In today’s macroeconomic context, companies are navigating through challenging times, including periods of recession or economic downturns while operating in an environment marked by rapid technological advancements, global market dynamics, and increased competition. During such periods, businesses often face financial constraints and a heightened focus on cost-cutting measures. As a result, investments, including technology-related expenses, are sometimes perceived as discretionary and subjected to reduction or elimination. However, it is crucial to recognize that even in times of recession, strategic investments in technology can play a vital role in improving overall performance and setting businesses up for future success. One such investment with significant potential is the implementation of a quality Contract Management Software (CMS).
“On average, companies lose 9% of their revenue due to poor contract management.” [1]
The average legal department lawyer spends up to 40% of their time working on tasks that don’t even require a lawyer’s expertise — and this includes a lot of contract work that could be handled (or prevented) with contract management software.” [1]
According to Black Book Market Research, “Healthcare providers in the U.S. spend $157 billion each year to manually manage their contracts. That’s because 96% of healthcare providers have not yet automated their contract management.” [2]
In this article, we will shed light on why companies should consider technology investments, such as contract management software, as critical drivers of value creation and return on investment (ROI).
- Time and Cost Savings: Manual contract management processes are time-consuming and prone to errors. By leveraging a quality CMS, organizations can automate various tasks, streamline workflows, and reduce administrative burden. This not only saves time but also optimizes resource allocation. Employees can focus on value-added activities, such as contract negotiations, relationship-building, and revenue generation, instead of being tied up with manual paperwork. The resulting time and cost savings contribute directly to improved ROI. It’s estimated that healthcare organizations can save the equivalent of 2% of their total annual costs by automating their contract management. [3]
- Enhanced Contract Visibility and Compliance: Contract management software provide a centralized repository for storing, organizing, and tracking contracts. This centralized visibility enables better monitoring of key dates, obligations, and performance metrics. By proactively managing contracts and ensuring compliance with terms and conditions, businesses minimize the risk of penalties, disputes, and non-compliance costs. Additionally, the system’s ability to generate comprehensive reports and audit trails further enhances compliance efforts, bolstering ROI by mitigating legal risks and associated expenses.
- Improved Contract Negotiation and Renewal Processes: Quality CMS facilitate smoother and more efficient contract negotiations. They enable real-time collaboration among stakeholders, ensure version control, and provide access to standardized contract templates and clauses. These features streamline the negotiation process, leading to faster agreement closures and improved contract terms. Additionally, contract management software send automated alerts and reminders for contract renewals, ensuring timely renewals and reducing revenue leakage. By proactively managing contract renewals, businesses can engage customers well in advance and explore opportunities for upselling or cross-selling. This proactive approach strengthens customer relationships, increases revenue potential, and demonstrates a commitment to long-term partnerships.
- Data-Driven Decision Making: CMS capture and store valuable contract data, which can be leveraged to gain insights and inform strategic decision-making. By utilizing advanced reporting and analytics capabilities, organizations can identify trends, patterns, and areas for improvement. They can analyze contract performance, supplier/vendor relationships, and procurement processes. This data-driven approach helps identify cost-saving opportunities, optimize contract terms, and identify potential risks and bottlenecks. Making informed decisions based on actionable insights ultimately drives better financial outcomes and boosts ROI.
- Risk Mitigation and Compliance: Compliance with contractual obligations, industry regulations, and legal requirements is essential for minimizing risks and avoiding costly disputes or penalties. A quality contract management software ensures standardized processes, enforces compliance with regulatory frameworks, and maintains accurate records. This level of control reduces the likelihood of compliance breaches and associated financial consequences. By mitigating risks and ensuring compliance, businesses protect their financial interests, maintain a positive brand reputation, and safeguard ROI.
While there are many Contract Management Software in market today, AffableBPM, a cloud-based SaaS (Software-as-a-Service) contract management solution offers a centralized repository, customizable workflows, routing for approvals, and notifications for important dates, all accessible through a secure and scalable cloud platform. With its cloud-based approach, AffableBPM provides flexibility, ease of access, and seamless updates, eliminating the need for on-premises software installation and maintenance. This Microsoft Azure based SaaS model ensures that organizations can leverage the benefits of AffableBPM without the burden of managing infrastructure, allowing them to focus on secure, scalable and efficient contract management to support their business growth.
