Have you ever been stuck in a contract because you forgot to submit an end of term letter? What about having to pull a late night at the office to draft a contract for the next day? Or that feeling of losing a client because of a missed contract renewal? These problems are far too common for companies all over the world.
When you think about it, organizations are governed by agreements. Those agreements are governed by contracts. Whether it’s an employment agreement regarding the expectations set out for a new hire, a utility agreement with a vendor on the service level expectations in exchange for a fixed payment, or a sales agreement with your clients regarding the services you will be providing in exchange for their commitment, contracts are a necessary component of running a successful organization.
As Ray Mazzoleni, procurement and tools lead for a biopharmaceutical company, said, “Contracts are more than just terms and conditions. They ensure what you are buying and also provide a framework for supplier performance by defining the customer relationship.”
Given that contracts are arguably one of the most important aspect of any business, the facts below present a unique problem when it comes to managing contracts:
- 20,000-40,000 – Average number of contracts per organization (Price Waterhouse Coopers)
- 85% of companies are using manual processes to manage sales contracts (Aberdeen).
- 65% of legal professionals identified time lost on administrative tasks as their biggest pain point (Apttus)
- 60% of legal departments do not have an automated contract management tool (Apptus)
- 73% of organizations found it difficult to or impossible to run reports that share information about terms in their contracts (Apptus)
These statistics identify an exciting opportunity for organizations to trim costs and boost their organizational efficiency. With such a high level of importance, optimizing the contract management process is vital for success. And there is no better way to achieve this than purchasing Contract Lifecycle Management (CLM) software.
There are several benefits to CLM software such as risk reduction, financial optimization, productivity/operational effectiveness, standardizing contract agreements, simplified negotiations, and having everything instantly searchable.
However, there are also consequences of implementing a CLM software which include cost of implementation and disrupting the day to day tasks of your employees. But when you see the statistics below, don’t the pros outweigh the cons?
According to Forrester and Aberdeen contract management automation can:
- 55% Improvement in compliance
- 50% Reduction in contract cycle times
- 25% Improvement in contract renewal rates
- 1-2% Improvement in revenue
Thank you for reading,
Shamit Patel, Sirma Enterprise Systems
Myers, M. 2016, February 11. Top 5 Benefits of an Automated Contract Management Solution. Retrieved from http://www.questys.com/blog/top-5-benefits-of-an-automated-contract-management-solution
JAGGAER Staff. 2016, September 27. 4 Key Benefits of Adopting a Contract Management Solution. Retrieved from https://www.jaggaer.com/4-key-benefits-of-adopting-a-contract-management-solution/
Determine Inc. 2016, February 24. Three BIG Benefits of Contract Management. Retrieved from https://www.determine.com/blog/three-big-benefits-of-contract-management
Alspaugh, Z. 2016. 10 Eye-Popping Contract Management Statistics from the General Counsel’s Technology Report. Retrieved from http://apttus.com/blog/contract-management-statistics-from-the-general-counsels-technology-report/
Weissman, R. 2017, July 11. How contracts help define supplier performance. Retrieved from http://www.supplychaindive.com/news/contract-management-supplier-performance-UCC/446811/
Smith, P. 2014, September 7. Contract management statistics for sales leaders. Retrieved from https://www.springcm.com/blog/contract-management-statistics-for-sales-leaders