World Commerce & Contracting recently released its highly anticipated "Benchmark Report, The Benefit of Focus, the Cost of Neglect," representing data from over 800 respondent organizations—making it the largest survey of commercial and contracting professionals worldwide.
As part of the research, WorldCC dove into specific industries to better understand the unique contracting challenges and opportunities they face.
In the fifth of a series of these industry deep-dives, WorldCC examined the telecommunications sector.
The report reveals that the ability of the telecommunications sector to form the networks that connect our modern world relies, in turn, on networks of contracts—a network powered by contract management capabilities that in many ways exceed other sectors.
Effective Contract Management Is Key to Telecom Success
While still a relatively ‘young' sector in its current digital form, the telecommunications sector has become a fundamental enabler of modern life and commerce.
"The sector was an early adopter and developer of [commercial and contract management] capabilities, not necessarily out of choice, but because they were critical to success."
Rapid growth in the scale and nature of competition, shifts in the regulatory environment, and the opportunities and threats that come with globalization have all factored into early adoption across the sector of contract lifecycle management (CLM) as a matter of necessity.
At the heart of the telecommunications sector are complex, multi-party relationships and commercial agreements that would be impossible to manage without relying on CLM. It's little surprise that this industry is ahead of the pack regarding current CLM capabilities.
As WorldCC puts it: "The sector was an early adopter and developer of [commercial and contract management] capabilities, not necessarily out of choice, but because they were critical to success." Today, 92% of telecom companies have dedicated contract management resources, vs. a cross-industry average of 69%.
Just how critical contracts are to telecom industry success is born when one looks at how much revenue is tied up in complex agreements.
As highlighted by the report, a "greater proportion of revenue and spend depends on medium- and high- complexity contracts" than the cross-sector average. While low-complexity contracts make up only about 20% of the portfolio on both the buy and sell-side, 41% (buy-side) and 43% (sell-side) of telecom contracts are high-complexity, with 38% and 36% classed as medium-complexity.
Thanks to mature contract management capabilities, the companies surveyed indicated they could focus appropriate time and energy on these high-impact contracts because they've correctly aligned resources.
Survey results show these companies do a good job aligning resources to focus on those more complex contracts while spending far less time than the cross-sector average on low-complexity contracts: Companies in the telecommunications sector engage with these low-complexity agreements 48% of the time versus the cross-sector average of 67% and use a below-average percentage of resources in dealing with these low-value contracts.
In simple terms, across the telecommunications sector, they spend their time on the right things, not the wrong ones.
These are efficiencies powered by CLM technology. CLM gives companies total visibility into where time and effort are spent on contracts to allocate resources appropriately.
No Letting Up on Finding Value in CLM
Despite the high level of maturity and existing focus on CLM within the telecommunications industry, the sector is not content to rest on its laurels. Instead, the telecommunications sector shows continued high interest in adopting new tools and systems.
Fully 81% of respondents indicated that the adoption of new CLM initiatives was being considered, and just 4% reported that interest in such initiatives was declining.
Fully 81% of respondents indicated that the adoption of new CLM initiatives was being considered, and just 4% reported that interest in such initiatives was declining.
The report says these factors are signs that "this is a sector that is awakening to the need for accelerated improvement." Along with contract analytics and knowledge management systems, the need for improvement initiatives ranked higher in telecommunications than elsewhere. These initiatives include CLM skills development and expanding the role of CLM overall.
Conclusion
As early adopters of CLM, telecom companies are case studies of the benefits of investments in contract management software.
Yet work is still to be done as the world continues to evolve and become ever more reliant on the networks these companies provide.
Read the full report to gain further insights on where CLM capabilities are headed in the telecom space and how contract management teams can drive even more value for their organizations.
