Understanding the “Why” Behind the Contract Management Process
How to drive ROI by understanding the WHY behind contract agreements.
We know that having a good contract management process is critical to revenue; World Commerce & Contracting once found that poor contract management can cost companies 9% of their bottom line. But it’s not just how fast you can negotiate or execute a contract that drives value— it’s in the data you gain from clients each time you reach an agreement (If you were paying attention, that is).
What to focus on during the contract management process
The first thing to know about agreement building is that many organizations still oversee most of the process manually. This typically involves games of email ping pong and approval tag, which can be time-consuming, frustrating, and can expose organizations to risk. More importantly, extracting data from the process manually usually involves waiting until the negotiation is over to record data that is only relevant to the outcome. Peter Thomson, Head of CLM Product Marketing Sales at Mitratech, believes that this is a critical oversight that can cost companies in the long run:
Looking at data taken after a deal is reached is like only watching the last five minutes of game film— you lose critical perspective on the moves you made along the way.
To that end, you also lose behavioral insights on your clients and stakeholders that could prove helpful later on, including:
- What shifted the tides in the agreement?
- Who was the best person to go to for each stage of approval?
- Were there any addendums made?
- Which sections of the contracts presented roadblocks?
- Where in the contract process did your team spend the most time?
These insights would be useful to have on file should you have a repeat customer, but you can also leverage them immediately to inform best practices for future agreements. In addition, keeping a digital record of the end-to-end contract process can help you discover why and how agreements are being reached — insights that could boost party approval and accelerate the process significantly. If you know that party X will have a Y response to a specific clause 78% of the time, actions on that clause can be adjusted, streamlined, and confidently pushed forward. When data informs your efforts throughout the contract process, everyone spends less time negotiating and more time reaching agreement.
Leveraging data to drive insights
A comprehensive contract management solution can help automate daily tasks and accelerate operations, but most fail to collect the behavioral data needed to deliver actionable business intelligence. It’s important to find a platform that can create a digital audit trail of behavioral data. These granular analytics can be used to improve business decisions, accelerate time-to-agreement, optimize savings, and drive efficiency.
For the best return on your investment, find a platform that offers behavioral data collection and intelligent analytics. Bonus points if you find a solution that integrates with matter management, workflow automation, and legal hold for better end-to-end control over your legal operations.