Texas Gulf Coast would be an intimidating task.

“Do you know where your data is? You start to care when there’s a natural disaster,” said Jeffrey Gordon, a professional negotiator and author of the Software Licensing Handbook. Because his client had contract lifecycle management in place, the company – in 20 minutes – was able to search through its entire portfolio and identify all of its contractors along the Gulf Coast and start planning for alternate operations. “We weren’t going to put up sand bags and block the water, but we could mitigate the risk,” Gordon said.

With the size and complexity of business today, the risks go much further than natural disasters. Contracts typically contain multiple terms and conditions that trigger cost penalties and potential liabilities, while Sarbanes-Oxley and other compliance initiatives have all but inserted government rules into contractual promises.

“Without an integrated structure you expose yourself to risk at all stages of the process,” said Timothy L. Smith, principal of The Plaid Group, a business consulting firm that specializes in mid-size organizations in transition. “Contracts can easily end up in a black hole without systematic management.”

Financial, sales and legal executives struggle with a variety of issues, including:

• Lack of insight into business policy and contract processes when going into negotiation

• Difficulty understanding the cause and effect of various contract clauses

• Uncertainty regarding the impact of the contract portfolio on the future economic health of the company

• The potential for non-compliance with regulatory policies and procedures

• Legal exposure through inadequate or inappropriate wording or usage of terms and clauses.

Everybody’s Frustrated

The Plaid Group was called into a situation recently in which the client had developed a new product and outsourced the manufacturing function to an outside partner. A few months into the relationship Smith got a call from the client saying, “I want you to go over there and straighten them out.”

Frustration had built on both sides, with Smith’s client being unhappy about quality issues and the manufacturer saying it had “bent over backwards to meet a moving target of product specifications.”

If the client had contract lifecycle management in place, it would have been able to approach the negotiation phase of the relationship strategically and with more insight; it could have developed contract clauses that would have managed the expectations of both parties, Smith said. The Plaid Group guided the renegotiation of the agreement that put procedures in place that enhanced communication and made both parties accountable to the success of the relationship.

Internal Agreements

An increasingly frequent problem relates to internal agreements as companies grow to include multiple subsidiaries. “Companies that do business with their own affiliates almost always fail to adequately memorialize their deals because they think of themselves as siblings. We’re family,” Gordon said. “The contract isn’t for the marriage; it’s for the divorce.”

And when companies enter merger and acquisition agreements, the contents of the contract portfolio are particularly sensitive, he said. A search through the contract database of one of Gordon’s clients showed that the company had neglected to insert contract clauses that would have assigned existing business to a new owner in the event of an acquisition. “It was a last minute scramble,” said Gordon. “We had to quickly get an amendment to all those customers. A lot of letters went out.”

If the client had a contract lifecycle management governed by a policy-based contract initiation process, it could have anticipated the need to insert contract language that would assign business to a new owner in the event of an acquisition. In this case, the company lost 25 percent of its customers because they refused to transfer their business relationship.

Mitigating the Risk

Many leading experts say the risks of failing to manage the contract lifecycle are “almost infinite.” They cite:

• Companies overpaying millions on software maintenance by paying fee increases when they fail to monitor contract language that doesn’t authorize pay hikes

• Having to scramble to get critical services (e.g. technology support, telecommunications support) when a company fails to anticipate contract expiration dates

• Getting services and products they didn’t agree to buy but are obligated to purchase because they’re hidden in contract clauses.

By mitigating risk through visibility into an active contract portfolio, a company can help ensure the effective management of the process from initiation and negotiation to execution and expiration. “You can optimize your internal and external relationships and keep the company protected in today’s changing business environment,” said Bill Pugh, president of CLM Matrix, whose Matrix software has been developed with process best practices for a number of industries, including healthcare, insurance, financial services, entertainment, energy and high technology. “You can also reduce the company’s risk by proactively monitoring contractual rights and obligations,” he said.

