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Ed Breault

The 4 Vs of Contract Management: Volume, Variety, Velocity, and Veracity

In today’s fast-paced business environment, contract management has evolved from a mere administrative function to a strategic one. In a previous blog, Contracts: The Ultimate Digital Asset, I explored this tactical to strategic elevation and why companies should reframe the way they see contracts and the lifecycle they move through. As organizations grow and their contracts become more complex, the need for an effective and efficient contract management process becomes crucial. Enter the concept of the 4 Vs of Contract Management: Volume, Variety, Velocity, and Veracity.

Let’s dive deep into each ‘V’ to understand their significance and impact on modern contract management.

  1. Volume: Scale with Efficiency

The sheer number of contracts that a modern enterprise deals with can be overwhelming. From procurement contracts to employee agreements, sales contracts, partnership deals, and more, the volume can reach staggering numbers.

This vast volume poses several challenges:

The solution lies in leveraging technology. Modern CLM can handle large volumes, automating many of the tasks that were previously done manually.

EDF Renewables mentions managing over 200 contracts at one time using Malbek. This system not only keeps them in compliance but also diligently tracked. It’s not uncommon for companies to start managing contracts in the hundreds and rapidly escalate to the thousands or scale up to hundreds of thousands.

 

  1. Variety: Address Different Contract Types

Contracts come in all shapes and sizes. Some are straightforward purchase agreements, while others might be intricate joint venture contracts that span several years. Each type has its own set of terms, conditions, and compliance requirements.

The variety factor throws in challenges like:

Here, a CLM can provide templates, standard clause libraries, and lifecycle automation to ensure contracts, regardless of their variety, are managed effectively.

Contracts can vary widely, but new users of CLM typically experience remarkable improvements within just three months. They notice faster processing times, less time hunting for agreements, and a notable 20% decrease in possible revenue losses. This enhanced efficiency introduces greater flexibility in the kinds of contracts they can handle, from sales documents to partnership agreements. Moreover, drafting these diverse contracts has become much more efficient, reducing creation times from weeks to mere hours.

 

  1. Velocity: Speed of Execution

In a competitive marketplace, the speed at which contracts are drafted, negotiated, approved, and executed can be a competitive advantage. Velocity is all about the ability to swiftly move through the contract lifecycle, which not only accelerates business operations but also positions companies to seize opportunities in a timely manner.

Challenges include:

Embracing native capabilities of a feature-rich CLM solution like Malbek, with workflow automation, and system integrations can significantly increase contract velocity. By reducing manual intervention and decision-making delays, organizations can significantly expedite contract approvals. It will also be a source for new legal operations KPIs.

SurveyMonkey provides a compelling case study. They’ve reduced their time to close by an impressive 50%, with pre-approved clauses and fallbacks proving invaluable in this acceleration. Another significant mention is Pantheon. Their focus on shared efficiency across departments led to a notable 36% efficiency gain within just the first quarter. Their heavily process-driven approach sets them apart from more typical use cases.

 

  1. Veracity: Ensure Accuracy and Truth

Now we arrive at my favorite and final ‘V’ which stands for the truth and accuracy of contract data. Given the legal implications of contracts, ensuring that their information is accurate and up-to-date is paramount.

Potential issues are:

Technology, combined with best practices like regular audits, training, and a culture of accuracy, can address veracity concerns.

Accuracy in contracts cannot be overemphasized. TIBCO’s success story with Malbek highlights the importance of veracity in contract management. In an impressive global implementation spanning just four months, tens of thousands of legacy contracts were migrated to Malbek by TIBCO with minimal external dependencies.

AI-driven extraction of contract terms played a pivotal role during M&A due diligence. Their integration process with key business systems required no customizations, a testament to the robustness of the Malbek platform. This allowed TIBCO to transition from using a CLM primarily as a repository to a comprehensive platform driving their growth strategy. They’ve achieved a 70% reduction in contract cycle times, AI-assisted contract reviews, and have consolidated their contract process onto a single platform. Legal, Sales, Finance, and Procurement teams now collaboratively engage in the contract process, yet they spend significantly less time on manual reviews. TIBCO has optimized its operations, allowing the company to redirect its focus on strategic business initiatives.

Veracity can also refer to a “fair and balanced” contract. An agreement wherein the rights, obligations, risks, and rewards are equitably distributed between the parties involved. Such contracts are designed to ensure that no party is disproportionately advantaged or disadvantaged.

Here are a few key aspects:

In many jurisdictions and industries, the concept of “good faith” underpins contract negotiation and performance, ensuring that parties deal with each other honestly and fairly. Having a fair and balanced contract is not only ethically sound but also fosters trust. This trust is crucial for nurturing long-term business relationships, embodying the essence of Veracity.

In conclusion, embracing the principles of the 4 Vs of Contract Management can empower organizations to optimize their contract management processes. With products like Malbek CLM, we are pushing the boundaries of what’s possible in contract management.

For more insights into our vision and the transformative impact of our solutions on contract management, visit Malbek.