Some Issues Developing a Set of Criteria for Selection of IT Solutions for Automating Contract Management

Research and development of automation technology for monitoring contractual economic relations consists of using technologies and automation methods to create a system that allows you to monitor and track the fulfillment of contractual obligations between the parties. This may include the use of information technology to collect and analyze data, as well as machine learning techniques to identify risks and issues in contractual relationships.

Automation technology for monitoring contractual economic relations is an area of research and development aimed at improving the efficiency and accuracy of monitoring and enforcing contractual agreements between parties. This could include using smart contracts and blockchain technology to automate the execution of terms, as well as using artificial intelligence and machine learning to analyze contract data and identify potential problems or violations.

Other potential applications include using automation to simplify contract negotiations and drafting, and using Internet of Things (IoT) sensors and devices to monitor compliance with agreements in real time. Overall, automation technology for monitoring contractual economic relationships can help reduce the risk of disputes and improve the overall efficiency of contractual relationships.

The goal of the work is to increase the efficiency of the taxation system of the Republic of Kazakhstan based on the development of automated technology for monitoring contractual economic relations using large-scale data.
a. In accordance with the stated purpose of the study, the following tasks were formulated:
b. explore the most vulnerable areas of contractual economic relations for the state;
c. scientifically substantiate and develop a mechanism for bringing income received as a result of contractual economic relations out of the shadows;
d. develop scientific and methodological approaches to monitoring contractual economic relations for the rental of residential and non-residential premises;
e. scientifically substantiate and develop methods of simplified tax reporting for certain types of contractual economic relations;
f. develop architecture, algorithms and software for an automated system for registration and monitoring of contractual economic relations;
g. develop a software interface for integrating the Egov.kz system created with the state database of individuals and legal entities.

The basis for the development of criteria are the requirements for an information technology solution, the most important of which are functional, requirements for integration, reliability, flexibility, and scalability. These characteristics form a component of the quality of the solution as a product. The cost of ownership should also be taken into account, as it is an important criterion for business entities.

When choosing a supplier of integrated software solutions, we recommend using the following evaluation criteria:

Architecture: The technical infrastructure required to support the solution. Product sustainability: assessment in three dimensions - finance, structure and market.

Price: the average cost of purchasing, installing, updating versions and technical support of a software product.

Service and support: The level of technical support provided by the supplier and its partners.

Concept and vision: supplier forecasts regarding industry trends; the supplier’s actions in terms of product functionality and strategy in light of these forecasts.

The above selection criteria characterize IT solutions, and the supplier is assessed in terms of ability to implement and completeness of vision using an analytical tool such as Gartner’s Magic Quadrant. Now let’s move on to criteria that take into account the specifics of enterprises.

The system must be flexible, namely, provide opportunities for modification and improvement to ensure that the needs of enterprise companies are met. In this case, flexibility means the availability of settings for localizing and modifying the components of an IT solution.

Companies within enterprises can be divided into four groups according to areas of activity. The system must be flexible enough to take into account the specifics of their activities. Note that in addition to the identified types of contracts, the company keeps records for more than ten types of contracts. The features of their management should be described using settings. This can be achieved through a wide range of customizable solution components, as well as the ability to manually modify interfaces, tables, applications and other system components.

Integration requirements include the ability to implement interaction and ensure compatibility with existing local and corporate IT solutions in the company. In the case of enterprises, these are solutions based on products from SAP and 1C companies.

There are uniform corporate requirements for reliability:
a. The software must allow reconfiguration. Changes must take effect dynamically or after restarting the software in a new configuration, subject to one-time downtime restrictions;
b. Only licensed software with valid technical support from manufacturers should be used as software;
c. Software components must not violate each other’s integrity;
d. The created application software should not depend on the internal mechanisms and internal structure of the base software, that is, it should use only the external interfaces of the base software.

To ensure the safety of user data, we recommend a system landscape consisting of three subsystems: development, testing and production. This provides the possibility of additional verification of the correctness of the changes made. In particular, such a landscape is implemented in local and corporate systems based on SAP.

Scalability is the ability of a system to adapt to expanding requirements and increasing volumes of tasks to be solved. This is a necessary characteristic of a company’s information system, which plans to expand, increase the number of personnel, sales volume, etc., for example, as part of the automation of contract management in a company, it is necessary to ensure the work of about 1000 users. This makes the scalability requirement critical.

Also, the “friendliness” of the user interface should be added to the quality criteria, since most people are very sensitive to the appearance of software forms and windows. The “friendly” interface is intuitive and allows you to work with the software with a minimum level of training. This factor must be taken into account, as it can affect the duration of the project, affecting the training time.

On the other hand, an interface that is “unfriendly” in the general sense may be convenient for users who are already working with solutions from this vendor. Therefore, you can evaluate this criterion only in relation to the users of a particular company. This criterion is very important for enterprises, since long training periods negatively affect the timing of the automation project, which reaches several years.

The organizational environment, as a component of the business architecture of enterprises, must be described by means of an IT solution. The complex structure of enterprises must be reflected in the contract management IS; the ability to describe it within the framework of the solution is another criterion.

The criterion for the possibility of data consolidation ensures the choice of a solution that will allow the supply of consolidated data to corporate information systems of enterprises. According to established practice, for this purpose, classifiers of compliance of materials and equipment (material and technical resources) and services with the lines of the consolidated report, which is generated for the management of the enterprise management company, are used.