The advantages of a full contact lifecycle management tool include:

• Standardized contract creation using contract clauses that include most favorable terms as defined by the company

• Enhanced collaboration through online negotiation and exchange of documents

• Faster approvals supported by automated workflow

• Global contracts visibility to support best practice information and instruction from legal, operations and finance

• Easier access to the contract repository with defined metadata that enables greater search and retrieval

• Enterprise risk management through reporting across clauses and terms.

“The transparency of the contract portfolio helps to simultaneously resolve the concerns of the entire executive team, said Pugh. It supports the financial officer responsible for the financial integrity of the company, the sales executive who needs to act quickly to bring in revenue while upholding the company’s business policies and brand, and the corporate counsel who needs to minimize legal exposure and litigation,” he said.

An Historic Opportunity

The economic downturn has slowed corporate spending, but as the climate improves, companies are looking forward to a new period of growth. This presents an historic opportunity for a company anticipating high growth to prepare for and invest in its future, said Pugh. “When the action begins – and it will – the company will have the capacity to harness the power – and the risk – of its contract portfolio through improved compliance and the ability to capture revenue and contain costs.”

26-Oct-09 8:00 AM

Defining a SharePoint Solution Roadmap

Darrin Poole — Tue, 23 Jun 2009 09:00:00 GMT

Download the full version of this article here: Developing a SharePoint Roadmap

When considering a Microsoft Office SharePoint Server 2007 solution, there are six major knowledge areas to explore. These SharePoint solution components should be considered when defining the SharePoint Roadmap. The feature areas are as follows:

Collaboration - Creating an environment that allows teams to work together by providing an intuitive, flexible, and secure capability for sharing information.
Portal - Delivering the capabilities to personalize the user experience of an enterprise website by providing individuality, security, and social networking capabilities.
Enterprise Search - Locating relevant data and content distributed across a wide range of sites, document libraries, business application data repositories, and other sources. Enterprise search also supports the location of appropriate resources to address specific questions.
Content Management - Creation, review, and management of content, regardless of the format of the content. Content management can include document management, records management, and Web content management.
Business Forms and Integration - Creation and implementation of forms that enable efficient business operations through the use of business process workflows. The forms are delivered via standard Web browsers and can be extended via the integration with databases and third party applications.
Business Intelligence - Delivery of business critical information using a wide range of solutions, including server based Excel spreadsheets, SQL Reporting and KPI tools, to assist in the decision making process.

Building the SharePoint Roadmap

Building a successful roadmap involves three areas: People, Process, and Technology. Business processes represent the way we capture information, organize and store the information, and, ultimately, use the information in our decision processes. The technology functions include all system components that make up the SharePoint solution. However, even the best technologies and logical business processes will fail if the user community does not readily adopt them.

The SharePoint Roadmap helps set a vision for a SharePoint project and defines how that vision will be achieved. The goals of the roadmap are to help the business users understand their needs and how SharePoint will help achieve their goals. In developing the Roadmap, a number of topics are addressed

SharePoint vision: Work with senior managers to align the SharePoint vision with business goals.

• Governance: What is needed to allow all departments or parties to help define and implement the SharePoint system?

• Determine desired features: What functionality is needed?

• Prioritize features: Determine the complexity and importance of each feature.

• Technology gap analysis: Understand and document what technologies are needed for the overall solution.

• Roadmap: Define in text and chart format what will happen over the next 18-24 months.

SharePoint Roadmap Benefits

The intent of the SharePoint Roadmap is to define a SharePoint vision aligned with business goals and then create a structured approach to building a SharePoint solution that meets those business needs. The SharePoint roadmap provides the following benefits:

Aligns your SharePoint solution to the business needs and strategy.
Defines governance with input from multiple organizations.
Leverages your company's users to define the most important SharePoint applications and features.
Defines what technology is needed (and when) in order to make the SharePoint deployment a success.
Helps ensure your SharePoint and integration projects are on track to achieve technical and business objectives.

