It’s hard not to run across the term “Big Data” these days, which refers to the idea of mining large amounts of in-house data for business intelligence/strategic purposes. Solution providers are very busy promoting plenty of new tools that promise to sift and sort data for new benefits.

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But all is not well in the big data kingdom. Determining ROI of big data efforts seems to be a big issue, according to a recent article on the Big Data. Big Decisions website. The article “Big Data ROI Still Tough To Measure” cites a recent IDG and Kapow Software survey of more than 200 IT and business leaders.

While more than 85% of the 200 IT pros surveyed agreed big data would help with data-driven decisions, just 23% said big data projects were a success (53% said they were “somewhat successful”). That’s a big difference between hope and results.

Coming from the more humble side of data in contract management software, it’s easy to see the forest through some of those “big data” trees. Companies often find real financial benefits from paying attention to  (for lack of a better phrase) “small data.”

Consider this factoid: an article on the Selling Power website cited a study that revealed just how important management of every day information – like sales contracts – can be.

According to this study, poor management of sales contracts can result in “revenue leakage” of five percent to nine percent. Let’s assume for a moment that’s the range in gross revenues lost. Even at five percent, that’s a huge number in today’s economy.

Contract management solutions, such as Contract Assistant, can help sales departments by alerting them when contract renewals are pending or even just reminding them to implement a mid-contract review of compliance with service terms and conditions.

Is there a possibility of a breach? Are payables getting paid properly and accurately? Are there unexpected operational expenses popping up on servicing that client? These are all “routine” questions that can pop up from a mid-contract review, and are part-and-parcel of the main benefits of contract management.

So as exciting as big data can be, consider the more mundane (but financially powerful) benefits from “small data” — like contract management.

Anyone in charge of contract management software knows that using the software is just one part of the job. Administrators often become the nexus for disseminating key contract information to many departments or branches.

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This makes administrators a kind of jack-of-all trades; they may create end-date alerts for one department while another may only care that contract changes are recorded properly. It can be a big job handling staff that uses the software, working with other departments, and generally staying on top of contract management duties.

Is anyone prepared for this? It’s not like there’s a central school of contract management with a set-in-stone list of skill-building courses (would that there were!).

Fortunately, an article posted on the website for the International Association for Contract & Commercial Management gives some insights into skill sets. The article “The Competencies a Contract Manager Needs: A Process Perspective“ goes into great depth on all aspects of skills needed for someone who is a hands-on professional in contract management.

The authors, María Arraiza-Monteux and René Franz Henschel, outline the skills needed along the gamut of contract work, from initiation, bid, development, negotiation and finally to management.

Obviously, for the purposes of this blog, we’ll focus on the “manage” portion. Their observations serve as good reminders of the key skills for contract management. This is not an exhaustive list, just a few fundamentals that really matter – and are worth noting.

Understand (well) the industry and business they serve. This may sound a bit simplistic, but consider that in medium or large-size enterprises there can be a bewildering variety of financial, non-financial and strategic contracts. For those administering contract management software, for example, knowing the key fulfillment requirements of a non-financial strategic partnership contract can affect how key dates are identified in the contract. The same may go for a fulfillment supplier’s contract, for example.

Be familiar with risk management. At a basic level, this can mean simply ensuring that key departments understand when contracts are nearing end-dates or key deliverable dates. But the full range of risk management is worth examining. While contract management staff may not be responsible for knowing all about risk management, it may be up to them to identify key financial risks as a result of contract breaches or missed deadlines.

Have good project management skills. Project management can be a widely defined skill. But increasingly it’s seen as being able to execute on specific goals with an often ad-hoc team and an extended group of stakeholders.Consider the job required of contract management administrators after a software solution is implemented: they have to train staff and work with other departments or branches to gather documentation in order to centralize it. This can mean working with ad-hoc groups to get these tasks done, and understanding both company-wide and department or branch needs.

