Being able to search and report on contract data can be extremely valuable. Increasingly, CEOs and CFOs are using Contract Lifecycle Management (CLM) solutions to generate contract reports to measure the current state of their businesses and as a means to predict anticipated revenues in the future i.e. to assign a level of confidence that future revenues will actually occur. In this data driven world, if you have the right tools you can process huge amounts of data and generate meaningful results. What happens when your data is incomplete or in error? We all know the adage, ‘Garbage In, Garbage Out”
When implementing a contract management system there are a number of factors that should be considered, if you hope to derive meaningful results from your data. First and foremost, it is critical to understand your business process flow. Does the way that contracts are coming into your system and are being managed lend itself to consistent data entry?
Adequate Staffing. There is no doubt that contract management automation can make the management of contracts dramatically more efficient. In an economy where we are constantly expected to do more with less, there is a tendency to overload employees and push them to the edge of what they can reasonably accomplish, ..... and then add additional responsibilities. If you want to recover meaningful contract data, employees need the time to be able to enter it. If this is not accomplished, deliverables and dates will be missed and penalties will be incurred. Audit you system regularly to make sure that the data you require is actually being entered. If it isn’t, find out why. You may need to adjust your process, your staffing or your expectations.
How much contract data (meta data) should you expect to record? In many instances, companies require huge amounts of contract meta data to be entered into their systems in the hope that the mining this data will allow for better business decisions. It can, but what happens when the volume of data to be recorded results in data never being entered. Pressed for time, many data fields may be ignored or a minimum of data is entered to just “Get a contract into the system”. Less is more. If you require 25 contract data fields to be completed, but only 10 of them are truly required for reports and assessments, consider removing the other 15 fields from your dataset. It is better to get 100% data entry compliance on your critical data, than it is to get spotty data across a larger sample.
Mandatory Data Entries. Making the entry of contract data mandatory (data cannot be saved unless all mandatory fields are filled) can both work for you and against you. We have seen instances where companies make virtually all contract data fields mandatory. If only 75% of the required data is available, it is not uncommon for "fake data” to be entered into the remaining mandatory fields to be able to save the good data. Try to keep mandatory data fields to a minimum. It is better to have a field with no data than to have a field with data that you cannot trust to be accurate.
Duplicate Data Entries. If you have the ability to generate custom contract meta data templates to support the different types of contracts that you use, you may be creating new database fields each time you create a new entry. In any CLM application, there are a multitude of common fields that will apply universally to almost any agreement. Expiration date is a good example. If “Expiration date” exists in you database, be sure to use this field each time you need to record an expiration date in any document template, whether a license, a lease, a supplier agreement, etc.. What you don’t want to do is to create new expiration date fields each time you create a template. When you go to generate a report, you will find you have multiple fields and you will not know which one to use for your report. Review your database fields every 6 months, aggregate any duplicate fields and remove any fields from your database or from your term sheet templates that are never used.
Procrastination/ The Human Factor. Another common practice that defeats the ability to generate meaningful reports is the practice of uploading contracts without contract meta data, with the belief that you will go back and enter it later. Other business pressures, procrastination and losing track of which contracts require data entry all conspire against you. There is no better time to enter meta data than when a contract is uploaded and it is front of you.
Tags: Knowledge Base