Contract management has moved on from the days of being simply an electronic filing cabinet. Today’s technology can help you drive value from your data, better manage risk, and boost cost savings.
Whether we’re in a bull or bear market, pre-COVID, or the new normal, increasing value will always pique the attention of your CFO and CEO. And, with the average company losing over 9% of its revenues annually due to contract-related issues, according to the IACCM – contract management could be the place to start looking when it comes to reducing costs.
Contract management has long been a method of inducing cost reduction. Since Contract Lifecycle Management was coined, one of the main benefits of adopting the software was to lower costs by organizing and categorizing contracts to reduce revenue leakage, improve process efficiencies, and streamline admin and management.
And, while these benefits haven’t changed, what has evolved are the tools smart GCs are using to manage their contracts, search for clauses and analyze their data to drive even greater savings, better manage risk, and discover more opportunities.
Today, it’s not about having bells and whistles on your contract management software or the deepest technology that takes years to deploy and even longer to understand. It’s about having a contract strategy architecture with goals and KPIs that are delivered with smart tools that discover the growth opportunities hidden in your data and help you develop new ways of thinking.
Contract Management to make data visible
Having all your contract data digitized in a single place cannot be underestimated, and is simply best practice in today’s data-fueled business economy. But the reality for many law firms and GCs is that files are still held in archives, boxes, and cabinets – a goldmine of hidden information that’s powerless to help your business.
Visibility of all your contracts means you can identify opportunities for cost savings. You can start to evaluate contracts by their key dates, milestones, deliverables, and specific contract terms. With this insight, you’ll be in a stronger position to renegotiate those contracts, consolidate the number of vendors in your portfolio, and not waste time and resources on contracts that are of little value or are redundant, reducing costs, and revenue leakage.
Contract Management to manage your risk
Managing risk via triggers that alert you or your contracts team to crucial renegotiation points, changes in contract values, compliance rules, and obligations that incur fees, can all help drive down lost revenue and add directly to the bottom line. But contract management has moved on from simple trigger alerts.
Today’s smart contract management technology takes a deeper look at risk management using artificial intelligence and deep learning techniques. For example, you can create a contract hierarchy based on risk potential and value that means you have better insight into which contracts pose the greatest threat to your organization, and manage them accordingly. You can get insight on what percentage of your contracts are compliant or non-compliant or have performance metrics and measure contract turnaround times.
Smart contract management technology is taking things even further, unifying the data beyond your contracts. By ingesting the data from your financial, sales, and procurement systems, the insight gives you a holistic overview of your organization, highlights areas of concern, and even predicts business outcomes based on past experience within your business. This insight helps you make better business decisions by understanding where the risk is and mitigating against it accordingly.
Contract Management tools to make your data discoverable
Attorneys spend weeks, months even, searching for the right contract or the right clause. With digitalized contracts this time is slashed, especially when you have a Google-like search tool at your disposal. Once you have your contract data – both structured and unstructured – ingested into your contract management system, your data is available at exactly the point you need it; quick searches returning the information you need in seconds.
With smart contract management, you can easily find late payments or delayed delivery that can incur financial penalties, contracts that are out of date, and evergreen contracts that haven’t been seen for years, helping to prevent revenue leakage.
Smart contract management helps you drive cost reduction, enabling you to search for relevant phrases, sentences, or just snippets without any concern over whether your system understands contract or organizational structures.
As business landscapes continue to move at pace, your contracts need to adapt to keep up. Having a process for standardizing certain contracts and clauses is a huge time saving for attorneys, which means they can get more contracts drafted more quickly, helping to accelerate your pace of business, increase efficiency, and adding to the bottom line.
Not only that, but vitally, standardization through contract management reduces risk, which ultimately saves costs. Having consistency within your contracts ensures that standards are adhered to, resulting in less financial liability, or costly compliance failures.
Visualize your data
The trend for infographics is happening for a reason. According to a study conducted by Aalto University in Finland, in collaboration with IACCM, visuals are changing the contracting world. The study found that visualization of contracts helps law firms “boost their brand, increase efficiency, effectiveness, and transparency.” The study concluded that: “Visualizations can reduce the cognitive load experienced by contract professionals, so organizations can ensure that their workforce is more engaged in reading contracts, achieving better results at a fraction of the time and effort usually required”.
Visualizing data means you can instantly spot trends and anomalies, and track information in a hugely challenging way, in a raw data format. With smart contract management, complicated data sets can be visualized quickly via a dashboard, to help you spot contracts that pose a risk or compliance areas for concern. Dashboards can help you display your contract data according to the areas that are most relevant, from contract term dates to upcoming obligations to vendor clauses.
More than just digitization & trigger alerts
Today’s contract management has moved on from just digitization and trigger alerts, important though these are. Contract management technology today can help you manage not just your data, but the data around your business, breaking down silos, and creating a data lake of information that, when combined with smart data analytics, can help you drive improved business decisions, accelerate your business processes and make vital cost savings.
If you’re ready to start realizing more value in your contracts and identifying opportunities for cost-saving, then contact us now.