1. © 2013 IBM Corporation IBM Emptoris Contract Management Review of Contract Authoring Administration and Usage 2016

2. © 2013 IBM Corporation Disclaimer  IBM’s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice at IBM’s sole discretion.  Information regarding potential future products is intended to outline our general product direction and it should not be relied on in making a purchasing decision.  The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code or functionality. Information about potential future products may not be incorporated into any contract. The development, release, and timing of any future features or functionality described for our products remains at our sole discretion.  Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user's job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here. 2 IBM Confidential

3. © 2013 IBM Corporation What is Authoring?  Creating a contract using clauses from the clause library  Typically starting with a template that contains a set of clauses  Often using an interview that adds, deletes or replaces clauses

4. © 2013 IBM Corporation Three Methods to be Discussed  Authoring – Complete clause breakdown  Authoring – Breakdown into one or few clauses  Creating Filed Contracts

5. © 2013 IBM Corporation Authoring – Complete Clause Breakdown  A contract template (document) is broken down into all of its logical sections  Each clause contains a cohesive set of text (generally single-topic)  Clauses may include embedded language terms

6. © 2013 IBM Corporation Authoring – Complete Clause Breakdown  Advantages – User –Redlines are tracked –Clause-specific alternates may be used in the contract record, or in an interview –Clause-specific Approvals may be used –Clause-related Events may be set up –Editing restrictions (security) may be applied to clauses –Auto-numbering is enabled –Clause use in contracts may be filtered by class and region –Terms may be included in language –Contract language is managed by Emptoris  Advantages - Administrator –Common Clauses may be used across many contract templates Fewer contract templates are needed when the difference between two templates can be accomplished by a few different clauses –Clause usage reporting is available

7. © 2013 IBM Corporation Authoring – Complete Clause Breakdown  Disadvantages - User –Somewhat harder to edit using Word in Emptoris –Somewhat harder to handle when checked out  Disadvantages - Administrator –Extensive maintenance of clause and contract template library This is significant and must be considered. A full-time administrator may be needed to add and maintain a library of templates. –Maintenance of interview that uses clauses

8. © 2013 IBM Corporation Authoring – Breakdown into One or Few Clauses  A contract template (document) is broken into just a few clauses (sections) –E.g. Body, Appendices  Each clause contains the complete text for each section

9. © 2013 IBM Corporation Authoring – Breakdown into One or Few Clauses  Advantages - User –Redlines are tracked by Emptoris CM system –Terms may be included in language –Somewhat easier to manage in Word (fewer section breaks) –Auto-numbering maybe applied –Some clause replacement for larger sections (like appendices) –Contract language is managed by Emptoris ->The first two points provide significant advantages  Advantages - Administrator –Significantly easier to build and maintain fewer clause templates

10. © 2013 IBM Corporation Authoring – Breakdown into One or Few Clauses  Disadvantages - User –Text editing is required to make changes (i.e. no clause swaps for smaller sections) –Few pre-defined clauses in the library may be added within the body of the contract document –Interview cannot replace, add or delete a detailed level of clauses  Disadvantages - Administrator –More contract templates will be needed because clause alternates are not available Instead of using fewer standard contract templates, with a few different clauses representing the differences between contract types –Clause management functionality (approvals, events, security) is not useful –Clause reporting functionality is not useful

11. © 2013 IBM Corporation Filed Contracts  A Contract template is provided to users as an attachment  The Contract templates includes all functionality on all tabs, except language (clause list)

12. © 2013 IBM Corporation Filed Contracts  Advantages - User –Might be easier to edit using pure Word, not Word within Emptoris –All system functionality, and other contract tabs, are available  Advantages - Administrator –Contract Templates can be configured using any file as the template attachment (no clause building at all)

13. © 2013 IBM Corporation Filed Contracts  Disadvantages - User –Redlines are not tracked among users –User must save every version to Attachments tab to maintain editing history –Text editing is required to make changes (no clause swapping, no language terms) –Few pre-defined clauses in the library may be added within the body of the contract document –Interview cannot replace, add or delete clauses –Terms must be filled in separately, on Terms tab or in interview –Contract language is not managed by Emptoris  Disadvantages - Administrator –More contract templates may be needed because clause alternates are not available Instead of using standard contract templates, with a few different clauses representing the differences between contract types –No tracking or reporting on clauses used –No audit of contract content, even whether the filed contract template is used or not

14. © 2013 IBM Corporation Legal Loves Authoring  Legal must be willing to assist in library maintenance

15. © 2013 IBM Corporation Benefits to Legal  Contents are controlled by Legal to ensure standard contractual language is used  Visibility of clause usage within the generated contracts - most used, most modified  On-going alerts and obligation management at Clause level for reviews and risk reduction

16. © 2013 IBM Corporation Benefits to User Department  Faster contract generation times using standard templates and clause swapping through Interview wizards based on legal content rules  Reduced Contract Manager time to generate contracts from Procurement requests  On-going alerts and obligation management at Clause level for reviews and risk reduction

17. © 2013 IBM Corporation Benefits Journey (1) Identify frequently changed clauses and develop alternates Identify decisions made in the drafting process for clause changes Faster communication and identification of language changes Transition drafting away from the legal team and to the contract owners Easily reuse previous negotiated language for larger more complex deals. Faster negotiation with larger customers with on-line contract authoring.

