What are the common challenges and risks of operational due diligence for contract management software?

1 Software capabilities

One of the first challenges of ODD for contract management software is to determine whether the software meets the current and future needs of the business. This involves reviewing the features, functionality, and scalability of the software, as well as its compatibility with existing systems and platforms. Some of the questions to ask are: Does the software support the types and complexity of contracts that the business handles? Does it have the ability to automate workflows, generate reports, and provide alerts and reminders? Does it comply with the relevant industry standards and regulations? Can it handle multiple languages, currencies, and jurisdictions? Can it integrate with other software applications, such as CRM, ERP, or accounting? How easy is it to customize, update, and maintain the software?

2 Software costs

Another challenge of ODD for contract management software is to assess the total cost of ownership (TCO) of the software. This includes not only the upfront purchase or subscription price, but also the ongoing costs of implementation, training, support, maintenance, and upgrades. Some of the factors to consider are: How long will it take to implement the software and what resources are required? How much training and support will the users need and how will they access it? What are the terms and conditions of the software license or contract? How often will the software need to be updated and what are the costs and risks involved? How will the software affect the operational efficiency and productivity of the business?

3 Software security

A third challenge of ODD for contract management software is to evaluate the security and reliability of the software. This involves checking the data protection, backup, recovery, and encryption features of the software, as well as its vulnerability to cyberattacks, breaches, or errors. Some of the questions to ask are: How is the data stored and accessed by the software? Is it cloud-based or on-premise? Who has access to the data and how are they authenticated and authorized? How is the data backed up and restored in case of a disaster? How is the data encrypted and decrypted? How often is the software tested for security and performance issues? How are the software issues reported and resolved?

4 Software compliance

A fourth challenge of ODD for contract management software is to ensure that the software complies with the legal and regulatory requirements of the business. This involves verifying the accuracy, completeness, and validity of the contract data and documents, as well as the auditability and traceability of the contract actions and transactions. Some of the questions to ask are: Does the software adhere to the contract terms and conditions, as well as the laws and regulations of the relevant jurisdictions? Does it have the capability to monitor and enforce contract compliance and performance? Does it have the functionality to generate and store audit trails and evidence of contract activities? How does the software handle contract disputes, changes, renewals, and terminations?

5 Software alignment

A fifth challenge of ODD for contract management software is to align the software with the strategic goals and objectives of the business. This involves ensuring that the software supports the business vision, mission, and values, as well as the stakeholder expectations and needs. Some of the questions to ask are: How does the software fit into the overall business strategy and operations? How does it enhance the customer experience and satisfaction? How does it improve the supplier relationships and collaboration? How does it increase the revenue and profitability of the business? How does it create a competitive advantage and differentiation for the business?