What is a Contract Repository?
The American Bar Association tells us, “A typical Fortune 1000 company manages between 20,000 and 40,000 active contracts at any given time, at least 10 percent of which are misplaced, difficult to find… or otherwise unmanaged or forgotten.” This is a figure that most businesses today simply cannot afford.
Contracts are the foundational structure of business relationships and decision-making and one of the most critical goals of any effective contract management program is to ensure visibility and provide anytime-anywhere access to the enterprise contract portfolio.
This is exactly what a cloud-based contract repository can do for your enterprise.
Conventional, manually-driven contract management processes, which broadly deal with paper documents and email attachments, are inefficient and expensive. The traditional way of contract tracking also prevents business and legal teams from being able to access key insights they need at the right time. As a result, contract managers and enterprises alike are transitioning to a digital-first contract management practice, with a cloud-based contract repository at its heart.
In this article, we will review contract repositories in detail, discussing both the need to stay organized as well as the benefit of contract repository software.
What Happens When Businesses Lose Track of Their Contracts?
After signing, contracts typically are not stored centrally and turn into static, difficult-to-access sources of mission-critical data. This is because many companies fall into the trap of losing track of the contract after it is signed and only revisiting it once something goes wrong (obligations are not met, important benchmarks are missed, terms are violated, etc.). Here are some of the challenges that arise from this approach:
- Limited access to contracts: Accessing contracts stored across multiple offline or siloed systems in a timely manner is difficult and laborious.
- Lack of insights into contracted terms: Contracts cannot be interrogated on-demand for visibility into critical contract information like T&Cs, obligations, and service levels. You also miss out on getting insights across your contract portfolio.
- Lack of visibility into historical contractual and counterparty performance data: In the absence of intelligence gathered from past KPIs, performance data, and contracting history, businesses are prone to repeating erroneous decisions or agreeing to risky T&Cs.
- Limited view of hierarchical relationships between contracts and entities, and suppliers and subcontractors: Enterprises are unable to understand relationships between contracts and subcontracts, SOWs, and work orders. They are also unable to see how the nature of a relationship has changed over time.
- Inability to track contract amendments and versioning: Businesses lose track of amendments because of the lack of visibility into most recent contract versions. This may create several versions of the same contract being used by multiple departments, causing confusion and disruption.
So, what exactly is the overarching impact of disorganization on business value? Here are just four of the main negative impacts that contract disorganization can have:
- Time and resources wasted: Employees spend far too much time searching for contracts and embedded information, causing labor expenses to rise. Further, the inability to track contract amendments leads to duplicated efforts.
- Impact on business continuity due to missed renewals and/or missed deadlines: Without contract repository software, it’s easy to miss important contract renewals and deadlines. This disorganization increases the risk of business disruption and can lead to frustrated partners, stakeholders, and vendors.
- Non-compliance with regulations and protracted time-to-audit: Decentralized contract storage can have detrimental effects concerning compliance and audit response times. Manual, Excel-based data aggregation from contracts is inefficient, prone to error, and increases the risk of misreporting data to regulatory authorities.
- Inadequate and inconsistent business outcomes: Lack of necessary visibility into what was promised (contracted terms) and what has been delivered (obligation fulfillment) translates into sub-optimal performance, budget and project time overruns, and issues and disputes.
What do Organizations Turn to in the Absence of Contract Repository Software?
In the absence of a centralized, digital repository, companies look to less robust (and far less efficient) document management solutions. For example, it is not unusual for businesses to use filing cabinets, binders, or folders as a simple document repository. Some might also opt to use digital storage options which were not designed specifically for repository purposes. These include digital PDFs, email attachments, Microsoft Excel, and Google Sheets.
Other enterprises use their existing tech stack to double-up as a repository. For example, procurement solutions such as ERPs and P2Ps typically have simple built-in repositories which only act as a file storage system. These are far more limited in capability and cannot be interrogated for insights.
Here’s Why Businesses Use Contract Management Software with Integrated Contract Repositories
Modern contract management solutions are equipped with integrated contract repositories that offer advanced capabilities for managing the contract portfolio. By keeping past and existing contracts in one place, you have a rich storehouse of data to reference anytime you need it. Here are just a few of the reasons why businesses are using contract repository systems:
Single source of truth
Using contract management software as a repository gives your team members a single place to refer for all contracting and third-party relationship data (including related documents, comments, and communication). Your team can pull in contracts stored across a fragmented enterprise IT landscape comprising ERPs, CRMs, P2Ps, and file servers and place them in a central contract repository.
Fully interrogatable repository
Contract repository software makes your documents easily searchable within a database, so contracts and important data are always within reach. Contracts in digital repositories can also be easily mined for insights with AI-powered analytics for informed decision-making and risk management.
Bird’s eye view of third-party engagements
Get real-time, 360-degree visibility into commercial engagements. With this, you can critically assess established relationships to gain insights into interdependencies, compliance, and even spend trends. With complete visibility on renewal dates, upcoming milestones and timelines, you can ensure planned business outcomes are achieved.
Reduce administrative work
Intelligent contract repository software automates error-prone processes and lessens the need for human labor, eliminating inefficiencies in manual administrative work. Advanced search features such as concept searching make it simple to find contracts by pre-set filters like contract type. You can ensure version control with configurable administrative workflows so you always refer to the latest contract documents. It’s also easy to scale as you can quickly digitize and add new contracts into the repository digitally instead of manually.
Audit and reporting readiness
Having access to all relevant contractual data in centralized repositories greatly simplifies the audit response process. Not only do you create detailed audit trails for future reference, you can also reduce audit response times from a few months to just a few days. Even more, the output of a software-driven audit will be far more accurate than a manual response.
Better data security and integrity
Ensure the confidentiality of critical contract data with advanced encryption for cloud-based storage.You can also prevent unauthorized access to sensitive information with customizable access controls. Additionally, you can minimize the risk of data leaks or breaches and avoid any issues with regulatory agencies.
What Should You Look For in a Contract Repository?
There are several key elements you should always look for in a contract repository. By choosing the right features, you will save time and money in keeping your documents organized. Below are the main elements you should consider when looking for a contract repository software:
- Hierarchical access controls: This ensures that only the people with the right set of permissions can access sensitive contract data stored in a repository.
- Native document viewer: This gives you the ability to seamlessly view any type of document without having to switch between systems.
- Extraction capabilities: AI-powered contract extraction technology along with OCR and NLP allows you to bring your contracts to life by extracting much more than just contract metadata and pulling out obligations, service levels, price books, and more, from your contract portfolio.
- Advanced analytics: Convert extracted data into actionable insights with intuitive and easy-to-understand data visualization, and role-based, customizable dashboards.
- Powerful search functionalities: This enables users to search keywords across your legacy contract portfolio. You can also search for all contracts with a particular vendor, or in a particular country, etc.
- Integrations: Out-of-the-box integration adaptors to connect your cloud-based contract repository with your enterprise stack will enable you to pull in and consolidate contracts and associated artifacts stored across your IT landscape.
SirionOne’s Intelligent Contract Repository
A hierarchical, access-controlled contract repository is a critical part of any functional contract lifecycle management (CLM) system. In today’s sophisticated business environment, digital contract repositories will help you with complete visibility over your contracts and global supplier and customer base.
SirionOne’s AI-powered contract repository enables automation of contract storage, search, extraction, and analytics. This helps reduce manual effort in managing contract records while ensuring effective risk mitigation and improving value realization. Learn more about how you can leverage SirionOne’s intelligent contract repository to start your smarter contracting journey in this insightful article.
Get in touch or request a demo today to discover how SirionOne can help transform your contract management practice.