2017 State of Contract Management Report
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1 2017 State of Contract Management Report 1
2 Help me hunt this wooly mammoth Contracts have existed in one form or another since prehistoric times ( If you help me hunt this wooly mammoth, I agree to share the meat and fur with you ). Once our ancestors created written language and could document contractual agreements, things began to get more complicated and they have only become more complex over time. Luckily our solutions to address these challenges have become more robust and sophisticated. In recent years, businesses have been moving to automated solutions to accelerate the contract process, ensure transparency and visibility, and mitigate risk. We ve come a long way! Gartner defines contract lifecycle management (CLM) as a solution and process for managing the life cycle of contracts created and/or administered by or impacting the company. Managing contracts has become a growing concern for businesses and organizations of all sizes, and contract management solutions have proliferated in response to this need. SpringCM began offering automated, cloudbased contract management solutions in 2010 and since then we ve seen accelerated growth and innovation in the market. To gain and share insights into the expanding market, we began surveying users of contract management solutions in This report includes the findings of our third annual survey, based on responses from 1,409 individuals. This is our largest response in the report s history and gives an even broader perspective of the state of contract management than ever before. It is our hope that this 2017 State of Contract Management Report provides you with insights into the current state of contract management solutions, the needs of professionals who work with contracts, and a glimpse into the future. Enjoy, Will Wiegler, SVP & CMO SpringCM
3 Table of Contents Introduction... 4 Audience Composition... 5 Contract Management: The Process... 7 Contract Management: The Tools... 9 Contract Management: The People Insights: Reading the Trends Survey Methodology
4 Introduction Behind every good business relationship is a contract. As the contracts in a business become more numerous and complex, the benefits delivered by an automated contract management solution increase. This is true for businesses of all sizes. While this highlights the growing awareness and significance of contract management, it also gives us a bigger and more comprehensive pool of data and allows us to more authoritatively report on what s working for businesses, and what can be improved. With that in mind, in 2015, SpringCM began conducting an annual survey of businesses across a range of industries to gather data about contract-related challenges, and the solutions companies are using to manage them. This report represents the findings from our third annual survey. Based on our findings, it s clear that companies are recognizing, and talking about, contract management at an increasing rate. This year s State of Contract Management Report features information provided by 1,409 survey respondents, almost 600 more respondents than the 2016 survey. No matter where you are in the process of researching, selecting or adopting a contract management solution, the 2017 State of Contract Management report should provide you with context for comparing your business to others, and give you crucial insights to plan your next steps on your journey to optimizing your contract management process. 4
5 Audience Composition Current Role While there were markedly more responses to the survey this year compared to our 2016 survey, the composition of the the respondents roles remained similar, with about 21 percent of respondents reporting they were in sales, the largest group in the survey. Information Technology (IT) came in as the next largest group at 16 percent, and legal and sales operations came in at close to 15 percent each. Sales 22% Sales Operations 15% Legal 15% Employee Count This year s survey revealed that almost one third (32 percent) of respondents with contract management concerns are SMB, or smaller in size. Contract management solutions are clearly not just for large organizations % % % % % % % Marketing 9% Finance 4% IT 16% Procurement 5% Other 14% 5
6 Industries As in prior years, there was a broad range of industries that participated in the survey. The largest groups of respondents this year were IT/technology and banking two industries with both a significant awareness of and need for contract management solutions. 1. Technology / HW / SW 2. Banking / Finance 3. Business Services / Consultant / Accounting 4. Education 5. Manufacturing / Process 6. Marketing / Advertising 7. Not For Profit 8. Life Sciences / Pharma / Medical Devices Biggest Challenge As was the case last year, nearly half the respondents reported that workflow was the most challenging area of contract management (46 percent), with contract generation again coming in second (with 36 percent). 1. Workflow 2. Generating new contracts 3. Tracking 4. Approvals 5. Renewals 6. Storing contracts 7. Redlining 8. Clause management 9. e-signature 10. Lost revenue 9. Insurance 10. Media and Entertainment 6
7 The Process In light of last year s finding that almost half of sales contracts had a cycle lasting longer than a month, we broadened this year s survey to address other types of contracts and focused on the length of contract cycles beyond the one-month mark. The one-to-two month contract cycle appeared to be the most frequent average length at 33 percent of respondents. But both shorter contract cycles (27 percent at less than one month) and longer contract cycles (18 percent at three to four months, 22 percent longer than four months) were found almost as frequently. This indicates that businesses tend to see contract cycles with a variety of durations, making a strong case for implementing a solution that can handle many contracts simultaneously with staggered start and end dates. This is especially true given the difficulties respondents face with maintaining effective workflows. LENGTH OF TYPICAL NEGOTIATED CONTRACT CYCLE 27% GLess than G G % 18% 1 month months months 22% GLonger than 4 months 7
8 Consistent with last year s findings, 64 percent of the respondents said that the contract approval process was a problem in terms of causing deals to stall. And almost half indicated that their executive team would benefit from seeing contract status in relation to anticipated revenue. IS THE CONTRACT APPROVAL PROCESS CAUSING DEALS TO STALL? % 64% Yes No WOULD YOUR EXECUTIVE TEAM BENEFIT FROM SEEING CONTRACT STATUS IN RELATION TO ANTICIPATED REVENUE? % 17% 52% Yes No Not sure 8
