What Is IT Contract Management?
Contract management is the management of contracts made with customers, vendors, partners, or employees, according to Wikipedia. IT contract management is essentially the same thing, except it’s related specifically to contracts having to do with a business’ information technology systems.
Here are just a few types of IT contracts:
- Software licenses
- Hardware licenses
- Online subscription-based services
- Maintenance and service contracts
All of these contracts have different terms and conditions, and the contracts may be acquired in different ways. Trying to manually manage contracts doesn’t make sense in an age when just about anything can be automated. Manual contract management is error-prone and unwieldy, even for the most organized manager. Hence, IT contract management.
IT contract management software is one of the best investments you can make because of the broad reach of good contract management. Here are 5 surprising benefits of superior IT contract management.
1. Rebate Management
Have you ever given up in frustration while trying to figure out the intricacies of getting a five dollar rebate on cat food? Try figuring out a hardware or software rebate. If you own a small business and need to control costs across the board, such rebates can be worthwhile, if you have a good way to manage and track them. With flexible IT contract management, you can store scans of UPC codes, receipts, and invoices, and receive notifications when you can expect your rebate. That way, if it doesn’t come through when expected and you have to figure out what happened, you can access all pertinent information using any web-connected device.
2. Keeping Your “SOX” Up
The Sarbanes-Oxley Act, nicknamed SOX, was passed in 2002. It spells out how companies must certify the accuracy of financial information and the penalties that apply for fraudulent accounting practices. Companies bound by SOX must have their CFOs and CEOs certify that they use effective controls and procedures to ensure accounting accuracy. Contract management software can be an effective part of a company’s SOX compliance strategy, since it reduces risks of contract noncompliance. Effective contract management software helps keep everything above board, clearly laying out expenditures in official contracts and providing necessary transparency for efficient, ethical business practices.
3. Evergreen Contract Elimination
Have you ever had an automatically-renewing subscription that you kept forgetting to cancel? Your print edition of TV Guidemay have continued arriving faithfully long after you ditched cable for Netflix because you never could remember when it was supposed to renew. In a medium-to-large company, such “evergreen” contracts of all kinds can add up to a lot of wasted money. By using IT contract management software, you’re notified before an automatically-renewing subscription renews, so you can cancel it if you don’t need it anymore.
4. Fewer Hard Feelings
Does your company hire services on contract? Maybe you hired an independent contractor to design your new logo, or perhaps you hired a writer to edit and polish an annual report. When these contracts are managed with contract management software, you don’t run the risk of forgetting to pay a contractor when you said you would and causing hard feelings. Plus, if a few years pass and you want to hire a contractor again, you can easily look up his or her name in your contract management database.
5. Return on Investment
Ineffective contract management costs US businesses $153 billion per year in missed savings opportunities. Contract management errors cost the typical company up to 12% of annual contract expenditures. Implement effective contract management software and you can achieve payback of 150% to 200% in just one year. Can you think of any other single investment you can make with that kind of payback? Managing contracts effectively is one of the best things you can do for your company’s bottom line.