Ardent Partners has written at length about the value of collaborating with internal and external stakeholders (namely, with legal departments and suppliers) to uncover hidden costs, risks, and opportunities within an organization’s contracts. After all, operating in silos and doing all of the heavy lifting can be a short-sighted and inefficient way to manage contracts, particularly since contracts transcend departmental and enterprise walls and touch many hands along the way.
However, collaboration has its limitations, and should be considered in the context of the partner, their capabilities, and the circumstances. Let’s face it: not every problem can be solved by simply picking up the phone or walking across the hall and talking it out. Often, information overload and / or pressing deadlines call for sophisticated approaches to overcome force and velocity.
For example, legal departments operating without digital document management solutions may not be timely in answering questions regarding sudden or developing situations that may place the organization at risk – say, whether the enterprise is required to secure a country-of-origin certificate for a given part or product from a given supplier. And although suppliers often know their markets very well and can be valuable assets while trying to manage cost, compliance, and risk, they, too may not be able to help in a pinch. With hundreds or thousands of contracts with enterprises, a supplier may not immediately know the terms and conditions with a given enterprise – i.e., one that requires country-of-origin certificates, let alone the existence of such documents or their whereabouts.
At the end of the day, collaboration, alone, may not help to clarify and simplify the sheer volume of paperwork that the typical organization must sift through to find timely answers to hot-burning questions. Automated contract management solutions, particularly those that feature robust reporting and analytic tools, can help overwhelmed Chief Procurement Officers (CPOs) and their under-staffed procurement organizations drive greater value and enhance risk mitigation for the enterprise.
- Automated contract management systems can transform reams of paper contracts that take up aisles of space and store them in a digital, central, searchable repository.
- They allow multiple parties – from contract, legal, and procurement teams – to search for contract terms, conditions, and service-level agreements and quickly find pertinent information.
- Likewise, analytics tools can dig deep within structured and unstructured data, aggregate, and distil actionable intelligence.
- Reporting and alerting tools can automatically and repeatedly deliver that intelligence to CPOs and other supply management leaders to facilitate informed decision-making.
Clearly, automated contract management solutions can simplify, centralize, and perform much of the heavy lifting for beleaguered procurement teams. Indeed, 48% of CPOs and procurement teams plan to adopt them at some point. So why not automate? The answer – budget. Many organizations still cannot or do not want to make significant investments in technology (or more people) to offset these challenges.
Although budget constraints is one of the tallest hurdles for CPOs and procurement teams to clear in order to achieve their objectives over the next few years, it is half as tall as staff and talent constraints (a lack of staff and a lack of skilled staff), which befall 60% of CPOs and procurement teams. Perhaps a well-crafted business case that frames contract management automation in the context of enduring staff or talent shortages within an enterprise that continues to shift more responsibility to the CPO and the procurement team, particularly when economic conditions are less risky and continue to improve, will be better received now than three or four years ago.
All things considered (an improved economy, a demonstrated need, an appetite for technology adoption, and an interest in automated contract management solutions), there is no better time to invest in such solutions, particularly those that feature contract analytics and reporting, than now.
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