The education sector is currently at an inflection point in the face of unprecedented challenges. While it faces this critical juncture, it has to implement sweeping changes in the way it deals with various stakeholders. Well-defined contracts are the cornerstones of adapting to this fast-changing scenario. However, entering into contracts with different parties is seldom a one-time activity. It involves multiple stages like initiation, negotiation, approval, signing, performance and renewal.
The importance of contract management
Contracts dictate an educational institute’s relationships with all its stakeholders throughout its existence. As contracts cover all the risks, obligations and entitlements, every enterprise needs to invest in a contract management system. Such a system is essential in specifying all the activities throughout all the stages of transactions, ensuring appropriate ownership of contracts, and their monitoring and administration. Today, the education sector is facing multiple challenges like delays in graduation [1], ballooning student debt levels [2] and doubts about the relevance of on-campus education. Given these rising complexities, effective management of contracts has emerged as an urgent need for every organization operating in the education space. An efficient contract management system creates value by overcoming inefficiencies in everyday transactions. It also leads to a better cost management through streamlining processes and renders an effective control over risks and obligations.
Contract management in the education sector
Educational institutions invest a significant amount of time and money towards managing their contracts. Due to the high number of stakeholders involved, the contracts are also voluminous. Here are the peculiarities of contracts in this industry:
Large volume of contracts
The foundation of imparting high-quality education to students depends on how efficiently all the participants in the educational institution work with each other. Teachers, administrative officers, management executives, procurement staff, suppliers and vendors have to converge their efforts for the overall success of the organization. A large number of stakeholders naturally leads to a high volume of contracts.
Decentralized contracts
Educational enterprises have multiple branches which are situated at different geographical locations. Each branch of such an enterprise has to engage with suppliers and vendors locally. Consequently, contracts between these branches and suppliers are also geographically dispersed. On the other hand, managers and administrative officers prefer contracts to be available centrally to gain quick insights while tracking multiple contracts.
Authorization requirements
With multiple parties involved during day-to-day operations, businesses prefer their contracts to follow strict authorization regimes. Managers and administrators also wish to exercise a central control over access rights and validation of contracts. This need becomes more pronounced with the adoption of digital technology for learning platforms. Institutes want to safeguard academic records, personal data, financial information and identity information from unwanted persons. To achieve this, an education company must ensure authorization controls over its contracts.
Supplier relationships
Educational institutions have to rely on external suppliers to procure various items – for example, books, stationery items and information technology resources. They also outsource their non-core activities such as bookkeeping, security and healthcare. Contracts assume a significant importance as they cover all the aspects of transactions between the enterprise and its suppliers.
Regulatory compliance
Due to its implications on future demographics and society at large, policymakers are deeply involved in the education sector. This causes education to be a heavily regulated sector. Be it a school or a college, each institute has to deal with the challenge of complying with multiple regulations.
Inefficiencies of traditional contract management systems
A conventional contract management system is riddled with inefficiencies, making contract management challenges. Some common obstacles are:
Inefficient storage, retrieval and renewal
Educational institutes are complex organizations that have to process numerous contracts at a high frequency. These contracts include several terms and conditions. This causes paper-based contracts to occupy remarkable storage space. However, an average educational institute struggles to commit a sufficient space dedicated solely to contract storage. Consequently, such an institute undertakes remote contract storage. Besides, as branches are situated in separate locations, contracts of every branch are geographically separated. Retrieval and renewal of these contracts then become quite challenging as the education enterprise has to commit additional personnel and finances towards these everyday tasks.
Drafting issues
Inefficiencies in the education sector can affect learning outcomes for students. To protect itself from these drawbacks, an organization undertakes thorough due diligence of all its contractual parties. This includes sourcing data from government agencies, past performances and financial history which requires a significant time. Drafting contracts based on the outcomes of these background checks causes more delays – making the entire exercise extremely inefficient.
Issues in contract collaboration
As multiple branches, departments, divisions and their respective persons in charge are dispersed geographically, their contracts are also available at different locations. This leads to delays in obtaining approvals and signatures from various stakeholders. Thereafter, the signatory parties often update their terms based on how transactions evolve. However, as contracts are not located centrally, these revisions are not reflected in all the copies. As a result, agencies dispute their counterparties’ claims. Such disputes are adversarial to executing operations smoothly and prove disruptive for the educational institute to meet its objectives.
Conventional contracts are usually based on age-old templates which are then force-fitted to new transactions. But as transactions progress, unforeseen circumstances and ambiguities arise which are left unaddressed in conventional contracts. Consequently, agreeing parties enter into disputes for which paper-based contracts offer only a weak resolution mechanism. In this scenario, an educational institute is left to commit resources towards long-winded litigations which hampers its overall operations.
