Core Capabilities

ECM is the process which enables the efficient creation, execution, management, and analysis of contracts to maximize financial performance, control risk, limit exposure, and ensure compliance.

A successful ECM initiative includes a combination of a software solution supported by professional services and strong integration capabilities. According to leading analysts and based on feedback from our clients, our experience is that an ECM system should include the following key features:

Contract creation & approval
Your ECM solution should include a flexible set of rule-based workflows supporting creation, tracking, and approval of contracts.

The system chosen needs to have an intuitive user interface to create documents from contract templates, including full version control and change/modification management. Examples of this are methods to track contract versions during negotiation and clause level editing using native Microsoft Word.

Approval capabilities need to ensure that contracts incorporate approved language and that all required authorizations are being made either as predefined steps in a workflow or as self-directed ‘routings.’ Approval monitoring should be an integral part of the solution.

Contract repository & document management
A common centralized or centrally coordinated database that contains and manages libraries of contracts, contract templates, approved language and phrases, and alternate clauses is an essential capability of an ECM solution.
 
In a legal conflict, the party with the most complete contract documentation available has a big advantage. Thus easy access to all tender documents, minutes, negotiation memorandums and e-mails between the parties to the contract can be valuable.

Contract administration & contract portal
Poor contract visibility (signed contracts stored ‘in a drawer’) and insufficient contract administration procedures lead to large costs and revenue leakages in many organizations.
ECM solutions need to support the full contract life cycle - from initiation to completion.
The scope of functionality needs to provide contract access and visibility, enabling   management of contract compliance, the analysis of contract and/or contractor performance and the sharing of experience and best practices throughout your organization.
In the post-award stage of contract administration, key features are management of amendments/ variations to the contract, alerts and/or workflow triggers based on pre-defined milestones, search functionality and functionality for registration, analysis and distribution of performance and experience data.

Contract Portal (dashboard) functionality that ensures visibility and easy access to contract information and related processes and tasks is another key feature. This functionality should include contract summaries, critical events, milestones, and attachments as well as strong search, monitoring and reporting tools. The portal should encourage an awareness of organizational effectiveness, contract cycle times, the number and type of contracts at various stages, and offer tools to identify bottlenecks in workflow execution.

Risk management & compliance
Efficient contract creation, approval and administration are of significant value to most organizations. However, the largest potential value of an ECM solution will come of its risk management and compliance platform.
 
The ECM system should include extensions to these features that secure transparency of business processes through workflow definition and monitoring, with strong tools for audit trailing, access control and reporting as well as functionality facilitating adherence to cost and revenue recognition standards to enable the documentation of regulatory compliance.

Rules-based notifications and tracking of commitments, regulatory exposure, and supplier compliance tracking are key features in an ECM solution. Predefined processes together with collaborative technologies (e.g., instant messaging, e-mail) can help to solve known and unknown problem scenarios.
For many companies dealing with large and complex contracts (e.g., development, construction or engineering contracts) functionality within claims management/variation orders with associated risk assessment and forecasting functionalities are other valuable features.

Functionality supporting identification and flagging of renewal candidates, contracts with high commercial or legal risk (due to unapproved or misplaced terms or clauses) should also be evaluated together with support for integration with analytics, business intelligence, data warehousing, and audit management systems.

Reporting and analytics
Reporting and analytics requirements are becoming more and more advanced due to both the internal needs for accurate and reliable key performance indicators and increased regulatory reporting requirements.

ECM systems should include advanced reporting and analytics tools covering analysis capabilities for term, value, contract type, and named party in addition to reports to track renewal ratios, contract values, progress against historical performance and to assist in audit processes and provide visibility to noncompliance.

Link with other business processes
The long-term value of an ECM system is realized when it integrates with other systems to expose obligations, identify savings, or alert managers to conditions of non-compliance.
Consistent and effective risk management will require integration to enterprise systems such as ERP, SCM and CRM to acquire all relevant data and to properly initiate resolution processes. Your ECM solution should be based on the established and emerging open standards (e.g., XML, SOAP, WSDL, UDDI, and BPEL) that support the required integration capabilities.
Your ECM vendors should offer professional services or other support for optimizing business processes, organizational change management and increasing your ECM skills.