A smaller company may need to retain information about just a few key leases at a time – perhaps an office lease, a royalty agreement, a long-term purchase agreement, or a maintenance contract. However, the situation is entirely different for a large firm with many subsidiaries or locations, or a company in a contract-intensive business, such as building leases, which may have to keep tabs on hundreds or thousands of contracts. For these firms, a spreadsheet summarization is no longer the answer.
Contract management systems (CMS) are designed to organize contracts and keep management apprised of key contract information. They are particularly valuable for warning management of upcoming contract buyout or renewal dates, thereby avoiding penalty payments and reducing the risk of contract nonrenewal. A CMS stores either key contract information or the entire text of a contract, while also storing a digital image of each contract. Some CMS suppliers are:
- Emptoris (formerly DiCarta) (www.emptoris.com)
- Accruent (www.accruent.com)
- Nextance (www.nextance.com)
Be warned, a CMS system is not inexpensive – a basic solution can easily cost $250,000, and spiral upward from that point, depending on implementation costs.