Contract managers are under increased pressure to deliver value with reduced contract risks, decreased contract costs, and improved contract performance. When you regularly measure progress and the success of contracts against contract management key performance indicators (KPIs), you can proactively readjust your contract strategy to ensure goal alignment drives critical and positive organizational impact. Read on to learn how contract management software can help maximize three important contract management KPIs for success.
Contract management KPIs (key performance indicators) are high-level performance measurements within an agreement between multiple parties. Contract management KPIs are a specific, real, time-based, attainable, measurable, strategic goals within an agreement that details the success of its components and how they relate to the overall contract objective. Contract management KPIs are the measurements for evaluating pre-signature and post-signature contract management processes.
Contract management KPIs should be specific, measurable, attainable, relevant, and timely. Industries, processes, and contracts are unique, so KPIs for effective contract management will vary. Still, it’s imperative to review your contract lifecycle management process and develop success metrics aligned with organizational objectives accordingly.
To manage the success of any contract strategy, you should measure results and contract database data points regularly. A KPI for contract management should encompass qualitative and quantitative information around contract value, incidents, contract review, contract tracking, and contract renewal.
Consequently, the three most common KPIs used to measure contract management success are contract efficiency, contract effectiveness, and contract risk management. Under each contract management KPI example are specific areas that you should use to measure your contract management ROI.
Contract efficiency performance metrics - the first of the contract management KPIs - may include contract lifecycle time, time to close deals, customer, vendor, or geographic trends, contract value assessments, and whether or not milestones are met.
Contract efficacy performance metrics - the second of the contract management KPIs - may include the number of agreements by type of contracts (program, customer, or vendor) in one’s contract repository, annualized contract value, the remaining value of a terminated contract, order value variance, and historical legacy contract trends.
Contract risk performance metrics - the final of the contract management KPIs - may include standard clause variance, amount of agreements expiring without renewal dates, missed contractual obligations, number of improper electronic signature approvals or vendor authorizations, number of delayed contract approval processes, task completion for terminated contracts, and contract terms disputes resolved. Leading contract lifecycle management software can provide you with a risk assessment matrix to visually assess risk within a centralized location.
While you can face the challenge of overseeing the contract lifecycle from requests through contract obligations and contract renewals and struggle to demonstrate this value to stakeholders, defining and maximizing the abovementioned KPIs with the right contract management tools can help you demonstrate the value of contract management software for increased ROI.
Now that you know how to define and leverage contract management KPIs, the ball is in your court. We have defined why the proper contract management system can help with meeting and exceeding contract management KPIs while getting contracts signed, executed, and analyzed in a record amount of time with the best tools in the market. Now, it’s time to choose the right CLM solution to help track progress, measure performance, and so much more. The leading solution for your needs is CobbleStone Contract Insight®.
CobbleStone Software is an award-winning contract lifecycle management software solution that has received widespread critical acclaim from CobbleStone® users and third-party analysts alike. CobbleStone Software has been a visionary leader in contract management software for years – having developed one of the first contract management solutions on the market. CobbleStone’s user-friendly and robust product scales with your unique contract management needs as contract complexity and contract volume increase.
CobbleStone boasts a litany of contract management case study stories in a variety of industries. It’s no wonder CobbleStone is named the CLM Leader in the SPARK Matrix™ Report.
Book a free demo with a CobbleStone Contract Insight expert today for better contract processing and tracking KPIs to analyze cycle times, long-term business goals, and more.
This blog post was published on January 16, 2019, and updated on July 22, 2024.
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