At the conclusion of the Roadmap development, your organization will be able to develop a plan for a successful SharePoint implementation. This plan will help your organization:

Gain a better understanding of the business background and expand your knowledge of the business and user requirements necessary to complete this project.
Define the functional, content, and management needs of the SharePoint solution to drive future phases of development.
Map the business requirements to the SharePoint architecture being developed to assess what components can be leveraged in this initiative and what gaps still exist.
Create an implementation roadmap that maps the user requirements to phases of the project and defines the phase timelines and deliverables. This roadmap will also be used to estimate the remaining phases of the project.

Developing a SharePoint Roadmap will ensure that your organization will be able to align the business goals with the capabilities provided by SharePoint. Engaging the business to define the desired functionality of the SharePoint solution is the one key activity to a successful implementation.

Agree? Disagree?

Have your own roadmap? Share your thoughts and opinions at the blog for Infonomics, Information at Work.

Alan Weintraub is a Principal, ECM Solutions, for Perficient. Alan has extensive experience in all phases of Enterprise Content Management solution implementations. He has worked as a Research Director at Gartner, focusing on the Content and Document Management markets and a consultant where he designed and implemented document management systems. Prior to his consulting experience Alan engaged in technology management for major pharmaceutical companies. He has over twenty five years of experience in the information systems profession.

About CLM Matrix

CLM Matrix is the market leader in Contract Lifecycle Management (CLM) software solutions on Microsoft Office and SharePoint technology platforms. Our solution extends the functionality of traditional contract management software by adding features such as:

· Rule-based document creation

· Clause libraries

· Policy-based approval workflow

· Automated reminders and alerts

· Real time user defined reporting

· Integration with legacy enterprise software

· Contract compliance tracking

· Multi-language capabilities

· Support for global environments

· Fully configurable to specific process and document types without code (wizard driven)

©2009 CLM Matrix, LLC. All rights reserved.
CLM Matrix makes no warranties, expressed or impolied, in this summary.
CLM Matrix is a registered trademark of C-Lutions, LLC.
Other product names may be trademarks of their respective companies.

23-Jun-09 4:00 AM

How Contract Lifecycle Management drives Real ROI for your SharePoint Investment

Darrin Poole — Mon, 15 Jun 2009 21:00:00 GMT

Download the full version of this article here: How CLM Drives Real ROI

SharePoint® is one of the hottest products in the enterprise content management (ECM) and collaboration spaces. Why are organizations implementing SharePoint? Is it because Microsoft™ has done a great job at describing the benefits of using SharePoint or is it all about a technology looking for a problem to solve? Finding the real benefit for implementing SharePoint is not necessarily about the capabilities of the technology, but how those capabilities align with the needs of the business.

One of the toughest questions I am often asked when first discussing a SharePoint project is to differentiate the hard versus soft benefits of SharePoint. This is often quite difficult to answer as a large number of the benefits can be categorized as soft as they address the need to find the right information and collaborate more effectively with others in the organization. Assigning hard dollar savings is not a simple task for these types of benefits. So how do you develop real dollar ROI benefits for SharePoint? One way is to look for a SharePoint-based solution that addresses a business need that can result in cost savings or cost avoidance.

One such solution that has proven to yield hard ROI benefits is Contract Lifecycle Management.

In today’s complex business environment, many organization’s contract management processes are defined by fragmented procedures, labor-intensive activities, limited visibility into contract terms and conditions, and ineffective compliance management and governance. Today’s processes are very manual and prone to inconsistencies and errors. These operational inefficiencies lead to lower margins and increase legal and regulatory business risks as many companies fail to honor the obligations defined in their contractual agreements.

Mis-management of contracts can cost a company millions of dollars in lost opportunities and additional fees. Organizations that have undertaken a contract lifecycle management project
have done so to address some of the following issues:

Fragmented internal procedures
Undefined workflow
Labor-intensive processes
Poor visibility into contracts and terms
Ineffective compliance and management
Inadequate performance analysis

Contract Lifecycle Management is a framework of policies and technologies that allow organizations to create, negotiate, and manage the legal documents that are used in the course of running a business. These technologies can include document management, records management, imaging, collaboration, email management, search, and workflow and business intelligence. SharePoint and Office 2007 can provide an excellent platform to solve this business issue.

