When talking to prospective customers, one scenario we often hear is that investing in a contract management solution has been on the agenda for a significant period of time.
They might have come to market at a particular point but the need for a system has been bubbling away in the background for anything up to two years.
Sometimes it’s a specific trigger that brings them to market, such as a new hire or a missed renewal. However, often there isn’t one single event that drives investment in contract management, instead it’s a gradual accumulation of small reasons and stakeholder buy-in.
Here we look at some of the reasons why you shouldn’t put off that investment and how the digital transformation of your contract management function could benefit your business.
1. You could free up significant amounts of time in your working week.
By removing the need for manual contract management and instead using automation to run your process, you can free up a significant amount of time.
If you’re understaffed and under-resourced when it comes to managing contracts then the benefits of structured delegation and automation can be huge for you personally, as well as for others in your business who have some responsibility in this area.
Not only that, you can also eliminate the need for your specialist staff, such as your Legal Team, to spend significant portions of their week focusing on non-specialist admin. The more time they can spend using their skills and qualifications, the more value they can generate for your business.
Discover how contract management software can save you 7.5 hours a week by watching the webinar below.
2. You could be missing out on contractual benefits.
This is one of the key pillars of a contract management solution business case. All contracts that your business signs have expected benefits in them, whether it be for goods received or services delivered.
For all contracts, but particularly for those over a period of time, there’s scope for those benefits to not be delivered as expected, or even at all.
Projects can lose momentum, personnel can change or simply the focus can shift to another area of the business.
In all these circumstances following an active approach to contract management, coupled with the right technological solution, will help to ensure the agreed benefits are delivered.
This process can vary from contract to contract but will often involve automating reminders about review meetings, renewals and periodic check-ins. Tracking obligations and any disputes will also help ensure there are no surprises.
3. You can significantly reduce your costs and boost margins.
If you take the time to centralise your contract data into a dedicated solution and categorise it appropriately, you’ll very likely see some opportunities for cost consolidation and reduction.
Whether it’s legacy agreements for projects that are finished, or different areas of the business paying different companies to do the same work, having this information in the one place can pay huge dividends.
Mckinsey have found that on average, collaborative cost savings between manufacturers and retailers could result in a margin uplift of 5%.
4. Your exposure to risk might be increasing without you knowing.
Without contract management software and a centralised process, you create an opportunity for risk to increase in your business.
If you don’t have clear oversight of who’s signing what and with whom, you can’t know what obligations are being agreed to, what costs are being committed to and who your business is dependent on.
Legislative changes, supplier cash-flow issues and the latest innovations can all have an impact on the business risk that you face.
You need to take account of these changes when it comes to the business agreements you have in place already (eg do new compliance documents need to be sent to suppliers and signed?) and the ones that you intend to sign.
An effective contract management process, backed by the latest technological solution, brings visibility and insight to your contract base and shows where risks are appearing and need to be mitigated.
5. It’s not as much work as you think it’s going to be.
It’s particularly an issue in mature businesses, where they’ve likely grown geographically as well as in terms of employee numbers.
Those team members tasked with managing contracts or who are investigating contract management solutions, build up a picture of the amount of work involved to centralise all that historical contract data.
The prospect of finding documents, chasing contacts, scanning old agreements, uploading bulk data can seem overwhelming. It can therefore be hard to start, especially if you already have a full schedule.
We understand this, which is why our experienced implementation team helps with the process, advising on how to bulk data together and structure your contract and supplier records for easiest access.
This takes some of the pressure of you to do all that manual work and also gives a clear path to complete that work in a timely manner.
With any business change, there’s a degree of inertia to overcome before you can move ahead with new projects and ways of working.
Contract Management is a discipline that needs to permeate your whole business for it to be effective.
This can make it a challenge to implement, so it’s no surprise that it can sit on the roadmap or agenda for a significant period of time before it rises to the top.
It’s also an area that can release a significant amount of value for your business, so if you’re looking to grow quickly and sustainably, having a process and a solution in place can give you a great platform for growth.
If you want more information on building an effective business case for contract management, you can read our related article.