Go To Market
Evaluation & Award
Reporting & Analytics
See an overview of all the procurement modules.
World Class Security
See why customers choose the VendorPanel Platform.
Bert Myburgh | 30 Mar 2022 | 7 min read
Using a Contract Management Spreadsheet? Here's Why It's a Bad Idea
Do you manage your contract data in a spreadsheet? If you do, it's time to reconsider how you've been monitoring contracts, since there are more secure and user friendly ways to go about it.
In this post , we'll cover why you should ditch the excel templates, and how you can track contract performance in a more efficient way.
The Risks of Using Spreadsheets for Contract Management
Spreadsheets are useful. They’re used in almost every organisation for a reason – data entry is easy, and you can modify and share them on a whim.
However, this is exactly why they’re a terrible method of managing contract data. Here are some of the ways using spreadsheets can trip you up.
Lack of control
Spreadsheets are solitary files, practically devoid of system-wide controls. That means almost any employee can create, access, manipulate, or distribute the data. Since there's very little audit or version control, things can be approved in a spreadsheet with no record to back up who ticked a decision off or why.
Spreadsheets rely heavily on manual data entry, leaving employees open to making mistakes. Even minor errors can have knock-on effects if they're not fixed in time. And when they do occur, it can take hours of data cleaning to identify and correct them.
The data used to run your organisation needs to be accurate. Inaccurate data that comes from errors can lead to unintended costs, non-compliance and control issues.
Poor reporting capabilities
Generating reports from spreadsheets can take hours and it can be difficult to go beyond basic analytics without being a spreadsheet guru. If you need real insights, or data pulled from various sources, a spreadsheet is just not going to provide it.
Lack of a secure audit trail
In an organisation with multiple locations and remote workers, monitoring and analysing data from multiple sources can overwhelm spreadsheet functionality. During an audit this is even more stressful, as there is no trail of staff activity. A secure audit trail will digitally track every action taken, identifying who did what and when.
It’s difficult to easily enforce a standard way to enter, organise, and analyse data in spreadsheets. Every staff member may do it differently, even if there is a contract management spreadsheet template in place. This is especially problematic if an employee leaves with the key to the system in their head. When someone other than the creator comes in, working with or simply understanding the data can be an impossible task.
No automated workflow or notifications
And significantly, there are no automation features native to spreadsheets such as automated workflow and communication. This means that deadlines can be missed, for example when a contract expires.
Key questions to expose how risky spreadsheets are in your organisation
- How many versions of a single spreadsheet are out there? Which one is correct?
- Who can see or modify the spreadsheet? Should they have this level of access?
- Are the formulas and calculations accurate?
- Is there documentation of the way this spreadsheet processes data?
- How do you ensure that unauthorised users can’t manually over-ride content?
- What built-in audit function tracks changes and restricts authority?
- How is the current version of this spreadsheet backed up?
However you look at it, spreadsheets for contract management are complex to set up, a nightmare to keep track of and risky to maintain.
A Better Way to Manage Contracts
What do contract professionals want from a solution that spreadsheets can’t give them?
If contract lifecycle management is generating, negotiating, approving, implementing, monitoring and reviewing legally binding contracts, then any worthwhile contract management software must make that job significantly easier and more cost-effective.
(For a more detailed read, see The Ultimate Guide to Contract Management Software.)
Digital solutions based on automated workflow
Contract management is like a journey you might take from one end of a city to the other.
Imagine navigating your way through town if the traffic lights were all out, the roads were full of sinkholes, and the signs had been vandalised. And to top it off, you’ve left your phone and to-do list at home and can’t remember the things you need to buy.
This scenario describes managing contracts without using automated workflow. It is an imperfect illustration but, if you use workflow properly, you will clear a path through the clutter and confusion created by manual control.
What is automated workflow?
Put simply, workflow automation takes a string of tasks and automates them using a workflow creation tool. It is moving from one process step to the next in a logical chain that makes up a business procedure.
Here are some of the significant advantages of using an automated contract management solution over using a manual “spreadsheets and email” approach.
Manage compliance obligations
Pressure to be compliant is driving the move away from spreadsheets. Staying compliant can give managers sleepless nights but, with a well-designed workflow, compliance rules can be encoded into the solution to create compliance by default and a secure audit trail.
Data security and user permissions
With a digital solution, data security is built-in. Having user permissions assigned at individual and group levels gives control as to who can see and do what. This is valuable when it comes to compliance and tracking and is a defense against corruption.
Approvals and sign-offs
To help remain compliant, there needs to be built-in approval functions that can be logged, managed and traced. To this end, contract management solutions can use electronic date stamps and e-signatures which are linked to a security level.
A single source of truth
By having a centralised system that can integrate with other solutions in the company, all the contract documentation is in one place with no duplicates. There is just one contract database, with one controlled version of each contract.
A secure audit trail by tracing every action
Every action performed in the system is recorded and can be accessed for audit purposes, including contract-related emails. The log of activities cannot be tampered with, and all actions can be reported on.
What is the point of having a database full of information if you cannot sort it into logical representations that unlock business trends and empower decisions? Reports, charts, graphs and dashboards are powerful tools that put strategic, analytical data into the hands of managers.
Control over workflow design
Although workflow is an automated process, an organisation still needs to have the freedom to configure the steps as required according to the predefined business rules. For example, escalations can be automated using a task scheduler to govern the record flow, which is useful when an action has not been taken and a red flag needs to be raised and alerts sent to the relevant person.
Eliminate human errors
Issues crop up when we rely on manual labour to successfully and consistently do tasks that are essential to the business. While it is usually unintentional, these processes get delayed or errors occur due to simple human weaknesses, such as forgetfulness, being ill or over-stressed.
Also, a contract management solution can run processes at speeds that would be impossible for a human, e.g., report creation, document assembly, sign-offs, workflows, etc.
Not only are errors greatly reduced, but the data itself is more accurate and consistent, and each employee is given a clear idea by the workflow rules what needs to be done and by when.
The flow of information is key to the success of any business, and the old manual ways that still linger in many businesses can clog this process. By automating workflow, employees can become more productive and responsive to real-time information.
An automated contract management solution helps your company work like a well-oiled machine that delivers on time and up to client expectations with no shoddy admin, delayed payments or missed deadlines.
Why the Arguments Against Digitally Transforming Don’t Hold Water
When we introduce automated contract management to businesses, we sometimes hear one of two reasons for not adopting it. Both are based on a lack of information.
1. “This is how we’ve always done it…so that is what we do!”
The reality is that people often don’t take a step back and analyse the things they do every day. If they were to go through each step in a process, they would begin to see the time-consuming and disconnected steps, the pitfalls and gaps which cause delays and errors.
It’s helpful for any organisation to map out this flow of tasks and begin to challenge why they do this… and is there a better way?
2. “Our processes are too complex for software to do.”
There is no contract management process that’s too complex for an automated solution to handle. If a company’s procedures require human judgement and intervention, a workflow can deal with that too with, for example, digital approvals.
By automating and digitising contract management processes, a company can shake off inefficiencies and be set up for greater productivity and growth, confident that the right things are happening at the right time.
With a VendorPanel Contract Management Solution, all activities of the contract life cycle are managed and tracked in a single, powerful system, which can also be integrated as part of a full source-to-pay suite. Contact us for more details.
Unearth top seven sourcing opportunities for Mining in 2023
Read our summary of the seven most significant challenges facing procurement teams…
Five Ways to Start FY24 on the Right Track
With an ever increasing focus on social responsibility, improved work-life balance…
Ready to Know More?
Get in touch, we'd love to hear from you.