Understanding the typical lifecycle of a contract will easily show how SharePoint can meet the needs for not only creating a contract, but managing the terms of the contact once it has been approved.

Using SharePoint and Microsoft Office can provide the capabilities to meet the lifecycle needs for creating, reviewing, approving, and managing a contract. These include:

Automated technology using Word for contract creation and formatting based upon contract request.
Automated, collaborative workflow for approvals, notifications, and reminders. These workflows can be based on terms of the contract.
SQL-based digital, historical contract summaries of information pulled directly from the contract Word document for quick research.
Role-based contract monitoring and tracking portal.
Advanced SQL reporting capabilities for contract trend, performance, compliance, and governance analysis.

By implementing Contract Lifecycle Management on a SharePoint platform, an organization can realize:

Standardized contract creation using contract clauses.
More effective collaboration through online negotiation and exchange of documents.
Faster contract approval and signing with automated workflow.
Global contract visibility for best practice sharing.
Standardized contracts that include the most favorable terms, as defined by the company.
Risk management through reporting across clauses and terms.
Risk mitigation through control of contract language and documents.

Looking at some examples of why organizations implement a Contract Lifecycle Management solution will demonstrate the benefit areas and the type of ROI that these organizations expect to receive. A pharmaceutical company implemented Contract Lifecycle Management to address
their need to better manage their contractual relationships associated with their clinical trial procedures. Many of the contractual relationships stipulate penalties for non-compliance and regulatory procedures require annual audits to ensure the company executes within the contractual guidelines. The Contract Lifecycle Management solution provided visibility into their active contract portfolio helped them insure that they were effectively meeting the required legal and financial obligations.

An entertainment company required a Contract Lifecycle Management solution to manage the numerous types of contracts related to a movie production. These contracts were often very complex with many different clauses that were dependent on the individual negotiation. Missed contractual obligations could result in millions of dollars in late fees and penalties. The company implemented a Contract Lifecycle Management solution that standardized the contract
clauses and provided automated alerts and triggers to reduce the possibility of financial penalties and ultimately improve the company’s bottom-line performance.

These two examples show typical results that will yield real, measurable ROI that can be used to justify the SharePoint investment. Contract Lifecycle Management can help your organization transform contracting from a costly, paper-based process into an efficient, technology-enhanced
“system” that will allow your organization to not only manage the entire lifecycle, but also manage the actual terms of each contract.

Alan Weintraub is a Principal, ECM Solutions for Perficient. Alan has extensive experience in all phases of Enterprise Content Management solution implementations. He has worked as a Research Director at Gartner, focusing on the Content and Document Management markets and
a consultant where he designed and implemented document management systems. Prior to his consulting experience Alan engaged in technology management for major pharmaceutical
companies. He has over twenty five years of experience in the information systems profession.

15-Jun-09 4:00 PM

Policy-centric Control in the Contract Management Process

David Montgomery — Thu, 11 Jun 2009 22:00:00 GMT

Download the full version of this article here: CLM Policy-Centric Controls

THE CONTRACT LIFECYCLE MANAGEMENT (CLM) MARKET has evolved over the last 30 years. In fact, one may view it as a growth from rudimentary contract document editing to content management, and to the inclusion of full life-cycle management. The recent focus has been to define the overall business process encompassing contracts and implement this process with the aid of technology — beyond word processing and storage frameworks. With this process-centric view, buyers in the public and private sectors have been seeking applications to help their business organize their procedures, track their approvals, and manage their contract repositories. However, this trend is, interestingly enough, developing beyond a process-centric perspective. Buyers in the market are now embracing the desire for technology to help them manage and enforce their business policies. CLM buyers have become policy-centric.What is the difference between process-centric and policy-centric? To understand this difference, it might be best to first understand the contract evolutionary picture; that is, over time how technology has addressed the business needs around contract creation and administration. Figure 1 on page 26 demonstrates the evolutionary picture as different periods of evolution, each period defined by having cer-tain characteristics.

