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Opportunities and challenges in contract management

$

US dollars to prepare and manage an average standard contract.

Source: Contract Lifecycle Management 2021

person-days to manage the data extraction and analysis for 100,000 contracts of a corporation.

Source: Contract Analytics 2019

of companies in Germany have no digitized paper files.

Source: Contract Analytics 2019

Objectives of contract lifecycle management​


1

Efficiency gains in preparing and managing contracts


2

Complete transparency of all contract information


3

Control and security over contracts concluded in the company​

Our holistic advisory approach

Our holistic advisory approach

Our holistic advisory approach

Our holistic advisory approach

Our advisory services start with an intake and assessment of the contract management maturity level in your company and the evaluation of risks and optimization potentials. Based on this analysis, we jointly develop company-specific short-term as well as medium- to long-term recommendations for action. Depending on your needs and requirements, we will support you with planning contract management governance and efficient processes throughout the entire contract life cycle. We will document the jointly developed company-wide CLM governance, including a clearly defined role concept, in manuals, guidelines or recommended actions tailored to your needs. We will make your existing contracts accessible and transparent by taking an inventory and analyzing the contract landscape and evaluating relevant contract information.

Based on our extensive experience with all leading system suppliers, we will find the right contract management system solution for you – starting with a definition of your specific requirements, compiling these in specifications, and ultimately selecting a specific supplier.

After selecting a system solution, we will support you with the implementation and integration of CM governance and the system solution in your company. You will receive support particularly with migrating the contract portfolio and existing contract templates. This includes updating the contract templates and creating a library of clauses as well as definition of the associated metadata and access and approval authorizations for each clause.

Use case: The holistic advisory approach using the example of procurement

We provide holistic support for the (individual) design, introduction and optimization of a contract lifecycle management system along the entire contract lifecycle from a process, organizational, legal and technological perspective. With our dedicated KPMG contract management approach, we not only support you in selecting the appropriate system, but also in defining requirements and designing the necessary processes and structures in advance. In exchange with the selected system provider, we ensure the smooth implementation of the system solution and operationalization of processes.

In this way, we help minimize costs and risks in procurement while increasing efficiency, effectiveness, quality and transparency:

  • Gain more control over the contracts concluded in the company
  • Manage contract enquiries better and start contract negotiations in a stronger position
  • Improve the efficiency of preparing and managing contracts
  • Make the contract landscape fully transparent

Is the introduction of contract lifecycle management cost-effective for your organization?

The KPMG experts will be available to you for a one-hour analysis of optimization potential free of charge and without obligation. Take advantage of this opportunity and make an appointment.


 

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Further use cases

We would be happy to help you implement a sophisticated software solution to securely manage your organization's contract management. We work closely with our alliance partners to help you achieve the best possible solution. Contact us if you are interested in learning more about the various providers. Our experts at KPMG will contact you for a demonstration and discuss possible next steps.

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Benefit from KPMG's expertise

KPMG has thoroughly looked into contract management, so that you can now benefit from it. Have a look at various whitepapers and studies to gain an even better understanding of contract management and its benefits.

Intelligent contract management of the future

This KPMG whitepaper uses practical examples to show why intelligent and digital contract analytics is important and profitable.

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Do you have to recognize all leases in your balance sheet as part of International Financial Reporting Standard 16 (IFRS 16)?

The KPMG Contract Abstraction Tool classifies, processes and extracts contracts automatically and self-learning.

TO THE USE CASE

Your path to digital contract lifecycle management with Icertis & KPMG

Clarity pays off: If you have all the information on your screen, you can respond better to risks, work more efficiently and save costs.

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Beware of the wrong contract management software

Many companies buy unsuitable tools. This costs a lot and brings nothing. Read more about this topic here.

TO THE ARTICLE

FAQ

What is contract management/contract lifecycle management?

Contract lifecycle management refers to the comprehensive maintenance and management of contract documents throughout their entire lifecycle. This covers all phases, starting with the creation and management of contract templates, through the preparation of contract documents (including contract negotiations), to administration and archiving. Clearly defined and efficient contract management can reveal hidden potential from contracts, reduce risks and increase contractual sales opportunities.


Due to increasing global networking, growing digitalization and the increasing need to comply with contract- and country-specific regulations, companies are confronted with the management of complex contract landscapes and organizations. Due to the high degree of complexity of contract lifecycle management, standalone solutions are usually created that facilitate the work of individual corporate divisions, but generally do not have any interfaces to other corporate functions or IT systems. As a result there are risks due to a lack of transparency, quality and increased costs due to inefficient or a lack of processes. Are you aware of the following challenges?

  • Lack of transparency about contractual relationships
  • Unpredictability of legal risks and consequences
  • Non-compliance with regulatory requirements
  • High susceptibility to errors due to a lack of contractual expertise and verification processes
  • Lack of reporting and deadline management
Contract lifecycle management takes on exactly these challenges.


The tasks and responsibilities of a contract manager are manifold and defined differently from company to company. However, in essence, a contract manager is responsible for the essential contract processes within the contract lifecycle. This means that the contract manager is responsible for the creation, approval, signature and execution of the contract and coordinates the involvement of other departments such as procurement, sales or legal. In addition, a contract manager can be responsible for implementing, monitoring and optimizing IT-supported contract processes. The contract manager uses the contract management system to ensure that contracts are optimally designed and negotiated. A key aspect in this regard is that all contracts and relevant contract terms can be found and evaluated at any time.


CLM software links the contract process with the leading business processes from procurement and sales. It also supports order processing and invoicing. By harmonizing and digitalizing contract processes, the basis for automated reporting and thus immediate transparency of an organization's contract landscape is ensured.

The resulting advantages are therefore obvious: errors are eliminated, risks are reduced, efficiency gains are achieved and proactive management of business relationships is facilitated.

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