Is “small data” a cure for big data headaches?

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.

Key skills for contract management professionals

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.

To be top-ranked in procurement, excel at contract management

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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Photo Credit: aussiegall via Compfight cc

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]

Six ways contract management software helps boost efficiency

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.

Establishing Selection Criteria for Contract Management Software

By: Judy Tucker, business consultant, Blueridge Software, Inc.

Once you’ve determined that doing a better job of managing contracts is a priority and that the best solution is off-the-shelf software, the next step is to establish selection criteria.

ASP Or Client/Server?
You’ll need to consider whether client/server architecture, in which users access the system directly, or ASP, in which they access it via a Web browser, better suits your needs. There are plusses and minuses to each.

Advantages of Web-based programs include portability and, sometimes, price (particularly for organizations with large numbers of read-only users). Disadvantages include security, speed and screen display.

If the vendor hosts your data, security is a prime consideration. Should you ever want to get your data back, be sure that the supplier will return not only your source documents but also the meta-data derived from those documents. Access speed can be an issue because of the vagaries of the Internet. The speed of screen refreshes can be problematic for data entry, sorting, searching, and reporting functions.

Web-based programs offer limited control over how information is displayed. Users may find the inability to customize drop-down menus or to remove extraneous fields frustrating or distracting – affecting efficiency.

Advantages of client/server programs include security, speed and report display.

Client/server software is not as widely accessible. But commonly used remote desktop technologies like Citrix, Virtual Server, and Terminal Services make distance computing practical. Access speed is more consistent and dependent only upon factors that are under your control (the traffic on your network, for example). This is important if most of your users will be manipulating data.

Your initial investment in client/server software may or may not be higher, depending upon the proportion of your users who are read/write. If you are comparing client/server models to hosted ASP solutions that charge monthly fees, remember that those fees are ongoing and are often based upon the number of records in your database. As your database grows, so do your costs.

With client/server systems, security is not an issue. Your data is never out of your hands. You are storing it and controlling who sees and works with it.

Client/server systems also offer much better control and customization of features. This can favorably affect ease of use.

Proprietary Data Storage Format – A Red Flag
Danger, Will Robinson! Whether you choose ASP or client/server architecture, be sure that the system will store your data in a standard, non-proprietary format. Any proprietary format should raise a red flag.

For one thing, you may want to work with your data from the backend, either for reporting purposes or to tie into other databases.

Infinitely more important, however, is the ability to move your data out if necessary. You may never need to get your information out of the system, but you must be sure that if you need to, you can!

Features & Flexibility
When you think about features, keep it as simple as possible. Ask whether a program meets your basic needs.

When you evaluate a product, be sure that it will store the specific information you need and that you’re comfortable with the way in which it allows you to view and retrieve the data. Consider whether there are layers of complexity that you don’t want.

Flexibility is particularly important with packaged software. Is the program too narrowly defined, or not targeted enough? If the software is intended for general business use, is it agile enough to accommodate your specific requirements?

Ease Of Use
How friendly is the user interface? How complete and accessible is the documentation? Is training needed for all users? Or optional for those wanting a jump-start?

What costs are involved in implementing the software? Does the vendor charge for help with installation? Is user training required, and, if so, what are the costs?

Upgrade Path
Is the system scalable? Can you start small and upgrade to a larger version later? An easy upgrade path allows you to leverage your investment in time, money, and knowledge of the software.

Technical Support
Look for responsive technical support. Make sure the supplier will provide personal responses to technical questions. Check references. Has the software been relatively trouble-free? How effectively does the vendor work with customers to solve any problems that do arise?

Although there may not be a simple formula for pinpointing when contract management software pays for itself, keep in mind ROI benefits may occur soon after implementation. That may become clear to you the first time an alert prevents you from an overpayment, or maybe even the first time you easily retrieve a contract record rather than asking a separate department for its files.

Core Requirements: A Sample List
Summarize your core requirements in a brief list. Here’s a sample of criteria you might use. Just add sub-points to the list where necessary.

  1. Easy to use
  2. Priced within budget
  3. All charges (software, installation, implementation, training) knowable up front
  4. Stores the data you need to store in a way that makes sense for your organization
  5. Provides visibility into key contract provisions
  6. Supports automatic alerts (visual and/or via email)
  7. Includes a way to store or link actual contracts, notes, and related documents
  8. Simple to administer in your environment
  9. Offers robust security that doesn’t interfere with ease of use
  10. Responsive, responsible technical support

An Excellent Beginning
Outlining the criteria for your contract management system is, of course, just the beginning (although it’s a good one). Implementation is still ahead of you, and designing and building your database is not a trivial project. But knowing what you’re looking for in contract management software will go a long way toward making sure you choose the product that’s right for you.