4 CONTRACT MANAGEMENT BEST PRACTICES TO UNLOCK … · 4 CONTRACT MANAGEMENT BEST PRACTICES TO...

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GET SPEED AND CONTROL THROUGHOUT YOUR CONTRACT LIFECYCLE

4 CONTRACT MANAGEMENT BEST PRACTICES TO UNLOCK VALUE

Webinar: 29th January, Tuesday

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In his role as CEO of IACCM, Tim works with leading corporations,

public and academic bodies, supporting executive awareness and

understanding of the role that procurement, contracting and

relationship management increasingly play in 21st century business

performance and public policy.

Prior to IACCM, Tim's business career included executive roles at

IBM and a period on the Chairman's staff, leading studies on the

impacts of globalization and the reengineering of IBM's global

contracting processes. His earlier career involved the banking,

automotive and aerospace industries, initially in Corporate Finance

and later in commercial and business development. He led

negotiations up to $1.5 billion in value and his work has taken him to

over 40 countries.

Tim CumminsSenior Director, IACCM

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Mr. Raguette is very passionate about the application of

innovative technologies to solve real-world business

problems with a strong emphasis on enterprise

solutions.

Arthur has more than two decades of experience in

working in Information Governance domains across

industries. Arthur’s prior technology passions included

high-performance B2B middleware, SaaS deployed

master data governance platforms and hybridized SaaS

applications for HR, and Employee domains.

Arthur RaguetteExecutive Vice President, Ultria

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AGENDA

1. Cultivate a contract repository

About Ultria

The need for best practices in Contract Management

4 best practices to unlock value

2. Standardize contract processes

3. Measure contract performance

4. Track cost of contract management

Summary and Q&A

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About UltriaUltria develops and licenses Ultria CLM -Contract Lifecycle Management for enterprise legal departments.

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Proven CLM Software

Ultria’s scalable, SaaS-delivered CLM software leverages Artificial Intelligence and Machine Learning to deliver unrivaled ease of access and ease of adoption in today’s complex business landscapes.

Ultria’s CLM technology has been deployed at 100’s of large enterprises.

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AGENDA


About Ultria






Summary and Q&A

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The Need for Best Practices in Contract Management

Companies in utilities, aerospace, defence, and

food manufacturing can have

around 90% or more of their annual revenues represented

in contracts.(Source : McKinsey)

Organizations lose 9.2% of revenue every year due to

poor contract management practices.

(Source : IACCM)

Global businesses lose $153 billion per year as missed savings due to ineffective contract management .

(Source: Aberdeen group)

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AGENDA


About Ultria

The Need for Best Practices in Contract Management

4 Best Practices to Unlock Value




Summary and Q&A

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4 Best Practices to Unlock Value

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AGENDA


About Ultria






Summary and Q&A

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12 – 15%DIDYOUKNOW?

of an organization’s contracts

are lost or unaccounted for

(Source: Aberdeen Group)

62%of the surveyed companies deal with

more than 100 contracts a month

(Source: Ultria CLM Survey 2019)

26%deal with more than 500 contracts

a month

(Source: Ultria CLM Survey 2019)

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1. Shared drive

2. Document management system

3. Contract repository solution

POLLQUESTION#1

Where do you store the majority of your contracts?

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Findings from Ultria 2018 Year End CLM Survey

64%of the respondents of our survey said their

organizations have moved to a contract

repository solution, yet ‘Searching existing

contracts’ is the most prevalent of all big pain

areas across the contract lifecycle challenges.

This contradiction indicates that majority of the organizations may

be using earlier generation tools such as Document

Management Systems rather than true contract repositories. As

is often the case with document management systems, they lack

intelligent search options and personalized dashboards for real-

time visibility across the contract database.

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1. No centralized storage for all contracts

2. Not easy to search contracts

3. Security threat due to dispersed storage of contracts

in folders, PDFs and file cabinets

4. Risk of misplacing contracts

5. Poor visibility into contracts

Pitfalls of not having a contract repository

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Advanced Contract Repositories Document Management Systems

Multi-parameter search and tracking optionse.g. Free-text searches, meta-data searches etc.

Personalized dashboards for real-time view

Pre-configured alerts and reminders

Contracts can be edited and approved in the repository software itself

Basic keyword search options e.g. File name searches

No personalized dashboard for real-time view

No facility to configure alerts and reminders

Contracts are shared over email for reviews and approvals

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• Find any contract any time

• Save time otherwise wasted in comparing contracts from multiple locations

• Have actionable data - such as contract value, due dates etc. – at your finger tips

Benefits of cultivating a contract repository

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AGENDA


About Ultria






Summary and Q&A

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DIDYOUKNOW?

60%of contracts get automatically

renewed due to buyer oversight. (Source : Forbes)

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Consider the case of a toy maker who has to recall more than 18 million SKUs due to the use of a harmful metal in the paint, which is against the state law.

Although its legal team is well aware of the regulatory policy, the same gets missed - while drafting the contract with the paint supplier - because of absence of procedural checkpoints. Moreover, there is no clause about indemnification of the toy maker in such a scenario.

Eventually, the toy maker, faces multiple lawsuits, a fall in its stock prices and a huge blow to its brand image due to the breach of compliance - clearly, a nightmare which every legal operations and contract management function would want to avoid. .

