Abstract
Contract management depends on document-driven processes that, in a paper-based environment, can be laborious and inefficient. The time it takes to approve a contract can be as significant as the content preparation of the contract. Slow, manual contract processing reflects negatively on an organization's ability to provide excellent service. The contract lifecycle is defined differently from an organization to organization or even form department to another. The number of contracts and the associated documents are ramping up in this era of digital transformation. An automated, digital contract lifecycle management (CLM) can reduce the administrative burden on employees and allows legal, financial, sales, and other professionals to make better use of their expertise. This chapter shows how automation can change the organizations' behaviors to view contracts as opportunities for operational improvement and competitive advantage. It shows also how CLM can be integrated with business intelligence (BI) and data analytics systems to provide contract insights and dashboards.
TopBackground
Contracts have become a key component in the organization assets to build sustainable competitive advantages, embedded in the organization's vision and strategy, and multilateral business culture (Saxena 2008; Zant & Schlosberg 2002). Contracting is thus “one of the core competencies required by any successful 21st century business” (Cummins 2009). According to (Willcocks,2008,5), more comprehensive and detailed definition of contract is defined as “A contract is a set of documents, governed and restricted by law, that clearly establish the boundaries, extent, and intent of the executing parties’ relationship, along with the rights and responsibilities of the entities involved.” (Sorsa, 2011) defined contract management, as “an advanced method in which an organization applies quality principles to its business terms, policies, practices and processes in order to improve and optimize the negotiation, execution and governance standards of its contracts” (p. 255-259).
According to (Milosevic. et al, 1995) and (Milosevic, Arnold & O’Connor, 1996) there has been renewed interest in modeling of business contracts in the academic computer science community as well as in the industry. (Anticona, 2020, p.9) defined e-contracting as “a process within an electronic environment where the parties negotiate and use automated communication methods to form their contract; once created, the parties administer and manage the contract through online collaboration systems to elaborate, share, deliver, and approve contractual documents”.
According to (Schuhmann & Eichhorn, 2015), the concept of contract management focuses on the contract and its optimal implementation. Thus, it tends to encounter limits when attempting to achieve objectives lying beyond the contract. Specific contracting also exists. (United States Patent No. US20040083119A1, 2004) defined a vendor contract management (VCM) system as a web application used to track obligations, payments and fees under each vendor contract. (Muhammad, Saoula, Issa, & Ahmed, 2019) studied the intends to cover the relationship between contract management and performance characteristics. (Bochicchio & Longo, 2011) discussed the contracts for the cloud that must combine international legal, financial, technical and operational aspects in a concise and expressive form, able to drive the business, but also to minimize any controversy in case of problems.
Key Terms in this Chapter
Enterprise Contract Management (ECM): Enterprise contract management is a means of streamlining and improving how contracts are stored and reviewed throughout an organization. This is usually replacing manual contract archiving systems that is insufficient for your company's needs.
Business Process Automation (BPA): A technology that enable automation of complex business processes. It automates repeatable, day-to-day tasks and accelerates how work gets done by routing information to the right person at the right time through user-defined rules and actions.
Business Intelligence (BI): A comprehensive management system that depends on a set of software, descriptive, predictive, and directive analysis through collecting, cleaning, and analyzing real data according to the organization’s strategies. It also provides useful informational indicators to decision-makers at all levels, through interactive dashboards and flexible reports, that support the organization in making wise decisions aiming to improve business.
Contract Management Systems (CMS): A group of software that used to handle or automate the creation, tracking, and monitoring of contracts. It usually fits into a portfolio of tools used to handle overall vendor or contractor relationships and commonly integrates with customer relation management software, proposal software, accounting software, and e-signature software.
Data Analytics: Data analytics is the science of analyzing raw data to make conclusions about that information. A process can be run to examine data sets in order to find trends.
Contract Life Cycle Management (CLM): Contract lifecycle management is the proactive, methodical management of a contract from initiation through award, compliance, and renewal. Implementing CLM can lead to significant improvements in cost savings and efficiency.
Robotic Process Automation (RPA): A form of business process automation technology based on metaphorical software robots. It can automate mundane rules-based business processes. It is sometimes referred to as software robotics and utilize artificial intelligence.
Smart Contract: A set of promises, specified in digital form, including protocols within which the parties perform on these promises.
Block Chain: A technology that is most simply defined as a decentralized, distributed ledger that records the provenance of a digital assets.