If you’re currently weighing up different contract management solutions, you may well have discovered some different pricing models.
One of the most prevalent is likely to be where a solution is priced on a per-user/per-month basis. This is generally a straightforward model to understand and can allow you to control initial outlay.
You might be looking around your business and thinking of each person that could need access and then working out whether the resultant amount is within your estimated budget.
In certain organisations this can be the most cost-effective way to implement a contract management solution.
So why would this not work for every business and why does Gatekeeper charge differently?
Collaboration
Both of these questions can essentially be answered with this same single word.
Gatekeeper was initially conceived to be one part of a consultancy solution that aimed to optimise business’s contract and vendor management - reducing costs, improving visibility of spend and minimising supplier and contract risk.
During that consultancy work, over a period of 10 years, we encountered numerous organisations where vital information about contracts and vendors was stored in separate areas of the business and had never previously been joined up.
Crucial to getting this information into a central location, and then being able to manage it on an ongoing basis, was getting different business areas to collaborate and to use newly prescribed processes moving forward.
It’s no use doing one sweep and then the business lapsing back into previous behaviours.
What we also found is that the number of people who have a stake in even a relatively small contract is often more than you expect. A wide variety of departments can be required to review new contracts, depending on their value, business area, location etc, followed by multiple signatories.
These findings are backed up by those of the International Association of Contract and Commercial Management (IACCM) in 2017 regarding the costs of an average contract.
They came up with a figure of $6,900 as the cost to a business to create and implement an average “low-risk contract”. This was based on a survey of its 40,000 members.
This figure is derived from the average salary costs of the typical business representatives that work on a contract and for how long.
While the figure itself is an eye-catching amount, what is also interesting is the number of different parties that typically work on a contract. In this most basic version, the IACCM is including 6 different personnel:
- Legal
- Contract Manager/Procurement Manager
- Operations/Engineering/Project Manager
- Finance
- Compliance/Risk/Regulatory Function
- Other - perhaps including the initiating department.
While this might not reflect the structure of your business, it quickly shows how many people might be required to work on a simple contract. Depending on the size and spread of your organisation, and the complexity of the agreements, that number can grow rapidly.
Which brings us back to the per-user/per-month pricing model. While this might provide the opportunity to keep initial costs below a certain threshold, it can limit how effective your chosen solution is at delivering its expected business benefits.
There are a few ways in this is the case:
- It limits collaboration. As you have a set number of seats. You’ll naturally be reluctant to add further costs in the form of new heads beyond the initial agreement. This can particularly be the case if financial control requires that you submit a formal request for each price rise. Even if new heads are agreed, the delays in getting access can then delay contracts being signed and benefits being realised.
- Security. Amongst those who have access, you might wish to set different permission levels. By limiting the number of seats, you encourage people to share login details, meaning that those without the requisite seniority level are able to access restricted contracts and files.
- Silos. It encourages those not using the system directly to maintain whatever system they previously used, meaning information silos persist.
Essentially, this pricing model has limitations, particularly for growing businesses.
As your business scales, if your chosen solution can’t scale at the same rate then you risk undermining its usefulness as colleagues are forced into either waiting for access or using alternative methods for managing contracts or suppliers.
The more the solution gets bypassed, the less effective it will be at delivering the results and benefits expected.
The Alternative
Gatekeeper believes so strongly in the power of collaboration that we allow unlimited users across all our plans. If necessary, every single person in your company can have their own login, with appropriate permission levels allowing them to see and work on contracts relevant to them.
Our pricing model is instead based around the number of contracts or suppliers your business has, with plans priced to fit the profile and size of your company.
We believe that in order to generate the expected benefits from your contract management solution, you’re going to need widespread adoption and that the fewer barriers there are to that the better.
In fact, if you’ve put a contract management business case together, it will likely be based around cost reduction, as well as efficiency savings and risk mitigation, all of which rely heavily on business-wide adoption and collaboration.
Departments in your business will grow and change over time, meaning that more and more people will be required to have input on contracts and vendors, sometimes only for brief periods. With Gatekeeper, you don’t need to think twice about this. You can simply invite them and they can start working immediately.
This is particularly helpful if you want to set up automated workflows and then delegate the initiation of contracts out to colleagues.
By using Role-based Access Control (RBAC), you can also tightly limit what each person can view and work on so that information security is maintained.
What’s more, Gatekeeper supports Single Sign-On (SSO) for Google, Microsoft, Okta and OneLogin, meaning that if your business uses one of these systems then access and adoption will be even easier.
If your business uses Google or Microsoft SSO you can also benefit from a simplified and faster account creation process. With Just-in-time Provisioning (JIT), you also won’t need to manually create an account for each person within your organisation. Simply invite them and they can create a secure account on the fly, using their existing credentials.
We believe this model offers the best opportunity for a successful implementation and for new contract and vendor management practices to take hold in your business.
It can also grow at exactly the pace your business does, making it ideal for long term partnerships and for fast growing or acquisitive businesses.
For more insight into choosing the right contract management system for your business, you can read our related articles:
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