It’s clear that contract management as a solution fills an important need. Just look at the comments from our own users and you see exactly how a contract management solution fills that need.
What is not clear, however, is where contract management fits into corporate department structures. We know that users of our Contract Assistant software run the gamut of department definitions and titles.
In the larger sense, it is very hard to separate contract management from risk management, which can be a broad responsibility. The point of actively managing contracts with a solution such as Contract Assistant is to ensure that cost over-runs don’t go unnoticed; that deliverables from vendors meet contract requirements; that data is available on contracts for analysis, information and for shared communications.
Recently Tim Cummins, CEO of the International Association for Contract & Commercial Management (IACCM) wrote about a lively discussion he heard about who should “own” contract management. Cummins makes a great point that can’t be emphasized enough. Here’s his take on the matter in his post “Organization is not the point”:
“These days, it seems many lawyers are becoming more a
ssertive about not only the ‘right of ownership’ they have over anything contractual, but also suggesting that legal skills are somehow uniquely suited to the role…But what role? Here is where we have the problem. Such debates between the lawyer and non-lawyer fundamentally miss the point over the role of contract managers [Emphasis added], the purpose of a contract and the value contribution from a contracting process.”
So if organization isn’t the point and the purpose of contract management is … what is the purpose?
The bigger picture: risk management
Not managing deliverables, costs and information means not managing risk. Whose job is it, then, to manage risk in an enterprise? Frankly, it doesn’t matter – so long as someone is actually aware of the risks and chooses to take action to monitor, manage and evaluate potential contract risks. The point of that monitoring, managing and evaluating is to take actions that impact (and specifically, lower) risk.
This means contract management cannot be the sole responsibility of employees with little responsibility or authority. By relegating contract management to a junior staffer (and then ignoring the info they generate) your organization has decided to pigeonhole the risks associated with contracts as nice-to-know but not important or even critical. Someone with no or little authority can’t take actions to lower your contract risk, however, which means your enterprise has decided to check the “don’t care” box on contract risk. Does that sound like a good idea?
So don’t worry about which department “owns” contract management and concentrate on who can take the actions that lower your company’s risks. That can easily mean contract management isn’t “owned” by anyone – but is a tool that should be in every unit, branch or department manager’s belt.
After all, when more employees (no matter the title) become aware of contract risks, your enterprise has that many more stakeholders to offer help in managing those risks. And who couldn’t use a few more eyes looking out for risk?