The management of contractual risk is a key component of any risk management framework and also part of the requirements of a company from a `good governance` viewpoint, since the majority of risks within an organisation and the mitigation of those risks are of a contractual nature.
Unfortunately, most organisations are not benefiting from the utilisation of a contract lifecycle management solution that could help to mitigate these issues. Thus, the following 10 questions should help to identify and crystallise the need for such a solution.
1. Are contracts easily located or visible should you require them?
2. Have losses been experienced as a result of the mismanagement of supplier or customer contracts?
3. Are all contracts within your company properly structured and signed?
4. Is the ownership clearly defined, does the organisation understand who is responsible for what, when it comes to contracts?
5. Do you ensure that your suppliers perform their services in accordance with their contractual obligations? Are SLAs managed appropriately?
6. Are you aware of the risks that your contractual relationships attract? If you are, do you mitigate these risks in an appropriate manner?
7. Can you accurately forecast your contingent liabilities associated with each contract?
8. Are all of your sizeable supplier and customer relationships supported by a proper contract?
9. Do you have multiple relationships with the same suppliers across different departments in your company?
10. Do you measure the BEE ratings of your suppliers at a contractual level?
At the recent Gartner Symposium in Cape Town, it was quoted: "In the face of mounting complexity and risk, it is inconceivable that enterprise management teams, compliance teams and auditors will allow enterprises to continue with the inadequate processes that most of them use today for managing contracts."(Gartner 2004)
"Our experience shows that the management of contracts and the inherent risks are no longer a nice to have. The pressure of King II and SOX is making this a mandatory business function. The days of the handshake passed a long time ago, organisations now have to understand their contractual risks intimately," commented Tony Maddison, Director of Realyst.
"Realyst is an experienced contract lifecycle management solution provider and we can provide the software, the consulting services and the best practice to assist organisations in this critical area of their business."
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Realyst was established in 1998 and is the leading provider of contract lifecycle management solutions in southern Africa. Realyst provides the technology solutions as well as consulting services spanning the implementation of best practice contract management methodologies and processes, education and training. Realyst offers gain share engagements designed to optimise the organisations contractual relationships and to deliver quantifiable savings using the Realyst processes and supporting technologies.
The services offered by Realyst include business process mapping, programme and project management, business consulting and where required, full business process outsourcing.
Realyst has developed and markets two software applications, Premises Manager and Contract Manager.
Premises Manager, launched in 1998, is a premises management system designed for the users of property and has achieved significant success in the retail sector.
Contract Manager, launched in 2002, is designed to facilitate the management of contractual relationships across the enterprise.
The Realyst user base includes several large corporate organisations including Altron, Discovery Health, Foschini, Johnnic, MultiChoice, Nike, Primedia and Woolworths.
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