At Gatekeeper, we have many conversations with prospective customers where they reveal that implementing a contract management system in their business has been on their agenda for a significant period of time.
In some cases, this has been as long as two years and they’re only now coming to market to address the gap in their business.
The reasons for that length of time extending out to two years can vary from lack of resource, to changing business priorities, to a new hire finally proving to be the catalyst for progress.
However, what we often see in these cases are small internal teams responsible for managing large volumes of contracts. Not only does this lead to busy day-to-day workloads for these teams, but also very little time to address legacy issues in a meaningful way.
And by legacy issues, we generally mean that large volume of historic contracts which may not be stored in an accessible or organised way.
It’s common for businesses coming to market for the first time to have contracts distributed across different business areas, in hard and soft copy and with no central register.
Alternatively, they may have a nice systematic approach for more recent contracts but older ones have yet to be given the same treatment.
This situation can often be even more complex for acquisitive businesses, which have their own data challenges plus those of the companies they have added to their group.
All of which, can make the prospect of organising them for the first time particularly daunting. For those with already busy workloads, the idea of having to chase up different areas of the business, search through filing cabinets, scan documents and gain access to old email accounts isn’t very enticing.
And what’s more, the longer it is left undone, the larger that initial task gets as more contracts are signed in the meantime.
This further contributes to the inertia and continues to prevent the project from starting.
So, where to start?
Although not particularly animal-friendly, the recommended method for eating an elephant is one bite at a time.
This translates into breaking the large task down into manageable chunks and ticking them off methodically until it’s complete.
When it comes to organising your historic contract data, the two main areas that you need to focus on initially are:
- Finding all your contract documents and adding them to a central contract repository
- Organising your contracts within the repository through the strategic use of contract metadata.
Building a contract repository
A central feature of contract management software is the contract repository. It should be your business’s single source of truth for its agreements.
Not only should it hold all the current contract documents for every business relationship, it should ideally also have historical versions and a clear timeline to show when these later versions came into effect.
To build your contract repository, you need to understand the scope of your business and where its current agreements are.
The key steps to be followed are:
- Start with the records that you have. This could be an existing database or shared drive, where contracts are currently stored. It could be a central spreadsheet that links to other documents or it could even be a filing cabinet containing hard copies. Whatever you have needs to be reviewed and catalogued.
- Follow the money. Speak to your Finance Team and ask to review records of monthly, quarterly and annual payments that are leaving your company’s accounts. This will give you a good indication of live business arrangements for which there should be paperwork stored somewhere.
- Contact the heads of departments. Once you’ve compared the existing records with what’s being paid for via the Finance Department, you then need to go out to the wider business asking for up to date documentation relating to those arrangements. You also need to ask more generally for all current paperwork for any business contracts.
- Contact individual staff regarding specific contracts. The most granular step is to speak to specific staff members who are likely to be the main points of contact on contracts you’ve discovered via the other steps. For example, if you fail to get a response from the head of department about a current live contract, it might be best to go directly to the member of that team that you would expect to have direct responsibility for it.
Remember, your first pass at this is highly unlikely to yield a 100% success rate. However, you should be aiming to cover off 80% of your business’s spend in the first instance. Following the Pareto Principle, this will likely mean that you’ll need to find the top 20% of contracts by value.
Again, your Finance Team is your ally here as Accounts Payable records for the past two or three years will show you the top suppliers by spend.
You will likely also have a variety of formats to deal with from electronically signed documents through to hard copies. It’s vitally important to have digital versions of every agreement so make sure you use a scanner with OCR enabled to create these and be able to search through them if required.
Defining your contract metadata
We’ve written a detailed article on the importance of Contract Metadata. However, for the purposes of this article, you need to know that contract metadata is:
“Structured information about a contract”
And you need to know that it enables you to:
- Segment and search your contracts by your chosen data-points
- Report on contract performance
- Highlight key dates and ensure renewals and other milestones are hit
- Maintain compliance across your contracts and vendors
The exact metadata that you will need to capture for your contracts will vary from business to business and industry to industry. However, some typical fields would be:
- Counterparty Name
- Contract Value
- Business Unit/Department
- Contract Type
- Contract Owner
- Contract Expiry Date
- Contract Notice Period
- Filename of the corresponding document
It’s important that you give careful consideration as to what metadata you want to capture for your contracts before you start building your repository up in earnest.
The good news is that Gatekeeper has developed an artificial intelligence solution called AI Extract™, which is designed to reduce the manual effort of dealing with legacy contracts to minimal levels.
AI Extract™ automatically extracts key metadata from uploaded contracts and populates data-fields with information. Individual data-points are presented with confidence scores and users can accept or amend as appropriate.
By confirming or amending the results the system is further taught as to what works and will provide a superior service the next time.
At Gatekeeper, we’ve got a huge amount of experience helping our customers move their historic contracts onto our platform. Our Implementation Team support all new customers through their initial period and provide guidance on how to structure the data and the most efficient process for getting it uploaded.
Using a combination of AI Extract™ and tailored bulk-upload sheets, your contract information can be pushed directly into Gatekeeper and your contract repository can be created.
Unlock the value of your contracts
If you follow the steps above, you’ll have a well-structured central repository of your business contracts.
This will give you new insight into your business arrangements, enabling you to:
- Identify areas for cost consolidation and reduction
- Prepare in timely fashion for renewals and contract negotiations
- See at a glance whether your contract partners are compliant
- Reduce business risk
- Cut down the time spent on contract administration
One key thing to remember though is that it’s not a once-and-done process. Yes, you’ll need to get that historic data into Gatekeeper but if you haven’t created a robust process for managing new contracts, you’ll quickly end up with a large number of agreements sitting outside your control.
Our Implementation Team is also adept at creating automated workflows from your current business processes, to support you in following good contract management disciplines in the future.
If your business is taking its first step beyond managing its contracts manually and only wants to centralise and migrate a limited amount of agreements, ContractNow is the ideal solution for first-time buyers looking to manage historic data.
In the meantime, if you’re looking to implement a contract management solution and have a significant volume of legacy contracts to work with, then get in touch with us today to find out how we can help.