This blog post was updated on February 18, 2021.
Contract managers are under increased pressure to deliver value with reduced contract risks, reduced costs, and improved performance. Contract managers who regularly measure the success of their contracts against contract management KPIs can proactively readjust their contract strategy to ensure goal alignment drives critical and positive organizational impact.
Top 3 KPIs for Contract Management
Contract management KPIs should be specific, measurable, attainable, relevant, and timely. Industries, processes, and contracts are unique, so KPIs for contract management will vary. Still, it’s imperative for contract managers to review their contract lifecycle management process and develop success metrics aligned with organizational objectives accordingly.
To manage the success of any contract strategy, contract managers must measure results regularly. Contract management KPIs should encompass qualitative and quantitative information around contract value, incidents, contract tracking, and contract renewal.
Consequently, the three most common KPIs used to measure contract management success are contract efficiency, contract effectiveness, and contract risk. Under each KPI example for contract management are specific areas that should be used to measure your contract management ROI:
KPI #2 – Contract Efficacy: Performance metrics may include the number of contracts per type, program, customer, or vendor, annualized contract value, the remaining value of terminated contracts, order value variance, and historical legacy contract trends.
KPI #3 – Contract Risk: Performance metrics may include standard clause variance, amount of agreements expiring without renewal dates, number of improper electronic signature approvals or vendor authorizations, number of delayed contract approvals, and disputes resolved.
Leverage Contract Management KPIs for Increased ROI
Contract managers face the challenge of overseeing the contract lifecycle from contract requests to contract renewals while struggling to show stakeholders the significance of an often complicated and undervalued process. The goals of reducing contract risk, increasing productivity, and improving visibility are at the core of effective contract management strategies but can be difficult to achieve without defined contract KPIs combined with the right contract management tools. Utilize the abovementioned KPIs to successfully demonstrate the incredible value of contract management software!
Discover why thousands of contract managers trust CobbleStone Software with their contract management needs. To learn more about CobbleStone’s unparalleled contract management software, book a free demo with a Contract Insight expert today!
Are you interested in future-minded contract management software tools? In our blog - 6 Critical Contract Management Tools for 2021 – learn how to leverage industry-leading CLM software tools for streamlined, user-friendly, and low-friction contract lifecycle management success!