Today as in years past, the speed of business continues to increase. Markets evolve, products improve, requirements change, and timelines shrink. Time gets more valuable every year, particularly as workloads increase while the global supply management workforce continues to recover from the Great Recession. Indeed, in 2015, the International Labour Organization reported that there were still 39 million fewer global supply management jobs than there were before the global economic crisis began in 2007[1]. As a result, organizations today and for the foreseeable future must become more agile – from the procurement organization as whole, to the Chief Procurement Officer (CPO), down to the mid- and junior-level procurement pro and the processes and tools that they employ to get the job done. All of these parties need to be quick on their feet, able to reach decisions and decision makers faster and more effectively with fewer resources and less room for error. In effect, they need to do more or better with what they have.
So Much Paper and Ink
In this kind of business environment, manual, paper-based processes are a major obstacle to success, particularly within the realm of contract management. The inefficiencies, opportunity costs, and risks associated with manually generating, editing, mailing, signing, storing, and reviewing paper contracts across the globe to codify business relationships have become too great. Business needs and timelines are too fast and mobile for manual, paper-based contracts. Luckily, technological innovations within business solutions have automated and digitized many procurement processes, including contract management, allowing many CPOs and procurement teams to become agile – to be faster, more effective, and proactive in an ever-changing business environment.
Automated contract management platforms and tools can drive efficiencies, speed, performance, and value over manual, paper-based processes. Nonetheless, 79% of the market continues to manually author, edit, and process procurement contracts, while 56% of the market stores their procurement contracts outside of a central, searchable repository. As a result, the vast majority of enterprises incur opportunity costs by not automating these two contract management sub-processes. Digital contract authoring, reusable templates and language, and central, searchable repositories can save all parties from duplicating efforts and making costly errors. Meanwhile, electronic signatures, automated workflows, straight-through processes, and mobile-first/mobile-ready applications can cut contract signature and execution times down from months to weeks and even days. All told, modern, automated contract management tools can save enterprises time, effort, and money, and prevent them from making costly mistakes or losing paper contracts on a messy desk or in an old filing cabinet. For enterprises looking for cost effective ways to increase efficiencies, performance, and value, automated contract management tools and solutions are essential.
Two recent technology innovations – cloud-based applications and Blockchain technology – are now coming online to make contract management applications and tools even more accessible and powerful. For starters, cloud-based contract management platforms and applications, like those provided by Icertis, enable procurement teams of all sizes to access affordable but robust and user-friendly contract management applications via the web and benefit from the support of a managed service without all of the overhead. Users can access pre- and post-contract management tools with a few clicks and without massive capital investment.
More recently, Blockchain databases have been reimagining the very nature of how trading partners record and manage their relationships. Blockchains, which are digital ledgers on which digital currencies like Bitcoin are traded, can act as de facto contracts wherein each transaction made between partners is recorded in a web-based system of record that is said to be unhackable. In fact, each change made by each partner is automatically recorded on a new “block;” and because it is an open system, any and all changes can be seen by any party – from current partners to prospective partners. Thus, Blockchains have the potential to increase the visibility, fidelity, and agility of the average procurement team, particularly when applied to contract management processes and tools. Solution providers, like Primechain, are working to apply Blockchain technologies to contract management.
Final Thoughts
As we near the end of 2017, it is high time for sourcing and procurement teams to relegate paper and ink contracts to the recycling bins of history and join the digital revolution, which for those keeping track is nearing 20. Business leaders need not spend a fortune in order to reap the benefits of modern contract management tools. Cloud-based solutions can afford small teams of modest means with the ability to become agile and efficient at a time when agility and efficiency are nearly table stakes. Pretty soon, Blockchains may be viable alternatives to “traditional” pre- and post-contract execution management tools, where every change and transaction is recorded for every trading partner to see.
[1] International Labour Organization, World Employment Social Outlook: The Changing Nature of Jobs, May 19, 2015.
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