The Creation Period First, there was a need to simply help a business create a contract — to write it down on paper. Early on, contracts were hand-written. The tool of choice was a pen, a writing implement to permanently mark obligations between two or more parties. This was time-consuming, and reproducing copies was laborious and error-prone. Then the typewriter was invented, improving read-ability and making it easier to reproduce copies with the aid of the mimeograph. With the advent of computers becoming business tools, word processing applications provided a way for contracts to be created and saved. Editing contracts became much easier. Formats and styles were designed to better structure contracts. Locating existing contracts and formats, implementing busi-ness policy, and productivity was frustrating, difficult, and time-consuming.

The Organization Period Once contracts had an easier way to be created, the business need became one of organization. File management systems provided a way for businesses to organize contracts into storage groups, directories, and folders. Yet, with this, a need developed to address the problem of locating a contract once it was stored on a floppy disk or one of the many storage directories. Content management systems then surfaced to meet this need, providing a way to associate attributes with each contract so that one could locate all contracts that have a given set of key attributes, for example. Many of today’s businesses find themselves still struggling through this period.While contract location issues eased somewhat, problems remained with implementing business policy and productivity. A new issue started to surface as well — tracking terms across multiple contracts.

The Processing Period In recent years, a business need has developed for technology to help in the overall process involving the creation, organization, negotiation, approval, signing, and execution of a contract. This process-centric view includes needs for better visibility into the contracting process, better standardization of procedures and content, improved collaboration among the employees involved, and improved quality in customer relationship, risk management, and audit discovery. Contract Lifecycle Management technologies grew to meet this need by delivering capabilities to define processes. Businesses achieved better visibility into contracting operations and they now had a vehicle to standardize their procedures and track-related activities. By centralizing these operations, employees can better collaborate and monitor the details. Several CLM vendors provide process-centric solutions. Most do so by delivering a fixed process and associated set of data items that once implemented provide answers to business needs, so long as the business follows the process procedures established by the CLM vendor. The better CLM vendors determined that businesses should be able to establish their own process with their own data terminology, and not be bound by fixed contract terms and procedures. As such, they provide solutions that are more agile to better adapt to the true needs, by allowing a way for businesses to employ process improvement techniques on their contracting process, change their process when a change is warranted, and allow a business to grow with the solution and the solution to grow with the business.Contract location issues continue to be solved, and productivity metrics improve by putting in place standard, repeatable contracting processes. However, implementing business policy, and ensuring such policy is followed, continues to plague solutions in this period.

The Controlling Period The market has entered the “controlling” period of evolutionary need. Businesses with defined processes are realizing that these processes and procedures are implementing business policy. This is an important addition in perspective. Not only are businesses concerned about following a prescribed process, the one that is defined by operational standards, they also understand that policy governs how these processes should proceed. Businesses want technology to help them implement policy and implement how that policy must govern the process, its detailed steps, the associated approvals, and the correct contract type being produced. The implications of this policy-centric perspective is that CLM vendors need to develop technology that allows for policy definition, not simply process definition; policy integration in process definition in data capture and in contract creation.So now let’s look at answers to the question, “What are the differences between process-centric and policy-centric CLM solutions?”

A process-centric view states that data needs to be collected. Typically, a human needs to “make sure” that the correct data is collected, resulting in potential rework and quality errors. A policy-centric view guarantees that the correct data is collected at the correct time in the process, and this data is used to determine which business policies now apply.

A process-centric view states that approvals are required. Typically, a human determines to whom an approval request should be sent. However, this too is error-prone, as occasionally evidenced by the wrong level of approval being granted and not discovered until after the contract is executed. A policy-centric view guarantees that the correct level of approval is obtained at the correct point in the process, because this view executes business policy.

