Your CMS can be measured on multiple KPIs, but knowing which ones are right for your business is key. We’ve detailed the most critical KPIs to include on your dashboard
Your contracts are digitised and you’ve got a Contract Management System (CMS) in place, but now what? How are you ensuring you’re getting the most bang for your buck from your CMS? And can you prove it? It won’t be long before your CFO, or CIO starts asking.
There are countless KPIs you can use, so identifying the most applicable ones will help you reach business goals and go beyond just legal department achievements. Working backwards with KPIs is an effective strategy; think about what you want the CMS to help you achieve, then work out how to measure it.
Below we’ve listed the nine most relevant KPIs for most legal departments:
1. Contract lifecycle time:
By measuring how quickly deals are completed, and monitoring lead time you can improve efficiency goals. Requests, analysis, authoring of each module, negotiations, approvals, signatures, obligations, and renewals with forecasted dates should be included.
2. Approval delays:
Helps you understand where holdups and bottlenecks are occurring in the process, especially useful for sales contracts, which have a direct correlation to business performance.
3. Contract volumes per customer, partner, program type and geography:
This allows you to track contract progress within a region, the key players and partners involved, improving resource management and promoting a global business strategy.
4. Qualitative contract value assessments and scoring:
Measuring quality not just quantity is important to help understand where your contract terms might be below standard and delaying the process.
5. Historical trend performance analysis:
Evaluating past contracts helps determine which contracts were the most profitable, most efficient, and who are the best partners.
6. Contract obligation performance:
Preventing any errors or extra pay-outs by having a formal obligation management metric in place means fewer unexpected financial outlays.
7. Percentage of agreements expiring without renewals:
Vital to ensuring auto-renewals don’t just happen without prior renegotiation or termination. Automation with calendar functioning is essential.
8. Inappropriate authorization and signature approvals:
Inconsistency or security breaches lead to serious consequences for the business, so ensure an audit trail can be done with both digital and inked signatures.
9. Contract risk analysis:
Risk should be measured in two ways – contract-related (i.e.; uncontrolled changes, regulatory non-compliance, and implementation schedule) and supplier-related (ie; financial issues, huge staff turnover and service delivery failures).
Your CMS should be at the heart of your business; a centralised repository that powers your strategy, ensuring everything from HR to IT, R&D to sales and marketing is optimised and operating effectively. However, no organization is static, so to help reach your business and department goals, the KPI targets for your CMS will change in tandem with your business objectives.
Want to learn more? Connect with us to discuss your CMS strategy.