9 The Tools While , shared drives and Excel spreadsheets remain the most frequently used tools for managing contract-related tasks, more companies are adopting contract management solutions, with 32 percent (compared to last year s 26 percent) of respondents reporting that they are using a contract management solution. HOW ARE YOU MANAGING YOUR CONTRACTS? G 60% G 25% Excel Of those who have implemented a contract management solution, 38 percent report cost savings for their companies and only 8 percent are not seeing cost savings. Last year, 38 percent reported not seeing cost savings, so the number of companies that have saved money from their contract management solutions has increased significantly HAS IMPLEMENTING AN AUTOMATED CONTRACT MANAGEMENT SOLUTION SAVED YOUR COMPANY MONEY? 54% 20% 8% 18% Yes Somewhat No N/A G Shared drives 46% G 6+94+G No process in place With a Contract Management tool 32% 6% G 12% Other 9
10 The People Similar to last year, sales, legal and executive teams topped the list of the departments involved in the contract process. One noteworthy development, however, is that 25 percent now report IT being involved in the process, showing an increased tendency toward leveraging tech solutions to get the job done. DEPARTMENTS INVOLVED IN CONTRACT PROCESS G 67% Sales G 43% Sales Operations G Legal 61% G 25% IT G 56% Executive Team G Finance G 8+92+G 51% 26% Procurement 8% Other 10
11 Respondents are reporting that human error still impacts the contract process at about the same rate as last year (92 percent saying it plays a role ranging from sometimes to very often). HOW OFTEN DOES HUMAN ERROR IMPACT YOUR CONTRACT PROCESS? % 68% 7% 17% Very often Often Sometimes Never 11
12 Insights: Reading the Trends The findings in this year s report point to a broader recognition of the difficulties of managing contracts manually. We also see an increased adoption of contract management solutions to make life easier and make business processes more effective. But it s important to note that some respondents had issues with their contract management experiences. Respondents who weren t seeing savings due to their implementation of a contract management system offered comments such as: So far we haven t been great about setting it up. It is really serving as a glorified shared drive. [There is] not enough organizational buy in. [The] tool was not rolled out to everyone so not all contracts are stored or being used. In light of the fact that 38 percent of respondents said that their contract management system was saving them money, such criticisms are telling. They point to the fact that not all contract management systems are equal in delivering value, and that proper implementation may be a key factor in delivering a successful solution that is widely adopted. We suggest readers consider the following when evaluating contract management solutions: Choosing the right solution: With such a wide variance of experiences among users, it s clear that not all contract management solutions are created equal. There are wide variations in solutions for managing, editing and e-signing contracts, as well capabilities for notifying relevant staff about contract end dates. It is important to do your due diligence and make sure that a selected solution can do what you need before you undertake an implementation. Since workflow was the biggest contract management challenge identified, you should make sure the solution you choose offers robust and flexible workflow capabilities. 12
13 Implementing the solution: The more contracts you are managing and the more that you have in your contract management system, the more impact you can expect from a properly implemented solution. The implementation of a contract management solution is a cross-functional project that should include taking stock of all existing contracts and getting them into the system, understanding who needs to see them, and setting up automated notifications and other features accordingly. Your implementation needs to be comprehensive across teams and functions, and visibility needs to be granted to all the appropriate people within the business. Using the solution: For a contract management solution to provide value, it has to be used and adopted by the people it is intended to help. And if people are using it marginally but don t know how to make the best use of the solution, it still may not save much time or money. This is why comprehensive training is a key factor in the successful adoption of any contract management solution. Make sure that you train staff on how to use the tools effectively, including establishing business process workflows. Contract Management in 2017 and Beyond: It s in Your Hands As you consider your next steps for managing contracts, keep this in mind: You can save time and money with a contract management solution as long as it is correctly deployed, comprehensively implemented and users are trained to use it correctly. The successful management of contracts will continue to be increasingly important in the future, both for increasing revenue through better business practices, as well as reducing avoidable losses through elimination of contract-related errors. Learning how others have benefited from such solutions and how to move forward strategically are the first steps. Join the #StateofCM conversation! Click or copy this link and to share on your favorite social media channel. 13
14 Survey Methodology SpringCM fielded our 2017 State of Contract Management Survey from June 29 through July 5, The survey was delivered via and administered online. We surveyed 1,409 respondents, who all received the survey via . Each respondent answered 40 questions, ranging from How would you describe your current role? to Is the contract approval process causing deals to stall?. To see the full demographic breakdown of the completed survey respondents, please reference the Audience Composition at the beginning of this report. THE TEAM SpringCM Team: Katie Gutwein, Brooke Glynn, James Serra Writer: Matt Stern SpringCM generates, automates and manages your documents and contracts by simplifying business processes so you can close business faster and make it easier for your customers to work with you. By adding efficiency and transparency to your document processes, you accelerate growth and revenue. Because when your documents flow, work flows. Every day, more than 600 companies use SpringCM to improve customer experience and get more done, faster. For more information about SpringCM, visit
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