Sally Murdoch, the Public Sector Director at Unit4, discusses the vision for contract management in local government
Unit4 evolves procurement in local government with a new approach to contract management with a unified Source-to-Pay journey.
With 3rd party spending increasing and the reliance on procured goods and services rising throughout the public sector, a robust procurement strategy is integral to delivering both economic and social value. This is especially true with inflation driving costs higher and energy costs spiralling, causing disruptions to the supply chain.
To demonstrate the value that can be created by a solid procurement strategy, we’d like to focus on just one part of the procurement cycle that can pay dividends if properly addressed: end-to-end-contract management. Indeed, the recently updated National Procurement Strategy for Local Government In England 2022 explicitly highlights the importance of improving end-to-end management as a priority for local governments in the immediate future.
Given the importance of contracts to your service delivery, there are clear advantages to be gained from effective contract lifecycle management and gaining control of end-to-end processes. A mature approach to this type of management can be especially valuable in understanding and controlling spending –, particularly for cash-strapped local governments – and is vital in improving relationships with key commercial partners to ensure a high level of service delivery.
By optimising the processes involved in contract management and adopting contract lifecycle management, a local authority can gain control over every stage of the contracting process. From risk assessment through onboarding to contract renewal and termination, which in turn improves contract performance and value.
There are four ways you can realize value from mature contract management
- Improved efficiency
- An efficient system improves your people’s efficiency and productivity. Clear processes and pre-set workflows allow for greater administrative control and continuous improvement, all while giving your teams more time to focus on service delivery in confidence.
- Improved cost-effectiveness
- Thanks to better visibility of data, practices, workflow performance, and audit trails (and better control of finances), successful contract lifecycle management can often help reduce operating costs.
- In the private sector, poor end-to-end contract management has been reported to cause companies an annual revenue loss of around 9%. If a comparative level of loss is assumed in the public sector, we can immediately see how any government body can benefit from improving its process.
- Effective risk and compliance management
- Successfully managing a growing number of contracts and suppliers requires a concomitant increase in supplier relationship management and contract monitoring to ensure successful governance.
- Implementing a strong contract management process improves your ability to comply with regulations and manage 3rd party risk – making it easier to continually audit contracts to ensure suppliers meet their commitments.
- Improved transparency
- Transparency is an essential element of successful relationships with both your citizens and your suppliers. Transparent management of contracts helps improve communication, makes all information readily available, and allows everyone involved in the contract to be accountable for their commitments and ensure successful service delivery.
The principles of successful contract management
Successful end-to-end management rests on the following four core principles:
- Centralize
- Bring all your contracts together into a single unified repository or “contract library.” Centralizing your contract documentation transforms contracts from a series of discrete agreements into a single source of truth about the way your organization handles supplier relationships which can be accessed, analyzed, and referred to easily.
- Standardize
- Using pre-agreed clauses and languages reduces the time necessary to create new agreements, helps bake risk-management best practices into each new contract from the start and allows your people to negotiate and create contracts from a position of confidence.
- Automate
- Automation of basic administrative processes is the fastest, most effective way to streamline any system, including Contract Lifecycle Management. By moving to an entirely digital strategy, reducing the need for human input, and incorporating a high degree of automation, two advantages are gained: speed and risk reduction.
- Monitor
- Keeping tabs on your contract collection, analyzing performance, and monitoring for internal compliance lets you determine whether you’re receiving the goods and services you should be – and whether you’re fulfilling your commitments too.
How software supports effective contract management – and how Unit4 can help you
Contract lifecycle management software creates the foundations of a better approach to management by providing a centralized repository, automated processes and workflows, audit trail, data tracking and customized reporting capabilities that allow your procurement team to stay on top of every commercial agreement your organization makes.
Unit4 has been creating enterprise software specially designed with the needs of government organizations and the public sector in mind for over 40 years. Our new Unit4 Source to Contract solution by Scanmarket incorporates a fully integrated Contract Lifecycle Management module that helps you to create contracts designed to maximize value over the life of an agreement, automate many processes through the use of templating and integrated data, and iterate on previous agreements to make continuous improvements.
This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International.
