Digital Contract Management Platform Pays OffBy Eileen McCooey | Posted 2017-08-02 Email Print
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An SaaS solution helps an international business manage complex contracts and negotiate deals, while increasing consistency and compliance, and reducing risk.
Keeping a tight rein on contracts is a tall order for a global company that deals with thousands of agreements and scores of suppliers and customers around the world. Inconsistencies and loopholes can create confusion, cost time and money, and expose the organization to financial and legal risks, including lawsuits and regulatory fines.
Novelis, a leader in aluminum rolled products and recycling, turned to a cloud-based software-as-a-service (SaaS) solution to meet these challenges. The move was part of a larger initiative to centralize and standardize business operations, including contracts and relationships with suppliers and customers.
Until 10 years ago, Novelis was using a decentralized business model to run its 24 operating facilities in 10 countries and to manage 10,000 active contracts a year. That resulted in a disjointed flow of information and inconsistent pricing, terms and conditions, recalls Chris Courts, vice president and deputy general counsel of the Atlanta-based company. Management, external auditors and legal teams were unable to quickly and consistently answer questions, and unclear contractual terms led to litigation with major customers.
"We realized It made sense to gather information centrally and develop a single set of guidelines for sales, procurement and legal matters," Courts says.
Providing Digitized, Actionable Intelligence
The first step was creating online data rooms that put all contracts in one space. However, getting information out of contracts was still a time-consuming manual process. So Novelis began searching for better options. A number of vendors pitched virtual file rooms, but those didn't give the company what it wanted.
One vendor, Pramata, offered a different approach: a platform that digitizes information and converts it into actionable intelligence that's delivered in a contextual view.
"We sent them about 50 contracts and identified dozens of key data elements we wanted to highlight," Courts explains. "They sliced and diced the data and summarized the contracts in a standard way that enabled us to compare them. We didn't have to read all 65 pages of a contract to quickly get the intelligence we needed. When Pramata showed us that, we were sold."
Once Novelis signed on, Pramata collected, cleansed and organized 10 million pieces of data into a centralized system. Issues that needed attention became apparent. "For example, we noticed that 104 contracts, all from Asia, had no limit-of-liability provision," the vice president recalls. "We discovered that was omitted from the form they used to generate contracts, so we quickly added it and brought them into compliance. "
The system also enabled Novelis to achieve new levels of consistency. "We were using many different ways of expressing payment terms, such as the second Tuesday or the 15th of the month," Courts says. "We settled on specific descriptions and mapped them throughout the system."
AI Helps Ensure That Data Is Accurate
It takes one business day to turn around contracts. Pramata extracts key information and loads it into an 80-point data model mapped to Novelis' practices and methods. A combination of artificial intelligence (AI) and review by Pramata's legal specialists ensures that data is accurate.
"That gives us a high degree of confidence in the information we are getting," Courts stresses. "We talk with the reviewers regularly, so they're not just nameless people, but an extension of our team."
About 15 super-users within Novelis upload contracts to the Pramata platform and run search queries, creating custom reports for the 300 or so users within the sales, procurement, accounting, legal and audit staffs. The cloud-based platform is accessible from anywhere with internet service, but given the confidential nature of the data, it requires a device connected to the Novelis VPN.
Since migrating to the system, the legal and sales teams have been able to ensure that standardized—often more robust—terms for pricing, volume and liability are included in every contract. The company is exposed to less risk, as evidenced by improved legal-risk scores based on deal quality, conformity to the playbook and compliance.
The overall business benefits as well. Global managers and regional sales teams can see dozens of characteristics that enable them to craft better deals, including negotiating for better payment terms. With insight into historical data, the company can build processes and guidelines for sales negotiations and contract practices.
Novelis continues to find new applications for the Pramata platform. "Traditionally, HR information such as offer and bonus letters and personnel files were managed through our file system," Courts explains. "But with 12,000 employees, this can be overwhelming. We're now starting to put this information into Pramata."
The company is pleased with Pramata. "It's become such a fundamental part of our company," Courts reports. "It underpins our compliance efforts and is integral to our business."