While every company is unique, certain contract management challenges are common across all industries, geographies and business roles.
Below are the eight most common contract management issues Icertis sees when speaking to companies about their processes and the contract management solutions that are available to address them.
1. Limited Contract Visibility
A lack of contract visibility continues to be a top contract management challenge for large companies. Contracts may be stored in Outlook inboxes, local shared folders or even filing cabinets. When issues arise requiring contract review, they can be difficult or impossible to find. A recent report from Gartner put it bluntly: “Several Gartner clients candidly admit they don’t know where all their contracts are.”
Cloud-based contract management software solves this challenge. Companies can place all their contracts on a single platform for global visibility; once the contracts are digitized and uploaded, they can be easily searched against for even greater accessibility and analysis. This means users can access any contract, anywhere in the world, at any time, improving business outcomes.
2. Slow Contract Turnaround Time
Any number of issues can slow contract turnaround time. Perhaps a user can’t locate the proper template. Or maybe redlines sent back from a supplier get lost in an email thread. Or there could be an approval bottleneck in the legal department.
The fact is that without a robust contract management solution, a company may have no idea why its contracts take so long to get approved, as there is no systematic way to monitor how long a contract sits at each stage and identify delays.
Contract management software accelerates contract turnaround time by providing both tools to speed contracts along and data to help identify bottlenecks. Clause and template libraries streamline contract authoring, collaboration portals take communication out of email, and business rules automatically route contracts to the right person for approval.
Learn how global pharmaceutical leader Sanofi used the Icertis Contract Management (ICM) platform to reduce its contract turnaround time here.
3. Contract Noncompliance
Companies today operate in extremely complex regulatory environments, and poorly managed contracts make compliance difficult if not impossible. Take for example the E.U.’s General Data Protection Regulation (GDPR), which requires companies to flow strict data-privacy rules down to their subcontractors. Without a systematic way to track the inclusion of necessary regulatory language in all contracts, companies open themselves up to noncompliance and major fines.
With contract management software, necessary clauses are automatically included in all contracts, enabling a holistic approach to compliance. Furthermore, companies with a powerful contract management solution can respond to regulatory changes by quickly surfacing all active contracts that could be impacted by new regulation and executing bulk actions against them.
4. Lack of Contract Standardization
A common contract management challenge for enterprises with ad-hoc contract authoring processes is a proliferation of contract clauses and templates in circulation. When contracts become non-standardized, it falls on the legal department to read each contract line by line to make sure the documents don’t expose the company to risk.
With an enterprise-wide contract management solution, companies have been able to cut down the number of templates and clauses used in an organization. This means only the most effective contract language is in use, which frees up time for legal to focus on more strategic initiatives.
Want to learn how HERE Technology gained efficiency through reduced contract templates? View this on-demand webinar.
5. Supply Chain Risk
Contracts form the foundation of a company’s relationship with its suppliers. As global supply chains become more complex, poorly managed contracts become a major liability for a company. Companies struggle to gain a full view of whom they’re doing business with, what the terms of the agreements are, and where risk may exist.
An enterprise-wide contract management solution provides a 360-degree view of a company’s supply chain. Companies can use their contract repository as a single source of truth for supplier relationships, enabling them to better monitor sourcing strategy compliance and supplier risk. Integrations with third-party sources like Dun & Bradstreet allow for automatic notifications on suppliers when their names appear in public information databases.
With advanced visualization tools, companies can even use contracts to power deep and intuitive insights into the entire supply chain, making complex contract relationships comprehensible to business users across the organization.
6. Unwanted Expiry and Renewal
As basic as it sounds, unwanted contract expiry is a contract management issue that many large companies continue to struggle with. At best, unwanted expiries and renewals are an annoyance that prevent optimal company performance. At worst, they can seriously harm a company’s bottom line. One company came to Icertis for a contract management solution after it performed more than $1 million in work on a contract that had expired—work it could not bill for.
Enterprise contract management software prevents unwanted contract expiries and renewals through alerts and notifications to stakeholders. The alerts can be designed to give stakeholders ample time to anticipate contract milestones, so they can better prepare.
Learn how Icertis customer Central City Concern uses alerts to reach out to donors earlier when contracts are approaching expiry, which improves donor renewals.
7. Siloed Contract Data
Contracts impact business conducted across an enterprise, but you wouldn’t know that from the way many enterprises file contracts away, separate from enterprise systems. Without a system to “push” and “pull” data in and out of contracts, double or triple data entry is the norm. This is inefficient and can cause errors.
Best-of-breed enterprise contract management software can integrate into ERP, CRM, SCM, HRM and other systems to reduce the need for multiple data entry. One major airline is using Icertis’ contract management solution to push data from fare-sharing contracts with partner airlines directly into its revenue system. A process that once required triple-entry of data is now completely automated once a contract is executed.
8. Contract Processes Separated from Other Systems
Similar to the contract management issue above, manual contract management does not allow for contract management actions to take place in the context of software business users use every day. Salespeople must leave their CRM software to spin up a customer contract; buyers must leave their procure-to-pay system, etc. Such context switching has been shown to reduced protectivity.
With a best-of-breed contract management solution, contract management actions can be taken from within the software people are comfortable with and already using.
Contract management challenges continue to plague even the largest companies. With enterprise-wide contract management software, enterprises can face these challenges head-on to accelerate, protect and optimize business.
To learn more about Icertis’ approach to enterprise contract management, contact us today.