The need of a geographically distributed enterprise is the operability of the system in the 24x7x365 mode (24 hours a day, 7 days a week all year round). Therefore, the IT solution must provide several operating modes of the IS: normal, emergency and diagnostic. All errors and failures in the system must be logged to enable their analysis and elimination of the causes.

Typically, the system is available to users during the working day, and diagnostic work is carried out at night. Due to the location of the company’s subsidiaries in different time zones, diagnostic time is significantly reduced. In emergency mode, the loss of productivity should not exceed 50%. System diagnostic tools must provide system maintenance personnel with information necessary and sufficient to make decisions about the need:

About emergency recovery of information storages and system databases; Checking and restoring system dictionaries. Quantitative criteria include indicators of financial and time costs for a contract management automation project. Thus, the set of criteria for choosing an IT solution for automating the contract management process includes the following components:
A. Functional completeness.
B. Flexibility:
C. Localization;
D. Modifiability to take into account the specifics of the activities of enterprise companies;
E. Ensuring the maintenance of dozens of types of contracts.
Integration with corporate and local IS
a. SAP ERP;
b. 1C.

Three-part landscape.

Scalability

A. Maximum number of users.
B. «Friendly» user interface.
Possibility of describing the structure:
a) Description of financial responsibility structures;
b) Description of production structures;
c) Description of sales and purchasing structures;
d) Description of the structure of enterprises.

Data consolidation

a) with a corporate system for maintaining master data;
b) with a corporate management reporting system.

Stability

a) System operability in 24x7x365 mode;
b) 3 operating modes;
c) Availability of diagnostic tools.
d) Annual cost of ownership.
e) Project cost.
f) Project implementation time.

When forming a set of criteria, it is important to take into account the existing regulations in the company; they form the basis of the requirements, and therefore the selection criteria. They are taken into account in the criterion of functional completeness. Its value is directly proportional to the number of automated functions from the list of necessary ones.

Please note that IT solutions can be assessed for compliance with the criteria by experts from the customer company or thirdparty IT consultants. In this case, data for the assessment should be provided by IT solution providers, since they have the necessary knowledge of the architecture and other features of IT solutions. This will help, when implementing the project, to avoid a situation in which it is discovered that the system parameters do not meet the customer’s requirements.

The given criteria are given weights to calculate the total assessments of IT solutions. They are approved by the competition commission. This assessment is calculated using the formula:

Total score of the k-th IT solution weight of the i-th criterion *score of the i-th criterion for the k-th IT solution, where n is the number of criteria.

Based on this assessment of IT solutions, it is convenient to conduct a comparative analysis and make a final choice. The best solution is the one with the maximum total score of all those proposed.

K₁- final value, N- number of functional requirements, f_i -indicator of the feasibility of a function within the IT solution, if the i-th function is implementable, f_i=1, no f_i=0

Analysis of the advantages and disadvantages of registration and monitoring systems for contractual economic relations to identify common features and differences between thesaurus and classification approaches. Our research has led us to the conclusion that many areas of contractual economic relations still remain in the shadow of government attention. The existing legislative framework and technical capabilities do not allow contractual economic relations between individuals and legal entities to be 100% legal. This situation leads to non-payment of taxes by a significant part of business entities. At the same time, the state’s losses could amount to billions of tenge.

Today we can say with confidence that the number of entrepreneurs who legally rent out their property is not a large percentage. According to the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan, shadow rental housing accounts for up to 70% of the market [1].

Having analyzed the legislative acts of the Republic of Kazakhstan related to the state registration of rights to real estate [2], which arises as a result of contractual economic relations, mandatory registration of lease agreements is carried out only when concluding a lease agreement for residential and non-residential premises for a period of at least a year, only for registration onerous property rights.

In other cases, registration of lease agreements is carried out at the request of the applicant. This fact, associated with the registration of contractual economic relations, does not guarantee the transfer of data to local departments of state revenues. Which in turn allows you to evade taxes.

The current situation in the rental housing market in Kazakhstan has more or less calmed down after the arrival of a huge number of relaxers from the Russian Federation to Kazakhstan and has led to a reduction in average prices for renting square meters. At the very beginning of the migration wave, this led to an aggressive increase in prices for rental housing throughout the Republic, especially in the northern regions of the country. However, the state budget did not receive adequate replenishment from such price increases due to the ineffectiveness of state policy in this area. The state budget lost billions of tenge in tax revenues.

Now we can state the fact that, in its current state, the existing system for registering lease agreements between individuals and legal entities does not work as required by the existing legislative framework of the Republic of Kazakhstan. And it is not a priority area of work for the Government of the Republic of Kazakhstan. This can only be explained by the lack of special mechanisms to resolve these issues, which lead to the loss of potential revenues to the state budget of the Republic of Kazakhstan.

First of all, it is necessary to encourage participants in the contractual relations market to work in a legal field. To do this, we have identified the main problems that cause reluctance to pay taxes in the proper manner. Lack of motivation to fill out a tax return. The platform being created should simplify this moment for the landlord by automatically registering and deducting the income tax due for payment. The automated system itself generates a tax return and sends it to the State Revenue Office. The lessor does not need to re-submit tax reports on income received by leasing real estate.

1. Skutin A (2006) Automation of contractual activity management. Financial Director, 5.
2. KrigsmanM (2009) Worldwide cost of IT failure: $2 trillion. ZDNet.