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Contract Management

Transforming surprises into strategic decision points

CFOs and their General Counsel colleagues report that it's not uncommon for the terms and conditions in major contracts to represent a total risk and exposure greater than their company's annual revenue. Managing that commitment and risk requires people committed to preparing for and negotiating a mutually beneficial contract, and people committed to ensuring the benefits and obligations of the contract are met.

Many companies successfully manage their businesses by making standard offers for goods and services, such as for consumer goods or mass-market checking accounts. These offers are easily managed by contracts that are very similar in nature, allowing very little, if any, room for custom terms and conditions. On the other hand, if your business falls into the 80/20 category, where 80% of your revenue and profitability are represented by 20% of your customers, then standard offers will not do. Your contracts are typically complex, span multiple years, and may contain several hundred unique terms and conditions, where decisions and actions have extreme consequences to your organization. ActionWorks Contract Manager is specifically designed to manage these type of contracts.

Managing complex, high-risk contracts is fundamentally about two things: negotiating the terms and conditions of a legally binding agreement, and managing the commitments in that agreement. Sophisticated document management solutions have solved the problem of routing and storing the document, but these systems are not designed to help senior management ensure the commitments in these agreements are acceptable and fulfilled. Executives cannot manage a document, whether the document is stored in a filing cabinet, or in electronic format. Executives can only manage the commitments people—employees, partners, customers, and suppliers—make to each other. In contract management, these commitments manifest themselves as the terms and conditions. Therefore teams need a framework for extracting these commitments from the legally binding documents, making them visible, assigning accountability to them, and tracking and managing them.

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ActionWorks Contract Manager helps your team track and manage every term and condition in, major contracts between key customers, suppliers and partners, regardless of whether a commitment is owed by, or to, your firm. The system can track virtually any designated trigger point for your date-, event-, or condition-driven contract terms—and notify your team the moment they need to take action. Anything from internal events such as a new product releases, to external events such as a change in currency rates, can trigger action.

Contract management consists of four major components: Initiation, Negotiation, Compliance and Analysis

Initiation: The Initiation portion of ActionWorks Contract Manager facilitates the activities and interactions of your team in deciding whether or not to pursue the contract. It helps answer questions such as:
  • Can we do this contract?
  • What will the impact be on our organization?
  • What are this vendor's capabilities and competencies?
Negotiation: The Negotiation portion of ActionWorks Contract Manager facilitates the activities and interactions associated with negotiating the terms and conditions of the contract—including the ability to include your partners, customers, and suppliers in cross-corporate negotiation. Yet the system allows them to access, view, change, and delete only those documents and interactions for which you grant rights. It helps answer questions such as:
  • Do all parties agree with the terms outlined?
  • What's the probability we will meet these terms and what's our risk and exposure if we don't?
  • Who's accountable for all the hundreds of deliverables?
Compliance: The Compliance portion of ActionWorks Contract Manager facilitates the activities and interactions associated with managing the deliverables of the contract. It helps answer questions such as:
  • This contract is coming up for renewal in 90 days-do we wish to renew?
  • How are currency rate changes or the spot price of oil affecting our terms and profitability?
  • What deliverables owed to us are still outstanding?
  • Are we in compliance with all of our terms?
  • Are we ready for an audit?
Analysis: The Analysis portion of ActionWorks Contract Manager facilitates the activities and interactions of analyzing the effectiveness of the contract. It helps answer questions such as:
  • What were the final financial results?
  • If we had executed differently could we have increased our margins?
  • How did the vendor perform?
  • Do we need to update our boilerplate contract to reflect lessons learned?
ActionWorks Contract Manager highlights the opportunities and reduces the risks related to contract terms and conditions by helping companies manage, monitor, and create management visibility into all the contractual commitments between major customers, suppliers, and partners. Please read the Contract Manager Brief for more information.

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ActionWorks, the Action Technologies business process analysis and redesign methodology, and the Business Interaction Model are protected under US Patents 6,073,109; 6,058,413; 5,734,837; 5,630,069; and 5,208,748