18. © 2013 IBM Corporation Benefits Journey (2) Contract repository opens up reporting and on-going alerts / contract events Clause library gives contract to contract language compliance Contract Interview ensure legal rules are followed and contract construction times are greatly reduced. Process improvement is supported by data analysis of the contract contents and changes from standard

19. © 2013 IBM Corporation Benefits Journey (3)  Previous experience has shown 80-90% of contracts can be released without further legal review due use of standard templates and the insertion of business terms into the language  Procurement user modification to insert party details, term details and remove drafting notes is not required as this is performed by ECM  Legal teams are released to focus on the strategic/complex contracts that require negotiation on the original language starting point (Buyer language or Supplier language)

20. © 2013 IBM Corporation Benefits Journey (4)  Interview wizard addresses a large portion of clause swapping with pre- approved alternates  Frees up Legal time to address strategic or complex issues  Using standard clause language from a legally-controlled clause library, no legal involvement in the contract is needed  Alternate clauses may require approval, or be considered pre-approved.

21. © 2013 IBM Corporation 3. ---------------------- ------------------------- Contract Template Breakdown 21 IBM Confidential Track changes (redlines) Events & Obligations Attachments Approval Chains List of Terms User Comments Activity History On-line Search Reporting 1. ---------------------- ------------------------- Clauses 2. ---------------------- ------------------------- 4. Alternate to 3----- ------------------------- Clause 1 Clause 2 Clause 3 (including Language Terms) Contract Template -------------------------------------------------------------------- Contract Instance 1. ----------------------- --- -------------------------- 2. ----------------------- -------------------------- 3. ----------------------- ---------------------- -------------------------- Supplier Name Contract Terms Payment Terms Start Date Delivery Terms Payment Terms Contract Region Supplier Risk Level Tracking Terms Other Metadata and Information

22. © 2013 IBM Corporation Benefits Journey (5)  Breakdown of templates will show consistently used clauses and terms  These clauses are loaded as common clauses  Terms are used across contracts for easy follow up reporting  Common clauses can appear in multiple contract templates  Contract language terms (e.g. Payment Term) are inserted into the Clause templates and flow into the final contract

23. © 2013 IBM Corporation Best Practices in Library Development  Identify existing contract templates  Validate which are unique templates and which are versions of the same template which different clauses  Agree common word standards (fonts, numbering styles, TOC's)  Update all templates with that standard  Merge like templates, and identify alternates (and rules around the alternate clause usage)  Create one merged template per grouping, which details the alternates and rules inside it  Identify any items which change per contract (like supplier, contract amount, governing law, etc.), and include these as terms to be automatically inserted  Detail out the clause swapping process for build into an Interview - to minimize legal construction of complex contracts - these usually come from the Drafting Notes incorporated into most contract templates

24. © 2013 IBM Corporation Current contract drafting - impact analysis  Determine the overall percentage of contracts from each template type  Identify the contract templates that will result in the maximum contract creation coverage initially  Understand areas of the contract that change and those that do not (e.g. Standard Terms & Conditions) to identify target clauses  Identify those clause templates that require the most modifications and the commonly used alternatives to feed into the Interview design  Ensure process coverage - for Contracts and Contract Amendments (Contract changes, Terminations, Renewals)

25. © 2013 IBM Corporation Moving from Legal Templates to Clause Library Template consolidation 1.Identify existing contract templates 2.Validate which are unique templates and which are versions of the same template with different clauses Standardize layout 1.Agree on common word standards (fonts, numbering styles, TOC's) 2.Update all templates with formatting layout Clause decomposition 1.Break down contract into Title & Body 2.Assign formatting styles to be applied 3.Allocate strict naming convention and clause type Clause Loading 1.Clear all formatting from clause 2.Build based on Title & Body 3.Specify Title & Body styles to be applied

26. © 2013 IBM Corporation Clause Configuration  Ensure that you generate a Clause Type list that correctly identifies all clause purposes  Use the Clause Types to categorise the Clauses to aid searching and clarity for the buyer users  Develop a strict naming convention to ensure that clause purpose, region, ownership, usage can be identified for the Clause  Develop a style sheet that details the styles to be used for the Clause header and body  Follow the standard IBM guidance on contract template decomposition from the standard documentation & training  After knowledge transfer HSBC would be able to build Clauses, Contract Templates and new Interviews as required

27. © 2013 IBM Corporation Time  With medium complexity in word styles the average turnaround for a contract template would be 20 pages per week  This covers decomposing the current contract into clauses through to loading into the system  The average time reduces with experience and due to shared clauses across templates

28. © 2013 IBM Corporation Questions? 28 IBM Confidential