What these points underscore is that contract management goes beyond the record-keeping function. Focusing on the above knowledge sets will help administrators and staff alike to be more effective.

Poor Chief Procurement Officers (CPOs). They get almost none of the buzz that CIOs or even CFOs get. And even though there’s probably a procurement magazine or two out there, I doubt you’ll see one on any newsstand (at least not the front racks).

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Nonetheless, for large enterprises, an efficient procurement process is the difference between profitable and unprofitable quarters or years. This makes efficiency in procurement a key ingredient to many enterprises’ success – or failure.

A recent (2013) study by IBM Global Business Services of procurement officers worldwide delved into the question of what separates top-performing procurement organizations from average or low-performing ones. IBM surveyed 1,128 CPOs from enterprises with revenues in excess of $1 billion.

What the study found was that top-ranked procurement organizations employ a trio of key qualities, which are: 1) A strong foundation in fundamentals; 2) A strong influencer within their companies; and 3) Embrace innovation and emerging technologies.

When organizations were asked which solutions and/or activities add the most value, top-performers identified three: E-sourcing solutions, supplier relationship scorecards, and “use of a centralized contract repository to increase consistency and visibility.”

It’s not that surprising when you consider that procurement organizations are often tasked with being hyper vigilant on supplier contract costs and cost fluctuations. Using contract information to either enforce vendor contract pricing or service expectations is key to controlling costs.

The study also found another surprising connection to contract management. Of all organizations survey, 42 percent responded that they were above average or excellent in their effectiveness with contract management solutions. However, a whopping 89 percent of top-performing organizations rated their effectiveness with contract management as above average or excellent.

In other words, top-performing organizations place a very high emphasis on their contract management effectiveness – far more than non-top performers.

What this all boils down to is that large enterprises that put contract management solutions front-and-center do better at procurement than others. It’s actually a lesson that applies to companies of all sizes.

[Source note: Data from the 2013 executive report “Chief Procurement Officer Study” conducted by the IBM Institute for Business Value for IBM Global Business Services]

Many companies only deal with vendor contracts at two times: in the rush to get a contract signed and vetted before it goes into effect; and at the end of a contract when questions come up on renewal and effectiveness.

Once the contract receives proper approval, is signed by the involved parties, and the agreement terms begin, what happens after?

Typically, paper contracts get filed in filing cabinets lining office hallways; electronic contracts get saved to folders buried deep on a network drive. In the best-case scenario, whoever manages contract administration in the organization has a running spreadsheet of contracts and some of the related information

The problem is that this information becomes locked away (sometimes literally) and even in spreadsheet format, becomes user-unfriendly.

Fast forward to a contract’s end date. Did the vendor fulfill the contract fully, as stipulated? Did they meet certain deadlines or time-related requirements? Did anyone even track if this happened? What about over all cost of services over time? Did administering the vendor’s services require more internal staff time than anticipated?

This can cost any organization time and money in the long run. This is where contract management software really pays off. Consider just the basic functionality that Contract Assistant has. By centralizing key contract information and tracking it over the period of the contract, your company will know what the true cost was,  or how efficiently the vendor fulfilled their obligations.

Here are six key ways contract management software does this:

1. Creating a complete electronic record and decreasing risk of misplaced documents
2. Setting alarms to prevent missed deadlines and unwanted auto-renewals
3. Conveniently storing a contract abstract and notes
4. Allowing users to create fields and user-defined pull-downs to tailor contract management to specific needs
5. Tracking and reporting of summary financial data via financial summary fields & monetary key elements
6. Making contract data searchable – thus saving time

The point is that if your organization is reviewing these kinds of questions only at the end of a contract, you really aren’t making an informed decision. Instead, you are relying on “institutional memory” (usually one person!) or just general sentiment to decide on that renewal – and on what terms. Doesn’t it make sense to consider contract management software? If your organization wants to be more efficient, and make better decisions, it’s an option that cannot be overlooked.