Efficient contract lifecycle management is gaining importance as we move to a service-based society where the rules of our offerings are outlined in the contracts we negotiate with one another. Contracts legally bind us to our obligations while detailing what those obligations are.
When talking about contracts, we often mention negotiating power, reducing contract bottlenecks, and creating legal team efficiency, but we don’t often stop to think about the players involved and their importance in contract lifecycle management.
Once we analyze all of the implicated parties within contracts, we start to understand why contract management is at the forefront of business affairs and concerns — they are our business. For those of you new to contract management, here are the top 10 players in Contract Lifecycle Management and their functions within the system:
Top Ten Players In Contract Lifecycle Management
1. Legal Team: There is no doubt that the legal team plays a major role in contracts as they are the individuals drafting, reviewing, and negotiating the obligations by which we abide. The legal team itself can be made up of several players, including attorneys, paralegals, legal assistants, file clerks, and analysts.
It is their goal in the contract lifecycle to get contracts drafted quickly to the correct parties while ensuring contracts encapsulate the regulatory concerns and operational requirements.
Related Article: How Legal Teams Can Manage Large Volumes of Contracts with Contract Management Software
2. Compliance Team: Contract management compliance teams is the regulatory powerhouse within the organization and all compliance teams differ in organizational structure. Often operational leaders, regulatory leaders, analysts, and members of general counsel come together to ensure that the organization is meeting regulatory obligations such as safety and governance concerns.
They must ensure that the contracts created by the legal team abide by company standards and regulatory requirements. It is their goal to have a proactive approach to compliance, mitigate risk, and apply action where necessary to stay in compliance.
3. Audit Team: The audit team provides a check and balance to the organization to ensure that all contracts and policies are evaluated and fall in line with the internal constraints placed within the organization. It is their goal to make sure all contracts are accounted for, all documentation is present, and the information is a fair representation of what is occurring within the process. Through detailed evaluations, the Contract Management Audit Team helps organizations maintain the integrity of their contracts, fostering trust with stakeholders and minimizing legal and financial risks.
While auditing is a major component of finance, it is still important to internally audit contracts for risks within the system.
Read Related Article: The Crucial Role of Contract Management in Mitigating Risks for Manufacturers
4. Sales: Sales are a major force in the contract lifecycle because they are the value-creating body within the organization that is selling the legal obligations of your organization.
It is important these team members are trained properly to provide a consistent message to your clients that is in line with your contract terms and negotiations. Often this group negotiates on behalf of the organization and requests contracts from the legal team.
5. Procurement: On the flip side of sales, procurement is the agents going on your organization’s behalf to purchase services and goods from other organizations—for example, technology or software. Like sales, procurement often negotiates on behalf of an organization to get better contract terms or added services.
It is key for this group to make sure they abide by your organization’s standards in business dealings and processes. They need to ensure they have received the proper contract approvals when creating contracts with third parties while also facilitating a quick buy process.
6. Council and Analysts: These are the major decision-makers, and their make-up slightly varies from one organization to another. They are the group the legal team is trying to appease in their negotiations, as they often have the final say in business decisions.
Their signatures are typically the ones on the contractual obligations so it is key that they are part of the contract approval process. Capturing their discussions and approvals on contracts is necessary to ensure a full record of contracts to provide accountability and direction later in the contract's life.
7. Project Managers: Project managers do sometimes fall under procurement based on their role within the organization. Regardless, whenever a project manager is assigned a project, there is a contractual obligation to achieve a deliverable. Often these deliverables are scale-based while also having specific timelines that are outlined in the contracts your organization negotiates.
It is important that contracts are clear and achievable for project managers, as they represent the organization’s commitment to their obligations.
8. Other Parties: The other parties you choose to do business with are also important to consider because they often have dates and deliverables that must too be achieved. They can be either side of the coin — they could be the ones providing services or the ones that you are providing services to.
Nonetheless, it is still important to consider who you are going into contracts with. Often companies' reputations are formed by the way they meet their contractual obligations. It is the goal of the other party to meet the terms of the contract while you abide by yours.
9. Other vendors: A major movement seen in the last few decades is outsourcing. Your contractual obligations with these vendors become very important because are providing services and goods on your behalf. There must be defined goals and contractual obligations before going into agreement with third-party organizations that ensure they work under your operating standards and regulations.
These vendors provide a higher risk than most players in the contract lifecycle, so it is important that their contracts be monitored to ensure their obligations are met.
10. Constituents: This last group is the most important of all; constituents are the employee base that represents your organization. Often management teams create contractual obligations but the constituents are carrying out the commitments.
It is important they clearly understand the terms and conditions in which they must abide, and have access to contracts when they need to reference information. It is the goal of the organization to make sure this group is actively working within regulatory boundaries, operational standards, and corporate culture.
Related Article: How to Implement End-to-End Contract Lifecycle Management (CLM) Software
Contract Lifecycle Management: An Efficient Solution
These 10 players are just another top 10 reasons why efficient contract lifecycle management is becoming increasingly important. With increases in regulation and today’s higher expectations on deliverables — there is a clear movement towards effective contract management systems that provide the tools necessary for contract creation, approval, and distribution. Take a moment to find out why more people are choosing Contract Management on SharePoint with ConvergePoint by requesting a demo today.