Security threats
A business in the education sector is in possession of critical data such as students’ information, financial data and intellectual property. Unauthorized access to this critical data may hamper the organization’s operations and, in the worst case, may even obliterate its trust among various stakeholders. Paper-based contracts present a threat to the organization’s critical data as they are prone to be stolen or copied without leaving an audit trail.
Lack of dashboard capabilities
Be it a student, a staff member, a supplier or a manager – stakeholders in the education sector often need to be aware of their upcoming deadlines and milestones. However, paper-based contracts offer no dashboard capabilities which give users an overview of all their contracts. This leads to frustrated users, and therefore, inefficient operations as people waste precious hours trying to figure out their upcoming contractual obligations.
The advantages of a smart contract management system
A digital contract management system overcomes all the setbacks of conventional paper-based contracts. It leverages digital data to enable faster management of contracts throughout their lifetime – from initiation to renewal.
Automation in contract management
A digital contract management system allows the educational institute to streamline all its contract-related processes. Efficient automation replaces laborious manual drafting, execution, approval and renewal of contracts. It also helps in preventing inaccuracies in contract management. Digital signatures save the organization from spending hours in obtaining physical signatures from signatories present at various locations. In the end, the organization reduces the time and costs involved in contract administration thereby adding to its bottom line.
Faster search and retrieval
A digital contract management system is essentially a central repository of all the contracts. Contract managers can easily search and retrieve a contract using a simple text search embedded into the system. The system enables managers to even search a particular clause or term within a contract. This capability goes a long way in saving time in contract execution and renewal.
Data-driven dashboards
As an intelligent contract management system is based on digital information, it can effortlessly extract relevant data from the contracts and leverage it to create powerful dashboards. These dashboards also offer analytical tools to alert users about deviations from obligations. For example, SignDesk’s contract management system improves the overall collaboration process across departments by tracking signature statuses and sending notifications on its smart dashboard. Even the renewal process improves significantly as executives are no longer required to spend their resources on searching and retrieval of contracts.
Proactive insights
A smart contract system is equipped with powerful contract analytics. Once it extracts the relevant contract contents, it employs rules-based logic to analyze user behaviours and provide proactive insights. This makes the system self-sufficient in suggesting clauses, AI-assisted drafting, evaluating risks and estimating the time to execute a contract. The organization benefits immensely on account of better business decisions and smarter control over contract risks.
Efficient onboarding of students and third-party vendors
A digital contract management system offers automated workflows which significantly minimize the errors of manually administering contracts. The system extracts the relevant variables governing the contract and integrates them into future contracts. In turn, the educational enterprise can draft contracts quickly, instantly share them online and use eSignatures to get them signed. In terms of digital student onboarding, this means faster access to financial aid documents, course enrollment forms, permission slips, student forms and parent consent forms. An enterprise can also onboard third-party vendors faster as contract turnaround times witness a substantial improvement. This frees up important resources, thereby allowing the educational organization to focus on meeting its desired objectives.
Seamless collaboration
An educational business handles a high volume of critical and confidential data as well as a number of third-party vendors. This makes it important for the organization to establish high standards of risk assessment. An intelligent contract system possesses automated workflows which accelerate the due diligence process. The in-built templates of a smart contract system also help by avoiding errors and minimizing missed details. As the system is always online, students, teachers, suppliers, administrators and managers can collaborate instantly to finalize the contract terms irrespective of where they are located. Such a system also allows an instant execution of contracts through its eSignature integration. Further, it enables easy regulatory compliance using the e-payment feature along with its e-stamping capability. For example, SignDesk’s smart contract system allows organizations to pay stamp duty online which helps speed up legal compliance.
Enhanced Security
The highly sensitive nature of data contained in contracts demands a robust security system. However, physical files, folders or cabinets – wherever they are stored, paper-based contracts are susceptible to theft and misplacement. A digital contract system enables data encryption and authorization rules which prevent contracts to fall into the hands of malevolent users. Besides, e-signatures enable contracts to possess an audit trail – leaving no doubt as to when, where and by whom a contract was signed. In essence, an educational institute would do well to adopt a contract management system, such as one designed by SignDesk, to ensure a high level of data confidentiality and contract security.
In summary, today’s educational institute could no longer rely on a traditional contract management system to fulfil its contract needs. As the sector stands at the cusp of a transformation, it must employ a new-age digital contract management system. Such a system would not just be a worthy investment in terms of overcoming existing challenges in contract management but would prove to be a strategic tool to achieve the organization’s goals. It would unlock the true value of contracts by enhancing the speed throughout their lifecycle. Additionally, an intelligent contract management system provides advanced security to ensure that the organization’s sensitive data is never compromised. These advantages make it imperative for an education organization to establish an intelligent contract system quickly as delays would only intensify the drawbacks of a traditional system.