A process-centric view states that a contract needs to be created at some point in time. Typically, a human would obtain a contract template for what he or she thinks is the correct contract type; and/or would obtain additional clauses and place these clauses in the template. Manual contract construction is a flawed approach because business policies are inconsistently followed, and there are issues in clause and contract quality and versions. A policy-centric view states that the correct type of contract is created containing the correct clauses in the correct document location and which clauses are required given the situation at hand; for example, making sure a specific clause is included or not included in a contract with the prescribed approval in place.

Summarizing, a process-centric CLM solution helps to make sure a process is executed correctly. A policy-centric CLM solu-tion makes sure business policies and processes are executed correctly. Have you ever been faced with the question, “Okay, I have completed my task, what’s next?” or “This is a special situation — who needs to approve it?” A solution built around a policy-centric core will evaluate the situation and take the user to the appropriate policy-driven next step, and make sure that appropriate policy-driven approvals are in place before continuing. As such, a policy-centric solution guarantees the correct policy is enforced. In fact, and more importantly, it is the policy statements that dictate which process to follow to begin with.It is straightforward to understand why business needs policy-centric CLM solutions. This level of control is a must for a business trying to completely address the need to improve their overall contracting process. Without technology that delivers policy-centric capabilities, human decision-making remains required for adherence to policy, and therefore, the potential for human error and policy mishaps exist.What specifically does this mean for a CLM solution? Such features go beyond process definition and go well beyond solutions that deliver only a predefined set of rules to be leveraged in a process (such as e-mail notifications or expiration date alerts). A robust policy-centric CLM solution should provide the capability to:

Define policy rules in the terminology of the business, with the agility to define any combination of rules to be applied when and where such implementation is dictated by policy;
Integrate policy rules within the process such that the process proceeds down the correct path according to the business policies;
Integrate policy rules within the process such that the correct data, contract attributes, and negotiated decisions are captured at the correct time and are captured fully and completely;
Integrate policy rules within the contract creation process to guarantee the correct contract type is created, and the applicable contract content (and only the applicable contract content) is contained therein; and
Change policy rules when and if corresponding changes to policy occur within the business, and have these policy changes take place without the need for software redeploy-ment or custom software development. Essentially, this capability directly infers that a business can define their own policies within the solution and not be bound by out-of-the-box rules hard-coded into the software.

The Fulfillment Period A future period of evolution presents a vision in which the technology directly fulfills the established policies and carries out all contracting activities without the need for human intervention, unless human intervention is warranted. With the technology of policy management and rule-driven controls put in place by the controlling period of evolution, it is not a stretch to envision such policies and rules to be at the core of an expert system; expert in both contracting process and contract documentation creation.One could say we are at the beginning of this evolutionary period in the contracting process, at least from a technology perspective. Total contract fulfillment is achieved during this period of evolution.

Imagine a concept of operation dealing with “sell-side” contracts, where a sales department representative logs in to a contract expert system. An initial set of questions is asked, and based on the answers, the contract expert system performs certain activities, asks more questions, obtains the necessary approvals, and builds the appropriate contract from clauses stored in a clause library.
Imagine the contract expert system implementing business policy perfectly, with no error in execution. If a specific clause is required for a situation, then the clause is included in the contract at its correct location, automatically.
Imagine a legal staff not being troubled with “standard” contracts, thus having time to use their skills more effectively on only the more tedious, out-of-the-normal-policy contracts. The contract expert system also would be able to use nonstandard clauses in a contract build, defined as clauses that deal with concessions, discount levels, service levels, and other situations that are not a part of a standard contract build, but are clauses that have approved language and are selected usually through negotiation based on the characteristics and terms of the contract. And if special approvals are required, the contract expert system will obtain approval before inserting the clause into the contract build.

Conclusion Business needs are shifting from process-centric CLM solutions to policy-centric solutions. This shift may be debatable, but it is logical given an appreciation in how contract activities and their supporting technology have evolved over the years.The shift to policy-centric solutions is just one step in the overall contracting evolution. The characteristics of the shift have been born from a need to ensure business policy is followed and policy management is in place. More than process management, policy-centric solutions ensure the right process is followed at the right time.

11-Jun-09 5:00 PM