Victorian Rail Track (VicTrack)
Author: Tim Cummins
The coronavirus pandemic has disrupted trading relationships worldwide - and as a consequence, we are seeing negotiation and renegotiation of contracts on a massive scale. This would be difficult to manage in the best of times, but right now, with home working the norm for many employees, it presents a monumental challenge.
So how has the contract management community been faring and what can we learn from progress to date? IACCM has conducted a number of studies that offer us insight.
The extent of disruption
First, how extensive is the disruption? The answer to that varies quite significantly by industry and, to some extent, by geography, but we know that by mid-March, around 60% of businesses were reporting moderate to severe impact on their contracts – both with suppliers and to customers. The pandemic has had a rolling effect as it spread around the world, steadily resulting in mass shut-downs and distancing.
The nature of that disruption differs between industries. For some, customer demand is increasing and generating a need for both new and revised contracts – for example, food and drink, consumer packaged goods, health, transport and logistics. For others, the story is almost entirely negative – airlines, hotels, travel and entertainment. Almost everywhere, this has resulted in a strong focus on Force Majeure, rights of increase or reduction, revisions to scope, deferral or delay. And that is not to mention the need for extensive reporting as management seeks rapid information on risks and rights within existing agreement portfolios.
A scale of difficulty
All this has been far from easy. IACCM members were asked how difficult it was to find their contracts or to analyze the contents. On a one to five scale of difficulty, they reported on average a level four. Not surprisingly, the larger the business, the greater the difficulty. But it was also notable – and not surprising – that those with contract management technology generally fared much better than those without. This not only allowed much faster identification and analysis, it also reduced the time spent searching and freed it up for more rapid and thorough interaction with the counter-party.
For many, this was the first real test of the ability of their systems to cope with such peak demand – and most discovered areas for improvement. Indeed, 85% identified the need for action, either in enhancements or additions to their existing systems or an acceleration of deployment across the business. But while there were some obvious shortfalls in performance, none to date have indicated a plan to replace an existing system, which testifies to the fact that the quality of contract management automation has improved significantly over the last few years.
What does current automation lack?
Basic functionality of an easy to use, searchable repository is naturally the underpin to any system. Most have other features, which may or may not have proved helpful at this time. Many do not have some of the tools that would have been especially useful in managing contracts and risks more effectively. Top of the wish list for improvements are things like:
An opportunity for immediate help
By way of conclusion, it is worth noting that several vendors have stepped forward and are offering the chance to trial systems during this time of crisis. Among them are:
CommonPage, a platform that supports collaborative negotiation using either embedded templates, or the upload of a specific agreement, is offering free trials until May 1st.
ThoughtTrace is offering businesses free access to the ThoughtTrace Platform: COVID-19 Response Pack, contract analysis software that uncovers business implications of COVID-19. This innovative solution will help companies affected by COVID-19 gain perspective on their unique situation and economic implications triggered by this pandemic. It gives teams the ability to immediately find the most important contractual elements for understanding their coverage, risk exposure, and maximum resulting liability.
Juro Since the onset of the COVID-19 pandemic, Juro has been seeing an increased demand from the its community to be able to collaborate remotely on contracts. Juro has made its Basic plans FREE for up to two users, to help businesses create, negotiate, agree and manage contracts right away.
scoutbee is offering free Covid-19 Emergency Supply Chain Support, providing rapid emergency supplier-search for critical and scarce items such as surgical masks, protective suits, cotton swabs and more NGOs, public bodies, local and national governments and healthcare providers with urgent pharma or medical sourcing needs.
Conga is helping nonprofits and supporting those serving our communities with unlimited eSign. Conga is offering Conga Sign for Salesforce for free, to any 501(C3) nonprofit that is not a current Conga Sign customer, through 9/30/20. With Conga Sign for Salesforce, nonprofits can get essential fundraising letters, grant contracts, and forms signed instantly and remotely, so they can function more efficiently when their services are needed most. https://conga.com/sign-nonprofits
ContractNow is a contract management application through which you can centralize your contracts, identify key clauses and execute new agreements with integrated eSign. It is offering use at no charge until September 1st.