Today we are releasing the sixth episode of Icertis' podcast series, "Contracts Over Coffee." This series brings together the most influential voices in the Icertis Contract Lifecycle Management (CLM) partner ecosystem to discuss all things related to contracting while enjoying a delicious coffee beverage.
In this episode, our senior director of partner marketing, Anne Baker, was joined by Ali Mansuri, customer success manager at our partner Whatfix – the award-winning performance support platform that allows businesses to accelerate their product adoption by providing in-app guidance on web applications via real-time interactive walkthroughs.
Here are four key takeaways from their chat:
1. Don't Get Stuck Using Outdated and Risky Contracting Methods
Anne: What do you think is the biggest challenge with contracting today?
Ali: There's a huge population still out there using traditional methods of contracting. And as we progress towards the future, I definitely feel there's a strong need to have a robust infrastructure and platform which not only serves as a repository of contracts but also streamlines the entire lifecycle management.
Also consider the risks involved for not opting for a good contracting process. As you know, we are getting more and more scrutinized, there are more and more regulations coming out there, unidentified risk, unfulfilled obligations, a lack of communications between stakeholders. Traceability is extremely, extremely important.
And lastly this is my very personal take: I wouldn't like to redline something printed out and mail it to a lot of third parties and send it back with revisions. It's just a very inefficient process.
2. Get Spend Under Contract Saves Millions
Anne: So, with that challenge in place, where do you think contracting is going?
Ali: What really caught my eye is how huge a potential there is in the CLM space. Look at a company spending a billion dollars in annual purchases or procuring. This is something quite interesting I read in the Aberdeen group white paper: About $200 million of that is spent off contracts, right? $800 million is on contracts, and $200 million is off-contract. And considering that enterprises report a 16% discount advantage for on-contract purchases, that means moving just a quarter of purchases back onto the contract could have returned $8 million in savings.
And a company with, let's say, a purchase procurement total of about $500 billion a year, and out of this they use $400 billion under contracts, and the remaining $100 billion is not: They lose $18 billion every year due to a lack of proper supplier contract management. So from a macroeconomic perspective, basically 80% of the world is on contracts when it comes to having any kind of obligations to be delivered—any revenue, any cost, any assets, any liabilities. CLM is bringing even more liquidity and getting more revenue to the end customers and enterprises.
3. But Using the Wrong CLM Can Cost You
Anne: What do you think people would be surprised to know about contracting?
Ali: It's just not an administrative role, contracting. Of the 80% of business transactions under contract, how many of them are actually on a robust platform is something that I'm still trying to research. But in a nutshell, what's really surprising is that a company with a $1 billion annual purchase agreement is close to losing about $8 million. Those numbers are just too staggering. And that has a direct P & L impact on if we talk about dollar values and ROI savings.
And just one more point: A five-cent pricing error in a single customer contract for two million units of a particular product could result in $100,000 in loss if unchecked. So knowing and having the right set of controls, the right of architecture out there, the right kind of compliance, etc., is important. A similar error across multiple customers could have a million-dollar impact.
4. The Growth of the Healthcare Industry Is a Game-Changer
Anne: So there are so many great contracting resources and tips out there. What is one contracting tip you wish every person knew?
Ali: I've been noticing how the new players, the new niches—be it CLM, digital adoption, health tech, or FinTech—are gaining so much momentum. One tip I really want everyone to know here is that the healthcare industry is gaining momentum. The market capitalization is projected to reach around $1.763 million by 2024. If you look at a CAGR, it's about 18.5% growth. And currently we have more and more awareness when it comes to well-being and better health, right? There is so much of importance where contracting plays a picture: the increasing need to reduce health costs while adhering to the regulators' requirements, and the safety and security along with the confidentiality clauses which have been rolled out. And I think everyone should know that contracts are everywhere in your life, and there's so much we can get out of it. It's truly staggering when we eventually deep-dive into the actual nitty-gritty of how this infrastructure of this entire product is such a game-changer.
Ali and Anne wrapped up this episode with a little personal history, revealing that he was driven to find out more about Icertis thanks to our CTO and Co-founder Monish Darda's inspirational videos—and also because the college Ali graduated from was right next door to Icertis' building in his hometown of Pune, India. Make sure to listen to the full podcast to hear more about that—and also why Ali is such a fan of Warren Buffett.
To learn more about Whatfix's digital adoption technologies, visit the Whatfix website, and click the link below to listen in our most recent webinar with Whatfix.