Five Things that can go wrong without IT Contract Management

By Matt Shanklin

Businesses of every size are parties to numerous types of contracts, from software contracts to landscaping contracts. Keeping up with contracts is, frankly, boring work. Thankfully, you can now use IT contract management to do the heavy lifting and keep up with every kind of contract your business is a party to.


Few things induce slumber as well as reading contracts and recording start and end dates.


For small start-ups in particular, it’s easy to think, “I’ll keep all contracts in this file folder so I can keep up with them.” The problem is, they all have different start and end dates, and it’s incredibly easy to lose track of time when you’re busy running a business. Here are 5 things that can go wrong if you don’t have IT contract management software.

1. Virus Outbreaks
Many anti-virus software packages are done by subscription through Software as a Service (SaaS) providers. Different vendors deal with subscription expiration in different ways. Some may still allow you to run the software, but without updates (which is risky considering how quickly a brand new virus can take hold), and others may stop services altogether. Going for even a day or two without virus protection can jeopardize huge amounts of data. IT contract management software can alert you when your anti-virus software subscription is about to expire so you can renew it or sign with another vendor.

2. Reversion of Software to Limited Capabilities
Office 365 is a subscription version of Microsoft’s Office suite, and unlike the software you install on your computers, it is run from the cloud on a subscription basis. When the subscription expires, Office apps go into “read-only functionality mode,” which quashes your ability to create new documents or edit existing ones. In other words, after your Office 365 subscription expires, you can only read and print documents with the software. While you can use the free SkyDrive Office Web Apps for basic editing, this isn’t sufficient for running a business. When your entire administrative staff loses half a day’s productivity due to a lapsed subscription, that’s money down the drain.

3. Failing a Software Company Audit
Licenses for software you purchase and install on-site usually have expiration dates. If the expiration date comes and goes, you’ll probably still be able to use the software, but if the provider should decide to audit your company, you could face enormous fines and penalties. Most companies feel the same about a software audit as they do about an IRS audit: it’s serious business. But with IT contract management in place, the appropriate people can be notified well before licenses expire so that they can be dealt with properly.


“If I can’t see the email saying we’re being audited, it isn’t real.

4. Hasty, Uninformed Decision Making
Say your company has been using the same lawn care contractor for a couple of years. You’re not really happy with their work and keep meaning to switch to someone else. If you don’t know when your contract with the old provider ends, you risk making a hasty decision that’s not in your company’s best interest, like renewing the old provider’s contract even though they’re not that great, because the grass out front is knee high. On the other hand, if you know your provider’s contract is up on June 1, the appropriate people can use the weeks leading up to that date to find a better provider.

5. Unnecessary Payments
Earlier in 2013, Sound Transit, Seattle’s regional transit provider, was found to have spent hundreds of thousands of dollars in late fees and unnecessary payments related to policing and security. A whopping $126,000 went to a private security firm in late fees due to inefficient bill tracking that delayed payments. The security firm was also paid time-and-a-half at times when it was neither required nor included in the contract: all of this due to problems interpreting contract wording. An efficient contract management program could have prevented some, if not all, of these problems and expenses.

Contract management is critical to businesses of every size. The cost of just one software audit can dwarf the cost of implementing effective contract

Photo Credits: Stuart Miles / freedigitalphotos.netstockimages /

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