Is contract management becoming more complex? – CIO Magazine interview with Seal Software CFO

CIO and Computerworld magazines recently published interviews with Seal Software’s parent company CFO being interviewed about whether contract management is becoming more complex.

Read the CIO Magazine article here:  http://tinyurl.com/4lf6bfw

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Reducing the cost of litigation through better control of your contracts

A recent survey published by law firm Fulbright & Jaworski suggested that over 50% of corporate litigation was directly related to contract disputes.

Why is this, you may ask?  For many companies this is because there is poor control over the contracting process and once contracts and agreemnets have been signed, they are often disguarded and only referred to again if a dispute arises.

However, due to poor contract control, contract documents that contain terms, conditions and obligations that need to be proactively tracked and managed to nip litigious disputes in the bud before they become serious issues, are often difficult to locate because they are lost or archived deep in file shares, filing cabinets and computer desktops.

Seal Software’s cDiscovery solution is a unique legacy contract discovery solution, based on search and artificial intelligence technologies to locate lost or hard to find contracts in Windows file shares and computer desktops, automatically extract key contract data and present these in a simple to use management dashboard.

We believe that being able to locate and manage your contract landscape and to be able to action key milestones and obligations before they become serious issues, will have a direct impact on your ability to control and reduce the cost of litigation.

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What contract terms lie at the heart of most disputes?

The International Association of Contract and Commercial Management (IACCM) has just published a list of the top 7 most contentious contract terms that are likely to lead to disputes and litigation.

The list is an interesting side effect of the annual Most Negotiated Contract Terms survey that is currently being compiled for 2011.

So, here is the IACCM’s list of the Top 7 most contentious contract terms:

  1. Delivery/Acceptance (cited by 43% )
  2. Price/charges (38%)
  3. Change management (33%)
  4. Invoice/late payment (29%)
  5. Performance guarantees/undertakings (28%)
  6. Service levels (27%)
  7. Scope/goals (23%)

It is interesting to note that out of the IACCM’s list of most popular and commonly negotiated terms, the top three terms: limitation of liability and indemnity, IP protection are not seen to be at the centre of contract disputes, yet in-house legal teams spend the most time and effort defining and negotiating these terms.

The annual Fulbright & Jaworski Ligigation Trends report suggests that the majority of corporate litigation is now directly related to contract disputes.

This is a real and present danger for many companies because they do not often have tight control over their contracting processes.  All too often contracts are drafted and negotiated, but then archived away once the agreement has been signed.  If a business is not able to proactively manage contract terms and obligations like early payment terms, service level commitments or agreed scope in agreements, then these are more likely to lead to disputes and costly litigation.

If you are not able to readily locate lost or hard to find contract documents because they are hidden in file shares, filing cabinets or your colleague’s desktops, then you are going to be at an instant disadvantage to companies who are able to demonstrate tight control over their contract landscape and commitments.

Seal Software’s cDiscovery solution addresses this issue by providing a unique solution to discover lost contracts in Windows file shares and computer desktops, automatically extract key contract milestone data and to provide instant visibility in to this data through a management dashboard.

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How many active contracts does your organization have?

100, 1000, 5000, 10000, … no idea?!

For many companies and non-profit organizations it is impossible to determine the number of contracts that have been committed to because there is poor, or no control over the contracting process.

PWC estimates that an average Fortune 2000 company has between 20,000 and 40,000 contracts.  Research firm, Faulkner estimates that over 10% of contracts are lost or hidden to the Business.

Image for a moment what might be contained within those 2,000 to 4,000 lost or hard to find contracts.

The average procurement contract contains quality, delivery or discount incentives that, if not managed fastidiously, can lead to significant wasted opportunities for Procurement to add value to the bottom line.

Many commercial and services-based contracts include service level agreements, milestone or deliverable-based obligtions that need to be met and managed correctly to maximise revenues or avoid costly penalty payments.

So you see, it is absolutely vital that your business is able to identify, locate and manage contracts with key suppliers, customers and partners.

Seal Software has developed the first Discovery Engine for legacy contracts.  Seal’s unique Artificial Intelligence-based engine will search and identify legacy contract documents saved on computer desktops and Windows file shares that are lost or hard to find.  Seal will extract key contract milestone data from the contract documents and present key business managers with a management console illustrating the pertinent details hidden within those contracts, like:

  • Total number of contracts (by contract type)
  • Contract due to expire (in the next 90, 60 and 30 days)
  • Right to assign contracts, and many more.

Visit www.seal-software.com for more information.

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Are your legacy contracts a ticking timebomb?

It is surprising to discover what unknown risks you may have hidden in your organisation. Take contracts, for example. Do you have full visibility and control over your executed commercial and procurement contracts? Are there inherent risks in your contracts that you do not have ready access to, or that your business is not managing effectively? Do you base your business plans on contracted obligations and commitments that you do not have control over?

As Andy Kyte at Gartner says, ‘contracts are the lifeblood of an organization and if you are not in control of your contracts, you are not in control of your business’.

So, what should you do about hidden or hard to find legacy contracts that are not being managed effectively?  Typically, you will normally have two choices:

  • Ignore the problem and leave your legacy contracts as they are (but run the risk of contracted obligations and commitments not being managed)
  • Hire resources to locate, scan (if in paper format) and manually profile legacy contracts and milestone data. (For many organisations, this is too costly and too complex to consider).

Seal cDiscovery– the world’s first discovery engine for legacy contracts
Seal cDiscovery is a solution that has been designed specifically to address the issue of locating lost or hard to find legacy contracts hidden in Windows file shares and user desktops.

For many organisations, legal, procurement and commercial teams spend significant energy and resources negotiating and fine-tuning the terms and conditions of contracts, only to disguard the contract document once it has been signed and executed. An average procurement or commercial contract will contain a mixture of critical dates that need to be tracked, as well as obligations or commitments that need to be managed effectively in order to maximise the value from the business relationship.

Seal cDiscovery is the first solution that will:

  • Discover and identify list or hidden contracts in Windows file shares and computer desktops
  • Automatically extract key contract milestone data from contract documents
  • Provide a management dashboard with instant visibility into contract milestones and key terms.

If you are planning for your next financial year at the moment and you are formulating plans on your understanding of what you have committed to in procurement and commercial contracts, but you feel that you do not have complete control or visibility of your contracts, consider deploying Seal cDiscovery to provide instant visibility and control over your contracts and commitments.

For more information, visit: http://www.seal-software.com

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