Imagine this: A Fortune 100 company deploys an enterprise contract management system across its buy-side operations. With all its contracts in a single system, the company identifies the suppliers it has multiple contracts with and rationalizes those agreements to make sure it’s getting the best price on every item.
When it’s all said and done, the company realizes savings of $70 million in a year.
Sound far-fetched? In fact, this is a real outcome for an Icertis customer that deployed the Icertis Contract Management (ICM) platform. By managing all contracts centrally with contract management software, the enterprise has been able to drive rogue contracting down to practically zero and has a global view of what suppliers its internationally dispersed organization is doing business with.
Sound like an outlier? In fact, according to a new survey out from WBR Insights and Icertis, 11% of CPOs asked estimated their company would save at least $50 million were their company to rationalize all supplier contracts; another 25% said they would save between $10 million and $50 million; 37% estimated they’d save between $1 million and $10 million. All told, the vast majority of CPOs surveyed see material savings to be had through better supplier contract management.
It’s little wonder. Contracts govern every dollar in and out of an enterprise. Yet, many companies continue to underutilize the value of these documents and the software they deploy to manage them.
Elsewhere in the report, only 23% of respondents say they use a contract lifecycle management (CLM) system to surface insights during contract negotiations; the remaining companies use CLM either as a document repository, for after-the-fact auditing or have no CLM system at all.
These companies are leaving money on the table. Contract management software allows companies to gain global visibility into their contracts for improved outcomes.
Another Icertis customer described recently how his buyers in the U.S. get notifications when they are entering a contract with a supplier who already does business with its Chinese office. This way, they can quickly leverage economies of scale and make sure they get the best price from the supplier. Such proactive notifications prevent bad deals before they happen, optimize commercial relationships and plug leakage.
These and other companies are reaping the rewards of treating contracts as the foundational documents they are; as shown by the new survey, for other companies out there, there is still a lot of work to be done.