Having worked with Terzo closely over the last year or so, I read with great interest the recent blog post by Jon Hansen titled “Moving Contract Management Beyond Dormant Enforcement.”

His opening paragraph about “contract management in the post-Covid world” is telling in that his research indicates that “most organisations were only using 20% of their CLM platform – mainly under the control of the legal department.”

Of course, this suggests that most CLM platforms are outdated in that their use is relegated (and limited) to being simple repositories for static document storage versus being living, dynamic sources of knowledge. In this regard, these solutions are developed and implemented to meet the myopic requirements of legal teams. In other words, most contract management systems are one-and-done tools that gather dust after contract signing. I call this the signed, sealed, and forgotten mindset.

However, as Hansen points out, at the beginning of the Covid-19 pandemic, accessing contracts to determine the Force Majeure options available to address supply chain disruptions was a reawakening of sorts. When I say reawakening, I am not talking about the recognition of contract importance or evolution over the years. We all know contracts are an essential part of doing business – in this regard, I am stating the obvious.

So, what’s different?

More Than a Data Base

An urgent need to access contract information on a timely basis created a greater awareness of the wealth of insights or “actionable knowledge” that one could mine from existing agreements. As I see it, forward-thinking organisations recognise that contract management is not limited to managing a crisis after the fact.

As a result, the view of contracts and contract management is transitioning from being seen as reactionary enforcement tools to proactive sources of greater real-time engagement and empowerment.

Rather than seeking to put bullet-proof barriers around an anticipated issue or potential default, data technicians can now analyse contracts on an ongoing basis to continuously leverage stakeholder strengths to deliver greater value for all concerned in all circumstances. Continuous access to contract information is invaluable in an increasingly complex and volatile world where circumstances can change overnight.

Of course, some are reluctant to fully embrace the promise and possibilities in their contracts because only some view it as a real-time intelligence source. And those who do, are not necessarily confident in their procurement team’s ability to access and analyse the data beyond a traditional enforcement mindset. In all fairness to procurement professionals, extracting intelligence, e.g., data from contracts on an ongoing basis, was never part of the job description.

Building A Data “Culture”

In an earlier article written by Hansen, titled “Getting beyond the Twilight Zone of data uncertainty,” he refers to Microsoft CEO Satya Nadella’s assertion of the “importance of organisations creating a data culture so that everyone could make better decisions based on (quality) data.”

Unfortunately, and despite the recognition of data’s importance – especially when managing the inherent risks in the supply chain, only 5 per cent of all data is analysed. While I am not suggesting that we now must analyse every bit and bite in our existing databases, I firmly believe visualising total end-to-end spend in all areas is critical to success.

Going back to my opening paragraph, getting this level of visibility into critical areas, including contract spend, renewals, and vendor satisfaction, requires more than a CLM provider. To create what Harvard Business Review calls a data culture, organisations require a partnership with a data company offering CLM solutions and support versus a CLM provider alone.

Terzo is such a company.

Partnering for Success

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To meet these challenges head-on, CPO Interactive leverages its industry-defining experience and knowledge to partner with innovative solution providers to deliver a comprehensive range of practical IT Sourcing and Procurement solutions for today’s economic environment.

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