Contract Management in the Age of Digital Transformation: Improve your Processes for Better Business Outcomes. A Frost & Sullivan White Paper

Transcription

1 A Frost & Sullivan White Paper

2 frost.com Introduction...3 Digital Transformation is Changing Everything...4 Re-examining the Contract Lifecycle...4 What to Look for in a CLM Solution...6 Conclusion...7 CONTENTS

3 INTRODUCTION Many large enterprises struggle to efficiently manage their contracts from negotiation to completion, resulting in poor visibility, decreased compliance and control, higher risk and slow completion cycles. This is true even for organizations that say they ve implemented a contract lifecycle management (CLM) process. Many of these are at most using basic document repositories that, while useful, do not meet the needs of legal specialists, salespeople or their customers, nor comply with relevant government, industry or corporate requirements. There is no guarantee that the right people are getting the right documents when they need them, or that methods in place ensure best practices are followed and consistently updated based on real-world experiences and market changes. Frost & Sullivan recommends that all enterprises embrace digital transformation to improve how they manage contracts across the organization. A modern CLM application will cover the bases from negotiation to signature; enable contact creation; support ongoing needs like addendums, renewals and terminations; include printing, signing, scanning and sending; offer robust storage, search and reporting; deliver tracking, routing and compliance capabilities; and integrate with CRM tools for complete visibility and management. This paper will discuss the need for large enterprises to re-evaluate (or, in some cases, create) their CLM practices in light of the need for digital transformation, outlining the value of CLM technology and highlighting the key capabilities of a strong CLM suite. It includes a list of key criteria for choosing a provider and offers best practices for deployment success. All rights reserved 2018 Frost & Sullivan 3

4 DIGITAL TRANSFORMATION IS CHANGING EVERYTHING Frost & Sullivan research shows that 90% of the data in the world today has been created in the last two years and that number is rising. The process of using that data to dramatically alter the ways in which business gets done is called Digital Transformation and it is having an impact on every aspect of corporate life. As we enter this era of unprecedented change, companies must re-evaluate how they approach every aspect of their business. This presents a tremendous opportunity for positive change and also creates numerous challenges for organizations. Digital Transformation is one way to address the second most important concern business leaders face, according to a recent Frost & Sullivan survey of almost 2,000 IT decision makers around the world: aligning IT and business goals. About one-third of respondents ranked reducing operational costs, improving customer experience and improving digital presence as top drivers for IT investment over the next two years. About 62% of respondents plan to increase their IT budgets, with an average increase of 26%. The results of the study show that 43% of respondents believe their company is an early adopter of technology, followed by 44% who believe they are in the early majority segment. This becomes interesting when we look at the correlation between early adopters and significant revenue growth. Almost 70% of respondents that said they achieved 51% to 100% revenue growth were early adopters of digital transformation. Also notable is that 74% who said they would increase their IT budget by more than 25% in 2018 were early adopters. This tells us that early adopters are more likely to successfully use IT to generate revenues. 43% of respondents believe their company is an early adopter of technology. Another 44% believe they are in the early majority segment. Almost 70% of respondents that said they achieved 51% - 100% revenue growth were early adopters of digital transformation. 74% of respondents who said they will increase their IT budget by more than 25% in 2018 were early adopters. 44% 43% 100% Early adopters are more likely to successfully use IT to generate revenue. Revenue Growth 51% 74% 25% to increase IT budget Source: Frost & Sullivan RE-EXAMINING THE CONTRACT LIFECYCLE One area of business that is ripe for transformation is contract lifecycle management (CLM). Indeed, many companies may not even have a consistent manual process for managing their contracts, let alone a digital one. Some may think they do, but simply having a review chain and contracts stored on a shared drive does not constitute a process. 4 All rights reserved 2018 Frost & Sullivan

5 Companies can help shape, track and enforce policies around contract creation and management with a contract management platform while leveraging the benefits of digital transformation in one of the most important areas of their business. Many organizations rely on recycled templates for contract creation, using older documents and substituting the new names, terms and financial information as needed. They then circulate the new document up the chain, getting the necessary signatures from management before sending the material to the supplier or client for final sign off. They might even store these signed contracts in a data repository so that other employees can leverage them in the future. Would you treat other critical business processes with such a laissez-fair attitude? An ad-hoc system does little to ensure that your company s critical contracts are up to date, meet all current business and legal requirements, and can be accessed, reviewed and revamped whenever necessary. That s unfortunate because visibility, control and analysis are critical to corporate governance and overall management best practices. CLM tools help organizations gain control over contracts across the organization, allowing them to simplify contract creation, streamline the negotiation process and ensure best practices are followed throughout the contract delivery process. An aligned electronic signature solution ensures every document gets signed as needed, by all relevant parties. Automation ensures contracts are stored in a searchable repository, information is protected with customizable security controls, flexible routing and approval policies are in place, and that users can do robust reporting through their preferred medium. Frost & Sullivan s Digital Transformation Framework How does this Transformation Impact your Business? KEY ELEMENTS OF DIGITAL TRANSFORMATION BUSINESS FUNCTIONS Digital transformation improves the ability of each function of a company to achieve their key objectives. (includes People, Operations, Products, IT, the Customer, and Management). The CONVERGENCE of business functions, the digital ecosystem, and new business models creates innovative ways to impact the top line growth and bottom line efficiency of companies. Business Functions Value Extraction Impact on Top & Bottom Lines Business Models Digital Ecosystem The DIGITAL ECOSYSTEM includes the technologies that need to work together seamlessly for digital transformation to be effective. NEW BUSINESS MODELS are created to generate new forms of revenue. Source: Frost & Sullivan By making a point of connecting legal requirements with the needs of the sales team and the CFO s office, CLM software helps reduce risk while maintaining compliance and increasing visibility across the business. By controlling the terms that can be included in any contract, for instance, and by limiting one-off changes, CLM applications ensure all contracts meet company, industry and government regulations and requirements. As a result, businesses can shorten the time spent in negotiation. Electronic signatures shrink the sales cycle, too, by automatically routing the All rights reserved 2018 Frost & Sullivan 5

