How Do You Score On Contract Management?

 

One of the most recurring challenges that arises in property portfolio management is that of effectively managing the myriad of contracts that seem to rain down like snowflakes on operations executives. The difference is that unlike snowflakes they fall year round, regardless of the season.

The scope of service and supply contracts spans a multiplicity of arrangements, geographies, be they a single property, regional or national and of course, term and ‘fees and rates’. Every discussion I have inevitably surfaces three common observations:

1.       “I have a stack of contracts that I have to sort through and analyze and I have to read them all.”

2.       “It’s a thankless job but someone has to do it”

3.       “I can only imagine the negotiating leverage I would get if I knew what was actively being contracted for throughout my portfolio.”

A lot is being discussed about ‘Big Data’ analytics these days. Cool. But the fact is there are ‘Big Gains’ sitting right there in that stack of contract paperwork. I am also not suggesting that you hire contract negotiators, although in some areas they can be helpful, such as energy, trash and telecommunications procurement. The fact is, gaining control and analyzing your existing contract portfolio is truly not a big effort with today’s ready to go technology. It seems that the biggest hurdle is making a decision to just do it. Once done the automation and analytics flow easily.

Why do it? Take moment and see how you would rate yourself on the following 12 questions:

1.       How many contracts do I have?

2.       Who are all my suppliers?

3.       What are my rates and fees for similar services under different contracts?

4.       How do the terms in my contracts for similar services differ?

5.       What is my total portfolio spend in each contracted area – by service type and geography?

6.       Am I getting the correct volume discounts that are available?

7.       Which contracts need attention – now, because they are due for renewal?

8.       What are my ‘terms of service’ delivery?

9.       What are my contracted metrics for service delivery – the SLA’s?

10.   How many expired contracts do I have?

11.   Do I Have contracts that will soon roll over and renew at less than favorable terms?

12.   What are my risks and exposure positions?

 

Document management technology with search and discovery capability can help you get to those answers, speedily and cost effectively. The steps are few. It starts with capturing the documents (which is straight forward), identifying the essential contract elements, then extract the ‘hidden data’.

And there you have it. Meaningful, actionable insights, analysis and strategies can be at your figure tips.

As I always offer, if you would like to take a closer look at how this can work for you - send me an e-mail. I’d be happy to share my experiences with the state of the art in the technology of contract management.

Why Legal Executives will become the Leaders of IT in Multifamily.

IT departments, plans and strategies are becoming ever more subject to legal policies, practices and laws. In truth it is legal who will be defining what IT does and how they do it. The case is more severe for multifamily businesses that are public companies and are subject to Sarbanes-Oxley, SSAE Compliance (what was SAS-70) and PCI standards for all businesses for personal identity protections. Be on the watch for new regulations by the Consumer Financial Protection Agency surrounding collections.

The point is that IT must increasingly look to legal and legal needs to learn more about the ramifications of IT practices and the technologies they deploy or allow to be used.

Too often I encounter situations where multifamily Legal Departments are defined as an obstacle or inhibitor to progressive IT strategies. Or at a minimum offered up as an excuse for indecisiveness or the lack of progress surrounding IT projects. Legal won’t let us do that. Or, what we want to do will not be sanctioned by legal. The law says this or that. Many times it can be true but far too many times it is not. I can attest that many IT requests for legal sanctioning of plans are adjudicated based on anecdotal hearsay. The simple fact is that technology crushes in on legal policies that have not kept pace. It is inexorable fact of our life in the digital age. 

A lack of attention, cooperation and collaboration between legal and IT only sires renegade or rogue activity to emerge and fester deep in the organization.

Experience is teaching a harsh lesson.  To succeed in age of ‘digital everything’ multifamily Legal Departments need to become significantly more engaged in the IT policies and strategies of their companies. To not adopt this view in practice and as a core operating principle invites ever increasing risks and a debilitation of potential progress towards a more competitive and high performing business results utilizing advances in technology.

The world we are and will be increasingly working and living in is alive with risk and exposure. Sure, there are technology solutions for most everything we do. But what are the ramifications of misuse or malicious use? It will take increasing cooperation and collaboration between ‘legal’ and IT to define what should be adopted in the way of technologies and how those technologies need to be overseen and managed. This means that legal executives need to commit to a deeper knowledge and understanding of the technology. And, IT needs to have patience in ensuring that ‘legal’ is fully up to speed on strategies for IT use.

Allowing end users to define their own choices of software, devices and services in a ‘bring your own device’ to works era is a formula for eventual disaster. Not IF but WHEN.

My most frequently encountered example of unattended policy is the use of FREMIUM or ROGUE document storage services. End users set up their own personal ‘file stores’ and in doing so set up their own passwords and move internal documents to an off-site facility out of the reach of IT. Documents are now the ‘property’ of these individual users, no one knows what’s been sent offsite. If the employee quits, they take the documents with them. (What was Sally’s password?) There is no audit of document access or re-transmission. Snatching personal identity information is a breeze. Who can know?

Another area that is hugely anecdotal regards the use of electronic signatures and on what documents they can be used. I am sitting here with two messages from property management firms in the same state one allowing its use another disallowing its use all based on ‘legal’ interpretation. Really?  Hmmmm…

The point being made once again, is that legal needs to embrace and become active in addressing the march of technology and lead in policy formulation that eventually blends technology and business practice into a risk profile that is fully considered and well understood. If legal does not get involved in ‘leading the IT parade’ in a fully collaborative manner with IT, bad things will happen and progress will be stifled reducing competitiveness and business performance.

So maybe Legal should head (read ‘lead’) IT is not a question after all. They must.  And, IT executives need to warm to the new age of enabling legal’s growing necessary dominance over IT plans and strategies and work progressively and positively to do so.

The days of IT policies built in silos and on anecdotes are over.

-          Mike Radice