Debbie Wilson

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Deborah R Wilson
Research Vice President
4 years at Gartner
12 years IT industry

Deborah Wilson, a Gartner research vice president, covers procurement strategies and applications. Her areas of interest include procurement transaction automation, e-marketplaces, e-sourcing, spend analysis, accounts payable automation… Read Full Bio

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When Is a Contract a Contract?

by Debbie Wilson  |  November 5, 2008  |  4 Comments

Finishing up this year’s iteration of the MarketScope for Contract Management (which is soon to go into final editing – hurrah!)  has really made me think long and hard about what makes a contract a contract – and hence, what makes a contract management system a contract management system.  I can certainly say this year that I have expanded my view, and its about time.  I’ve been too easily swayed by the “contract lifecycle management” rhetoric that has defined the industry that I cover.   

Please indulge me with a personal example.  Yesterday morning, I reviewed and signed a contract with a ski area, authorizing them to rent my ski condo when I am not using it.  I’ve had this arrangement for many years and it provides a wonderful means to offset some of the costs of owning this property, and it keeps the condo spotlessly clean.  I’ve had a long history negotiating contracts – I was employed in my teens in my family business as a rental manager for an apartment complex – so naturally, I changed some of the terms that I didn’t care for.  The ski area home owner manager immediately called me to question the changes.  I think it’s fairly safe to say that they rarely if ever have condo owners attempt to negotiate their rental agreements!  

 Many contracts are handled without any expectation of negotiation.  Mobile phone agreements.  Non-disclosure agreements.  Leases.  When I worked in purchasing, I had my terms and conditions printed on the back of the hard-copy purchase order forms.  And here at Gartner – I bet that the only thing that gets negotiated on our subscription contracts is the price and type of subscription.   The point is – why should we tell everyone they need a “lifecycle management” solution when the lifecycle of many contracts consists of send, sign and file?  Its time we recognize in the contract management applications industry that there is a variety of contract types, and one that is signed “as is” is no less a contract than one that is heavily negotiated.  The logical conclusion of this assertion is that “simple” contract management functionality is necessarily really simple, but perhaps right-sized to a contract type that we all know and love.

4 Comments »

Category: Contract Management     Tags:

4 responses so far ↓

  • 1 Suv Sahoo   January 26, 2009 at 1:23 am

    I am Content Management professional and now focusing on Supply Chain Content. As I see a Contract, irrespective of the type of contract it follows a life cycle and the life start when it is created. For a typical consumer it could be “sign as is” , but for a the commercial entity – it needs to be managed from the moment it is drafted / negotiated / signed to tracked for the promised delivery/receipt to closure of the contract. So a mobile phone contract is a just few signatures for the consumer, but the mobile phone company needs track the very template itself to the end of the mobile services agreement.

  • 2 Debbie Wilson   January 26, 2009 at 11:14 am

    That’s an excellent point, Suv, thanks for chiming in. To be (hopefully!) more clear – my contention with the “contract lifecycle management” approach is the assumption that negotiations must be supported in the application functionlaity. For example, I’ve taken a lot of heat over including EchoSign in this year’s contract management marketscope. But not all contracts need to negotiated, and in fact I would argue that less than 5% of contracts are. Therefore the functionality that is required to support the lifecycle of a contract must consider what the life of the typical agreement supported is.

    Along those same lines is contract administration. Not every agreement needs attention after signing to carry out the terms and conditions. Take for example non-disclosures.

  • 3 Raj Rajendran   March 11, 2009 at 3:32 am

    Debbie, for me too a contract is not a contract if the document is sent, signed and filed for which organizations do not need to spend $$$ on a Contract Lifecycle Management application. But a Contract is a Contract only if it utilized by the execution system to the fullest possible extend – by procurement application when there are release orders against the contract, by invoice application when there are no release orders i.e. invoice against contracts for example repeated services. Organizations should make the most from those hard fought contracts.

    In my earlier tenure as a sourcing specialist, I have found few Purchase Orders (operational procurement team) during spot audits not utilizing the price I negotiated with the supplier and the contract with these pricing terms were just lying in the racks. I know what it takes to digest this.

    The six stages of contract lifecycle management are Contracts Authoring, Negotiation, Approvals (buyer, seller, legal), Storage / Repository, COMPLIANCE and RENEWAL. To manage this lifecycle, I am sure we need to have a CLM application (or an ECM application). But again the functionality offered by these applications are just good with regards to Compliance. It calls for a tight integration between CLM and operational procurement applications.

    I have recently published my point of view on CLM and further developed a solution on contracts compliance which would help organization move from GOOD TO GREAT.

    http://www.infosys.com/supply-chain/white-papers/contract-lifecycle-management.pdf

    http://www.infosys.com/supply-chain/offerings/leveraged-contract-management-solution.pdf

    Thx
    Raj

  • 4 Debbie Wilson   March 19, 2009 at 10:04 am

    Raj,

    I respectfully disagree (and sorry I overlooked your comment until today – don’t know what happened there!) Many if not most contracts do not need the full blown “life cycle” steps your outlined. In US public sector, terms and conditions are legally mandated and thus not negotiated (no need for negotiation step then!) NDAs are contracts but I can’t imagine how you would systematically, through functionality in a CLM app, track compliance. and your model is missing administration – something we see companies do all the time with contracts. Here I mean they use the CLM system to track milestones.