6 right documents to the right people to sign when they need to. While many companies today use to track where a contract is, a CLM tool can deliver visibility into all agreements, showing exactly where they are in the process, whose hands they re currently in and where any bottlenecks lie. CLM tools automatically record versions, audit trails and final agreements into the system of record so that there are no gaps in contract information. Longer-term, CLM tools let managers leverage advanced analytics to drill down on issues with past contracts, identifying key areas for improvement. The resulting documents, which are constantly being improved while adhering to all corporate governance rules, can be stored in a single repository, where they can be accessed, managed and tracked throughout their lifecycle and beyond. WHAT TO LOOK FOR IN A CLM SOLUTION Contracts are one of the most critical pieces of any business, regardless of size, industry or location. No matter what type of work you re in, you use contracts with suppliers and customers. Those contracts are critical to the success of your organization and ensure you have the supplies, technology and personnel you need to produce your goods and services, and that you can collect revenue from clients. Contracts define the relationships you have with your customers, vendors and partners in clear financial terms. But they must adhere to legal constraints to be enforceable in the ways in which you intend and your business needs to operate. Companies that use a CLM tool ensure that every contract conforms to all company policies; includes vetted, legally approved (and enforceable) language; contains all necessary signatures; and includes key data on payments, billing and deal terms. There s no excuse for leaving compliance to chance: enterprise-grade contract lifecycle management solutions make it easy and cost effective to transform your contracts by developing policies, enforcing approved contract language, digitizing the signature process, mitigating risk, and streamlining the entire negotiation and sales process. Of course, there are many CLM options on the market, so how do you choose the right one? Whether you re new to the software or ready to upgrade an older model that is no longer adequate in our always-on world, there are a few key functions to look for in a solution: Advanced features that group common terms and conditions to make them easy to find and use in new documents, speeding contract creation and minimizing errors. Contract creation tools that let you automatically build contracts using pre-approved terms and conditions, then vet new language as you make revisions all within the CRM system. Drop-down menus can make this process even easier, providing vetted language to make it clear what can be used (and impossible to use anything else). The ability to negotiate terms in Microsoft Word while tracking the process in a customer relationship management (CRM) system like Salesforce. That means being able to see and review every change and compare versions as they evolve all in real time. Professional final documents that incorporate all relevant logos and branding in a matter of days or weeks. 6 All rights reserved 2018 Frost & Sullivan

7 esignature capabilities to ensure every document is signed, everywhere it needs to be and by the right people. Once a contract has been approved and signed, your system should be able to store it for future use or reference, especially when it comes to renewals, regulatory changes or as an example for others who need to generate contracts. A CLM application should be able to handle third-party contracts (from suppliers or partners and not generated by you) so that you can seamlessly reconcile any relevant data and save relevant clauses in your CRM system. Analytics and charts deliver insight into the types of language and trends users are encountering in contract creation. This makes it easier to identify common roadblocks, allowing you to eliminate them to prevent future problems or delays. Finally, look for an end-to-end solution that will deliver all the CLM features you need in a single, integrated tool. It should appeal to all lines of business so that the needs of all internal departments are sure to be met. CONCLUSION Digital transformation is impacting almost every business process in almost every organization. Contract lifecycle management is no exception; by using software to improve the CLM process, companies can see measurable gains in productivity, shrink sales negotiations and cycle times, and ensure all documents meet government and corporate legal standards and requirements. As you evaluate CLM tools, look for a solution that makes it easy to quickly create professional documents using vetted language and terms, and then gather all necessary signatures electronically; that integrates with your strategic CRM software; and that leverages analytics to improve the process in every unique instance, as well as over time. Choosing and implementing a CLM system that serves the needs of your business will create broad efficiencies across the organization, leading to happier users and measurable gains. All rights reserved 2018 Frost & Sullivan 7

8 NEXT STEPS Schedule a meeting with our global team to experience our thought leadership and to integrate your ideas, opportunities and challenges into the discussion. Interested in learning more about the topics covered in this white paper? Call us at 877.GoFrost and reference the paper you re interested in. We ll have an analyst get in touch with you. Visit our Digital Transformation web page. Attend one of our Growth Innovation & Leadership (GIL) events to unearth hidden growth opportunities. SILICON VALLEY Santa Clara, CA Tel Fax SAN ANTONIO 7550 West Interstate 10 Suite 400 San Antonio, TX Tel Fax LONDON Floor 3 - Building 5, Chiswick Business Park 566 Chiswick High Road London W4 5YF Tel +44 (0) Fax +44 (0) GoFrost myfrost@frost.com MELANIE TUREK Vice President Enterprise Communications Frost & Sullivan P: E: melanie.turek@frost.com Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today s market participants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? For information regarding permission, write: Frost & Sullivan 3211 Scott Blvd Santa Clara CA, 95054