Example : A case of reputational loss

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1. Inconsistency in contract language among different

contracts of the same category

2. Duplication of effort by multiple stakeholders for the

same contract

3. Omissions of important clauses and obligations

4. Absence of audit-ready versions of the contract

5. Missed compliance checks

6. Missed approval steps for high value, critical contracts

Pitfalls of not having standardized contract processes

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1. Contract templates and clauses

2. Scenario-based approval workflows

3. Audit-ready versions and compliance documents

POLLQUESTION#2

Which of the below do you have the greatest difficulty in standardizing?

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Capturestakeholders’

business requirements.

Ex. A contract template handy for every scenario, easy to find by business

users.

1 2 3 4 5

Introduce a vetting mechanism for third

party templates.

Ex. AI-based contract parsing and clause level comparison.

Identify As-Is process and define a To-Be

process.

Ex. Contracts to go for approvals to the specific stakeholder

depending on contract values,

contract types etc.

Be audit ready.

Ex. All contract versions during

authoring stage are easy to find and view at any point of time.

Build a culture compliance

accountability.

Ex. Assign stakeholders to

measurable compliance metrics.

How to Standardized Contract Processes: Identify As-Is Process and Define To-Be Process

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1. Increased immunity to business risks

2. Protection against regulatory audits

3. Increased adoption and adherence by internal stakeholders

Benefits of standardized contract processes

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AGENDA


About Ultria


4 Best practices to unlock value




Summary and Q&A

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DIDYOUKNOW? 75%

Percentage of compliant contracts is the metric most voted as “Very Important”, 2X compared to Contract Authoring Cycle Time. (Source: Ultria CLM Survey 2019)

Yetof contracts lack KPIs and TCO reporting (Source: McKinsey )

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Consider the case of a social media platform which exposes its user data to its various partners. Although it has all the necessary fair use, and privacy clauses in its contract, let’s say, one of the partners violates these clauses and sells the user data to a political consulting firm.

Due to the absence of a mechanism for tracking the contractual obligations, this gets overlooked, only to surface 5 years later as a scandal which costs the social media platform not only trust of its users, but also $150B of market value in just 90 minutes.

This huge loss points out that it’s not enough to draft and sign strong contracts; companies must have a robust way to track contract obligations, monitor compliance and take immediate action to remedy breaches if any.

Ex. 3: A case of violation of contract terms

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1. Projects exceeded timelines initially contracted

2. Substandard product/service implementation

3. Penalties due to neglected obligations

POLLQUESTION#3

Which of the following problems has your organization most-often faced?

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measurement

Every contract has KPIs

associated with it

1 2 3 4 5

Every project stakeholder is aware of the KPIs for their

contracts

Characteristics of Effective Contract Performance Measurement

6

All contractual timelines are

translated into milestones

Stakeholders are alerted about

the milestones well in advance

Everybody can see how their contracts are performing at

any point of time

Remedial actions are initiated to

bring underperforming contracts up to

speed

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• Improved customer service

• Increased revenue/business value due to fuller contract utilization

• Savings by way of leveraging volume discounts, penalty avoidance etc.

• Increased accountability of project stakeholders, internal as well as external

Benefits of measuring contract performance

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AGENDA


About Ultria






Summary and Q&A

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DIDYOUKNOW?

Business spend on an individual, standard, low-risk

procurement contract has increased by 38% in the last 6

years and is estimated to be at $6,900 on an average.(Source : IACCM)

12%of total annual costs are committed to contract management and administrative tasks (Source: PwC)

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1. Departmental budgets are difficult to justify and report on

2. Absence of team accountability and efficiency

3. Complacency and old ways of doing things tend to stall progress

4. There is no way to know where the saving potential LIES

Pitfalls of not tracking costs of contract management

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1. Average administrative cost per contract across its lifecycle

2. Average administrative cost per contract from initiation to sign-off

3. Average administrative cost by contract type (e.g. sales, employment, procurement etc.)

POLLQUESTION#4 Which of the below would you most like

to track when it comes to cost of CLM?

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Characteristics of Effective Mechanism to Track Cost of CLM

There are TATs associated with

contract review and authoring stages.

1 2 3 4

The contract management

professionals are proportionately

assigned supervision of the contract

database.

There are yearly targets to reducing

losses and penalties incurred due to poor

contract management.

Overall, the contract

management team is ROI

driven.

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Benefits of tracking costs of contract management

• Ability to estimate departmental budgets

• Ability to plan resource allocation, new hires, replacements

• Data at hand to create a case for operational revamps, process upgrades

• Visibility into leakages and loopholes

Benefits of tracking costs of contract management

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AGENDA


About Ultria






Summary and Q&A

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• Contract management needs to be managed well because of the high volume of revenue committed therein

• The 4 best practices for managing compliance are:

• Cultivate a contract repository

• Standardize contract processes

• Measure contract performance

• Track cost of contract management

Summary & Q/A

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Covers insights on:

• Contract management profile / maturity level

• Contract authoring challenges

• Contract lifecycle challenges

• Contract management metrics

• Role of contract management function

• Use of AI in contract management

Ultria CLM Survey Report 2019

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AIPowered

Contract LifecycleManagement

Ultria Product Overview

Ultria CLM has been designed

to give you speed and control

throughout your contract lifecycle:

• Request

• Draft

• Internal Review

• External Negotiation

• Sign-off

• Compliance

• Renewal

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Why AI-driven Ultria CLM?

Ease of Access Central Control Powerful

CollaborativeEase of Use Connected

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