Decentralized spend. Outdated contracts. Missed savings opportunities in contracts. Fragmented company policies on negotiation language. Contracts that no one knew were up for renewal.

Eastman Kodak Co. had all of those problems, and the company knew it had to tackle them head on, if only just to increase compliance with Sarbanes-Oxley (SOX) mandates. In fact, Kodak's external auditors told company executives that outdated contracts could hinder the transparency and accountability required by SOX.

So, five years ago when the Rochester, N.Y.-based company started its transition from film to more digital technologies, Kodak's then-CFO Bob Brust mandated the centralization of contracts.

It wasn't easy, says Ann Kerwick, who was in charge of the centralizing effort.

The problem was that the company had vastly different procedures for handling contracts, even within the same business units. "Auditors recommended that we improve from a process standpoint within the company to be more SOX compliant," says Kerwick. "The view was that a corporate-wide contract system would assist us in implementing common procedures that would be used throughout the company."

Kodak formed a team to determine what exactly the company needed in a contract management system that would not only fit the needs of its decentralized business units but also be easy to use and drive adoption. After a detailed evaluation, the team decided they needed the following abilities and features in a new contract management system:

• The ability to create contracts, negotiate terms and track approvals with an audit trail
• A repository of contract meta-data that could be updated as needed
• Flexibility for the software to function across very different business units, product lines, and approval matrices
• A global scope to allow communication with businesses in China

After some preliminary benchmarking, Kodak sent out 10 RFPs to software suppliers, eventually narrowing the field down to four. After more trials, the company chose iMany of Edison, N.J. as its contract management software supplier.

But selecting a software suite was easy in comparison to implementation. This is where Kerwick came in to the process, and before any software could be rolled out across business divisions in the company, she had to evaluate standard business processes across the decentralized structure of the company. Somewhat unexpectedly, the software implementation forced the company to scrutinize some of its practices in new ways. "At that point, as a company, we had to get a handle on boilerplate standardization of contracts and identify approval matrices—who approves pricing, which lawyers are involved in negotiation vs. final review," says Kerwick.

While corporate contracting started to standardize the business end of things, iMany and Kodak's IT group teamed up to prepare the software's roll-out. iMany's ability to integrate and interface with software that Kodak already had in-house was a huge part of its appeal, and it took a heavy amount of collaboration between the two companies' IT teams to get the contract software running with the in-house programs. "There has to be awfully good teamwork between IT and your business folks during implementation," Kerwick adds. "It's always going to take longer and be more complicated than you think it's going to be."

Once Kerwick and the corporate contracting team had a better handle on what processes and standards should be used in their contracts, they opted to select a small team to trial run the software. Many of the business groups that Kodak looked at to try the software first had a patchwork of home-grown contract management systems in place—in some cases a mix of paper and spreadsheets. This wasn't so much a problem with simple, one-time sales contracts as it was with long-term ones—old paper contracts left in file drawers until they are up for renewal can be a lost opportunity for price renegotiations.

With data scattered across paper and spreadsheets already standard practice in some groups, Kerwick made sure to ask each business group if they had the time and staff needed to enter their data into the new system. Some of the groups responded they didn't have enough contracts to warrant a big change or heavy time investment for the new system. Others, however, saw that they could get a big return out of some front-end work with the new contract management system.

The original plan was to start the pilot program groups within six months of signing a deal with iMany, but Kodak sold the first group slated to test the software, setting the timeline back a bit. Enter the graphic communications group. That group volunteered to try the system first.

"This was a group that had a volume of contracts that they wanted to be able to look at, view and report on a fairly regular basis, and they saw the value of getting the contracts into a database where they could since they didn't already have an existing database," Kerwick says.

They started using the iMany system "as a repository for some of their more complex agreements," says Kerwick, and several more groups within Kodak, including its consumer digital group, are slated to start using the system this year as well.

Inevitably there's reluctance from the people who have to use new software in their daily work, but in the long run, the success of software depends on how often and how enthusiastically people use it. Especially when it comes to contract management software, a user base not leveraging the software means rogue spend slipping through your fingers.

A few of the challenges in getting people to use the software stemmed from problems Kodak had to work through with iMany. One of the first problems was as seemingly simple as the physical formatting of the contracts—many users didn't like how the new software changed how their contracts looked, says Kerwick. In the first iteration of the software, the appearance of contracts as they were created and modified—for instance, as they went through negotiations and approvals—didn't sit well with some users. "We had some resistance on our end from folks who didn't want to change the look of the contracts," says Kerwick. Thankfully in a subsequent update of the software, customizations were added that gave users more options about how to change the appearance of their contracts. Once that happened, more people latched on to the contract software.

A second snag Kerwick's team hit with the software roll-out was on the always-sensitive issue of contract language. Since the software was meant to bring together many disparate business units, it was inevitable that these units had different boilerplate language for their contracts. When it came time to merge the language into one database, there was friction, especially since not every business unit needed the same language in their contracts. One thing Kerwick wanted to avoid completely was forcing all these units to adopt the same exact language—from talking with previous contract management software users, she found that a "one size fits all" approach to language standardization didn't go over well with the software users. So instead of trying to force one change over all the units, Kodak opted for more flexibility within the program.

"The software is flexible enough to accommodate different language for contracts," says Kerwick. "People have the choice to change the language of the contract depending on the business area they're in."

Much of what some Kodak employees resisted in the new software came down to the idea of change itself, as well as skepticism that the software would really boost efficiency. Many employees resisted changing over to the new system because it meant more work for them without any visible results. For example, one employee might have to enter all the up-front data for the contracts, which added three or four more steps to their normal process, while all the benefits of that work would be seen further down the line. In that case, management- and executive-level support became crucial to keeping adoption of the software on track.

"In order to get [software] ultimately implemented, you're going to need upper management, because it doesn't happen overnight and priorities do change, resources get spread thin or other projects come up," says Kerwick. "It's important to understand the timeline and what the resource commitment will be for that length of time."

In Kodak's case, use of contract management software was driven by a suggestion from auditors as well as the CFO for added SOX compliance. "With a company this big, you don't have the same processes throughout the business, and that's okay as long as they're good processes," says Kerwick. "Variations in processes are okay, but (instilling the idea that) you can't have no processes at all, was viewed as a way of ensuring that we had good processes everywhere."