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Achieving Effective Contract Management: First Steps Toward a Solution

Aug 17, 2007
You may have suffered a costly oversight or a scary close call. Whatever the reason, once improving contract management has become a priority, the next step is figuring out what shape the solution should take. More effective contract administration is the clear objective, but before you can achieve this goal, you're faced with some basic decisions.

First, you need to determine whether to seek a broad or a focused contract management solution.

Contract management is sometimes approached as one small part of an all-encompassing "fix" integrating an organization's sales management, financial, IT, reporting -- virtually every area of the operation. Such a system is woven into everything from billing to inventory management. The cost is high, running into hundreds of thousands of dollars, or even more. Implementation times are typically lengthy, and learning curves can be steep.

A broad, integrated system can be suitable for large organizations, but frequently this approach is overkill: too big, too complex, too long in providing real help -- and much too expensive.

The decision to go with a focused solution designed specifically to manage contracts may be made for you by budgetary constraints and/or the urgency of the project. For small and mid-sized companies, this path is frequently a foregone conclusion. Even for divisions or departments of large organizations, the most prudent approach is often to solve the immediate problem by implementing a contract management system of limited cost and scope.

Once you've decided on dedicated contract management software, the options include commissioning a custom program, building your own, or buying an off-the-shelf package.

Custom software written by an outside party will almost always lead you right back to the land of expensive, protracted IT adventures. (Yes, you said you had to have it by September. But you didn't say which September!)

This narrows the decision to buy vs. build.

An objective analysis will almost inevitably favor purchase. To build, you must have the available internal IT resources (scarce in most companies), and these IT resources must have the appropriate technological capabilities, interest, and skill in working with non-technical users on business issues. (We are dealing with human beings, after all.)

You must also be able to delay implementation for the not-inconsiderable time it will take to spec the project, write the software, test it, etc.

Unless you have extremely unusual contract management needs, you are likely to come down on the buy side of the decision and find yourself seeking an off-the-shelf product.

This isn't surprising. Packaged software is the best answer in most cases.

A ready-to-go program lets you take advantage of the research and experience of developers and business people who have focused substantial efforts on the contract management problem you are attempting to solve. You can choose from a variety of approaches, user interfaces and feature sets. Your costs are known up front. Your time frame is under your control.

Once you've reached this point in your decision tree, you can move ahead to define your requirements and evaluate available solutions. You're well on your way to effective contract management.
About the Author
Judy Tucker works with emerging companies in planning, project management, and communications and helps them get the most out of contract management systems. Find out more about how contract management software can save time and money at www.contractassistant.com 877-509-7500.
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