Organisations with many departments and multiple sales channels facing numerous problems in the area of contract management. Among those can be lack of strict procedures who and when should prepare contract, who and why should this contract accept in formal way, finally who should decide from business point of view about risk and opportunities that specific contract can bring to organisation.
Most companies have some parts of Contract Lifecycle Management already implemented in their organisation, at least in some form of procedures for different departments. But only really innovative companies have a full contract lifecycle joined together in one holistic solution – Contract Lifecycle Management
In current situation companies still treat paper contracts as a must. Even though law regulations in most countries allow electronic signatures (using certificates, biometric signatures or two-factor authentication) paper is treated by legal departments as the basis for any further actions.
Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market repealing Directive 1999/93/EC (eIDAS Regulation), which came into effect on July 1, 2016 established (among other things) an EU-wide legal framework for electronic signatures.
This Regulation lays down foundations for more predictable legal framework in EU setting in order the definitions of electronic signatures indicating three signature levels:
- ‘electronic signature’ means data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign;
- ‘advanced electronic signature’ means an electronic signature which meets the requirements set out in Article 26 of eIDAS Regulation, which are as follows:
- it is uniquely linked to the signatory;
- it is capable of identifying the signatory;
- it is created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and
- it is inked to the data signed therewith in such a way that any subsequent change in the data is detectable;
- ‘qualified electronic signature’ means an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures
Magdalena Kluz-Litwa, senior legal counsel at Comarch summarises the Regulation: ‘Complying with the general principle of equivalence and non-discrimination of electronic signatures, which became the basis for the adoption of laws on electronic signatures worldwide, article 25 (1) of the eIDAS Regulation provides that an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures.’
One of the largest mistakes organisations make is forgetting about signed contracts after all the effort made in preparation and negations. Contracts should be tightly linked with other documents that are connected with the contract subject like correspondence with vendors, protocols, schedules or invoices. Contracts of the expenditure type are often treated as a budget where each invoice connected via our accounts payable solution will update the remaining money left to spend on any given project.
As Gartner said in Market Guide for Contract Life Cycle Management 2015: ‘CLM [Contract LifeCycle Management] is evolving from an operational record-keeping system, primarily used for legal audit purposes, to an enterprise-level core system addressing business risk, costs and the pursuit of revenue maximisation.’
Contracts always contain personal data. For this reason, companies operating in the European Union are subject to a number of legal requirements on the ways they archive and manage these contracts.
As Ángel Martinez Gonzalez, business solution manager of Comarch Spain, states: ‘The 1995 EU Data Protection Directive (95/46/EC) was a key milestone for regulation of personal data in the European Union, although some European countries had data protection laws long before, eg, Germany in 1977 or France in 1988. In Spain, the Directive was implemented by the Data Protection Act (Law 15/1999), which is one of the most restrictive regimes in EU. Moreover, the Spanish Data Protection Agency (AEPD) has a reputation of being one of the fiercest in the EU and a history of imposing some of the highest fines. As a result of the above, data protection compliance has been a challenge for many companies operating in Spain.’
Where to store a company data is still a headache for the managers. Marcin Geroch ICT Consulting Director from Comarch conclude ‘Fast and easy deployment of an infrastructure, reliable environment and lower TCO are undisputable benefits of the cloud services. Nevertheless there are still concerns about security that stop decision makers from processing sensitive data outside their companies. Either legal requirements related to data protection or contractual liability can be a blockers.’ .
Find out more about Contract LifeCycle Management in the digital era in Comarch’s white paper.
Maciej Dudek, Comarch ECM consulting director
Maciej Dudek – consulting director of Contract LifeCycle Management
Solutions at Comarch. Head business analyst of contract management projects at British Petroleum, Castrol, CEMEX and Pfeifer und Langen. Comarch has been a global software provider since 1993. Mr Dudek has joined the Comarch Group in 2010. He spent the year 2015 in the LATAM region, consulting legal counsel of emerging markets regarding a smooth transition from traditional to digital management of their departments. With a strong technical background, Mr Dudek helps in explaining IT aspects to business-oriented people and tries to fit business requirements into possible technical solutions.
Comarch
The Comarch Capital Group structure encompasses innovative companies employing 5,000 people, in 74 locations across 25 countries. Since 1993 Comarch has specialised in the design, implementation and integration of advanced IT systems. The company distinguishes itself through its comprehensive range of solutions for large enterprises. Comarch ECM Contract Lifecycle Management is dedicated to meet all technology-based and legal requirements (local law regulations) in multicountry companies.