Contract management is an increasingly important part of procurement. As the global pace of business accelerates and becomes ever more competitive, effective contract management will continue to increase in importance.
In a recent survey of procurement leaders, WBR Insights revealed that a growing number of organizations view enterprise contract management software—and the improved contract lifecycle management that it unlocks—as an essential part of their procurement futures.
Here are the key findings from the survey:
1. Half of all sourcing organizations are now putting contracts at the center of the sourcing process
According to the survey, more than half of respondents continue either to treat contracting as a separate process or leave it for last, while the other half are taking steps to make contracts an integral part of the buying motion.
When sourcing and contracting are done separately, companies are exposed to risk, leakage and delays as it is left to manual processes to ensure terms and conditions negotiated for in the sourcing process are captured in the contracts. Yet it is promising to see so many companies are incorporating contracts into their sourcing process, which accelerates deals and reduces leakage.
There is no doubt that in the coming years fewer and fewer companies will treat contracting as a separate process and will instead join the other half in embracing contract-centric sourcing.
2. 42% of organizations are experimenting with procurement blockchain
This data confirms what we’re seeing in the market: Interest in blockchain is high, and procurement organizations are actively experimenting with how to deploy this revolutionary technology in the market.
In an enterprise contract management context, blockchain technology is helping buyers ensure that sustainable and ethical sourcing practices are met at each link of their supply chain, by requiring suppliers to certify compliance using immutable blockchain transactions. This is just the beginning of what we expect to be a game-changing category of technology.
3. 77% of respondents have difficulty leveraging past supplier performance during contract negotiations
Data is worthless if you can’t use it, and according to the survey, most procurement departments cannot properly leverage supplier performance when negotiating a renewal. With enterprise contract management, supplier performance is automatically tracked against contract language and intake from third parties like Dun & Bradstreet provides a holistic view of the supplier’s risk.
This means that when it comes time to renew a contract, buyers have instant, deep visibility into the supplier’s performance, which can inform what commercial and risk considerations need to be taken into account during the renewal process.
4. 68% of organizations are likely to invest further in contract management software for procurement in the next year
Contract management software has clear ROI for procurement departments, so it’s not surprising that investments will be forthcoming this year.
Procurement and sourcing organizations recognize that by digitizing the contracting process, they can push contracting to the center of the buying process, thereby reducing supplier risk and accelerating their overall source-to-contract process.
When making the investment in contract management software, companies should be sure that the technology they are choosing is robust enough to handle all the processes unique to their company, industry or function.
[Complimentary Gartner Report: Don’t Assume You Have to Use an S2S Suite to Digitalize Procurement and Sourcing]
5. Integration is the most common requirement in choosing procurement software
Leading organizations treat contract data as foundational and see the most success when they then integrate this data with other key systems. With the right technology, contract data can flow seamlessly between systems, meaning contract data gets “pushed” into other enterprise systems and “pulls” data from those systems, accelerating contract turnaround time and optimizing outcomes.
Interested in learning more about a contract-centric approach to sourcing? Download this eBook.