Last week we announced that EWE AG, one of Germany's largest energy providers, has rolled out a contract management solution based on enterprise content management software. The company's solution, called Central Contract Management, has helped to reduce risk, speed up operations and increase transparency.

Managing contracts, with all their dense language and many pages of details, is a difficult job for any organizations. This is because contracts often span many different individuals, departments and software applications. Pulling out the relevant details and making sure that those details are accurately represented and acted upon across the company is a big task. EWE, however, has taken the bull by the horns and is reaping the rewards.

For companies that are looking to make gains on the contract management front, I thought it would be worth revisiting the five cornerstones of a contract management strategy. You can download a comprehensive white paper on the topic here.

Automated Contract Creation
In order to provide a truly flexible system that eradicates cost at every stage of the contract lifecycle, the contract management system must provide the ability for trusted end users to make use of technology to create contracts and legal documentation within pre-planned and pre-approved parameters. This will enable resource constrained groups such as legal and procurement to focus on the creation of approved contract templates and best practices.

Secure Contract Negotiation
Contract negotiations between external parties often take place via e-mail. This can create many problems for contract negotiators. Sending an e-mail to five recipients will generate five separate copies of the contract. If the five recipients wish to make any comments or amendments to the contract, then there may be multiple versions of the document in circulation. This creates significant work for the contract manager when attempting to bring these versions together into a final contract, and can lead to a loss of control over what may be sensitive commercial information. A comprehensive contract management strategy should use a secure collaboration environment for contract negotiations with external parties.

Electronic Contract Repository
A comprehensive contract management strategy should include the implementation of a central electronic repository to store contracts and agreements. Paper filing cabinets or shared folders on a company network are not efficient mechanisms for storing sensitive information like contracts. The contract repository helps companies meet corporate governance rules, and gives authorized staff instant access to the latest version of any contract. Companies can also avoid the extra costs of retrieving archived contracts when needed from off-site paper stores, a common practice for many organizations.

Automatic Upload to Back-End Systems
Most organizations manually key contract data into back-end systems, an inefficient, time consuming, and sometimes error-prone process. A contract management strategy should insist on the use of data transfer technologies that can automatically extract key contract data and upload it to relevant back-end systems as required without any manual intervention.

Proactive Report & Alert Management
While documented processes around the creation, review and archiving of contracts are required to meet compliance requirements, the true commercial power of a contract management system is in its reporting ability. Reports are used to alert and provide actionable management information to staff members who require that information to carry out their business function. The terms of a contract can affect many parts of the business. Specialists like sales managers or the procurement team, will want to keep track of the finer detail relating to their principal transactions. Other business functions like finance, legal, operations, customer services, etc., may only need to view subsets of the contract data to either ensure that suppliers are complying with pre-negotiated terms or that customer commitments are being met so that the business is maximizing revenue while minimizing risk.