Nicole Giantonio, Global Managing Director of Marketing, had a conversation with Prashant Dubey, VP of Contracts Solutions. Prashant is Elevate’s obligations management expert.
Prashant, in your experience what is one of the most foundational elements to ensure proper obligation management and a well-run contract administration function?
Organizations need to establish a High Integrity Contract Repository. Bringing order to contract management starts by looking at what you have: assembling the thousands, if not hundreds of thousands of contracts – with key attributes of those contracts extracted and available to all managers responsible for managing obligations in contracts, within a couple of keystrokes.
Seems daunting. Where would an organization start?
Starting is simple. Put in place a process to gather all executed material agreements and store them in one place. This will allow a company to identify what is present, what is missing, what is material and what is perfunctory. As simple as this process is, it takes a while to get close to 100% compliance – companies are an aggregation of people after all, and people work at different paces with different priorities.
You specifically reference the need for high integrity, what are the leading indicators of repository integrity?
A high integrity contract repository is one where entire families of contract documents are kept together, with inter-relationships articulated, documents fully text searchable, named in a common naming convention, with metadata extracted and attributed to each contract type. Further, there needs to be a mechanism for the repository to be kept evergreen. Without this, integrity rapidly dissipates.
What is the most prominent challenge organizations have when they look to adjust their contract management processes?
Intellectually, everyone knows that a data-driven, fact-based, technology-enabled contracting process is better, but it’s still different. In implementing a contract management initiative, the biggest challenge is to get participants in a contracting workflow to do things differently.
Whether it is faster-contracting cycle times, or faster time to revenue, or higher compliance with regulators or recovering lost revenue and expense, the destination needs to be clearly articulated, and it needs to be re-iterated. Getting people to change, even if the change will ultimately be good for them, is the most daunting challenge in any initiative.
One final question, what are the key steps in creating a High Integrity Contract Repository?
The key steps include:
• Gathering all material contract documents• Organizing them by counterparty• Articulating the parent-child relationship between these documents and creating holistic contract families• Identifying and extracting key metadata needed for obligation management• Placing these contract documents and metadata into a searchable repository• Putting in place a process to keep this repository evergreen• Leveraging technology where applicable to increase process efficiency and consistency
“In implementing a contract management initiative, the biggest challenge is to get participants in a contracting workflow to do things differently.”