The Situation Today

All organizations depend upon their ability to make, manage, monitor and perform against their business commitments, or to structure and oversee those they receive from their trading partners. The increasing complexity of today’s global networked economy – with extended supply chains, growing strategic partnerships and increased use of outsourcing – has made this capability more important and more visible. Recent regulatory developments have further emphasized the need for good business controls and management of enterprise risk, which for many has meant a need to ensure contracts can be found3, to increase visibility into the commitments that are being made and to identify any performance exposures. Yet even now, contract management remains one of the most manual and under-systemized areas of business operations.
Adoption of contract management software has been slow, even though studies4 have consistently reported the benefits achieved by those companies and organizations that have implemented (see Table 1). Ironically, analysis of the survey results implies that the source of greatest benefit and the reason for slow adoption appears to be the same – that is, process definition. In most businesses and public sector organizations, contract management remains one of the last undefined areas of activity. While there are certainly rules, policies and authorities related to the form, content and creation of contracts, and there may even be resources operating with job titles like ‘contract manager’, this does not represent a process with clear ownership or accountability for performance.