There are a number of macro-trends and events converging in 2020 that will have a direct impact on businesses and which present opportunities for contract management to make a material difference to their overall performance.
For the purposes of this article, these have been grouped into two main areas:
- Large scale legislative changes and political events
- Sustainability and Environmental Factors
Each of these topics will have a significant impact in 2020 on businesses and their contract and vendor relationships.
Those responsible within businesses for managing contracts need to ask themselves whether their current processes and solutions give them the best opportunity to capitalise on them.
1. Large-scale legislative changes and political events
The global political landscape will shift again in 2020 as the UK finally commits to the Brexit process and exits the European Union. Then, later in the year, the US general election will take centre-stage.
One theme running through these events and other legislative changes this year is that of Data Protection and Privacy. Businesses are facing ever-closer scrutiny over their data practices and those of their contracted partners. Building robust processes to address these in an automated and auditable way is of increasing importance, especially given the size of potential punishments for transgressions.
These (substantial) fines are of course separate from any reputational damage sustained by having poor data practices revealed publicly. If anything, the risks associated with this are greater than the financial measures.
Here again, by managing contracts effectively and using a dedicated CLM system, companies are able to mitigate the risks posed by data and its handling.
In 2020, web saw the introduction of the California Consumer Protection Act, which has added to the administrative responsibilities for those dealing with customers and businesses in the state.
Brexit will also create new administrative burdens on international companies dealing with Britain and the EU, as well as for businesses inside these territories.
Trade negotiations are ongoing but there will be new processes to be followed and updates to contract relationships, supply-chain processes and T&Cs to be managed.
All of which can be facilitated by the right contract management software. If your business transacts internationally, then your contracts and vendor relationships will absolutely require more focus and rigour in 2020 than can be offered by a combination of spreadsheets, shared drives and Sharepoint.
If your business relies on any of these basic programs then why not get in touch today to understand how Gatekeeper can help you gain total control over your business’s contracts and vendors?
As for the US election, whatever the outcome there will be a range of policy pledges with the potential to change business’s working arrangements. Based on current activity, areas such as medical care, taxation and immigration are all firmly in focus and could be subject to significant changes.
Any movement here could necessitate new working practices and responsibilities that will need to be reflected in contracts.
By bringing the right software solution into your business in advance, you mitigate the potential risks you will face in 2020.
2. Sustainability and Environmental Factors
A “hot” topic in 2019 and only likely to get more so in 2020 and beyond; the issues of sustainability and the environment continue to be front and centre of both the news agenda and, increasingly, the business agenda.
Environmental, Social and Governance (ESG) or Corporate Social Responsibility (CSR) considerations are of growing importance to:
- Company executives responsible for managing the strategic direction of their businesses. [Source: Deloitte Annual Readiness Report, 2020]
- Procurement departments wanting to improve the sustainability of supply chains and contracted partners. [Source: Sustainable Brands]
- Company employees and prospective employees who are prioritising working for ethical and sustainable enterprises. [Source: Consultancy.uk]
- Investors looking for ethically-run businesses in which to place their funds. [Source: Investopedia State of Sustainable Investing 2020]
- Customers and potential customers who make buying decisions based on the perceived strength of ESG credentials. [Source: Global Web Index CSR Report]
In the current climate, both business and literal, it’s no longer considered acceptable in many cases to have weak policies and governance when it comes to environmental impact in particular.
At Gatekeeper, we’ve heard this exact feedback from our customers, particularly those working in procurement. More concerted efforts are being required when it comes to contracting with other parties to make sure they have strong ESG processes in place and don’t risk compromising either business.
As a minimum, companies have to consider the reputational impact of the state of their supply chain, so close monitoring of all contracted partners is imperative.
Here, contract management solutions such as Gatekeeper offer the easiest way to automate and track this process by triggering periodic reminders, requesting up-to-date documentation and storing of information against contract and vendor records.
At-a-glance reporting can then be accessed at any time and outliers identified and addressed.
However, businesses can also approach the areas of sustainability and the environment as opportunities to differentiate themselves from competitors. Although evidence remains relatively thin, there is an increasing view that consumers make buying decisions based on the strength of companies’ green credentials.
For business-to-business transactions it can now also be a key factor in decision-making as well. Particularly when dealing with government organisations who may be under obligation to treat green credentials as a priority.
Beyond the environmental factors such as reducing carbon emissions and waste there are other factors relating to sustainability to consider.
Globalisation can make it harder for businesses to monitor the working conditions across their supply chains, leaving open the possibility that they could fall foul of modern slavery legislation. This was something that Tesco was obliged to address in December 2019 with the story that some of their Christmas Cards were being produced by forced foreign inmates in a Chinese jail.
So what actionable steps can be taken in 2020 to address these issues with Contract Management Software:
- Include “ESG Credentials” questionnaires as part of supplier onboarding.
- Impose environmental standards on suppliers so that only those that meet them are considered for future business and store documentation against their contract records.
- Automate regular reviews of suppliers for their environmental impact and effectiveness of their sustainability measures.
- Request up-to-date documentation and allow contracted partners to self-serve through a dedicated portal.
- Review all existing contracts for environmental and sustainability provisions and ensure they’re being honoured.
There’s always a risk that companies will look to exploit current sentiment by making empty pledges or only having superficial levels of commitment to improve against ESG measures. If changes to processes are difficult to implement and follow, then it’s easy for the good intentions to fall by the wayside.
However, the measures that are described above can easily be facilitated by the right contract and vendor management software.
Once in place, processes can run automatically with little requirement for human intervention and only needing to be managed by exception.
Reports and overviews are easy to produce and monitor, which makes it much more straightforward to demonstrate the strength of your business’s environmental and sustainability credentials.
With environmental considerations only likely to become more prevalent, now is the perfect time to invest in the technology to support the management of ESG programmes, as well as bringing rigour to all contract and vendor relationships.
While the issues described here in relation to 2020 are significant, the benefits of contract management aren’t only limited to when these macro-events and trends are happening.
Every business can benefit from a greater focus on their contract and vendor relationships. These benefits come from being able to understand things like:
- Which contracts are due to renew soon and who’s in charge of managing that renewal?
- Are the obligations that were signed up for in all of the business’s contracts being delivered as expected?
- Do we have all the legally-required, up-to-date documentation stored against all of our vendors?
The point is that there’s no need to wait for large-scale events to get your contracts and vendors under control. You can save costs, drive revenue and improve compliance immediately by implementing the right software.
To discuss how Gatekeeper can help your business gain control over your contracts, contact us today.