In the world of strategic sourcing, contract management is a good example of how difficult it can be to anticipate adoption by the broader strategic sourcing community.
Contract management solutions have been around for a while, but it took some time for them to start gaining real traction with customers. There are real savings to be realized with contract management. A study from the National Contract Management Association (NCMA) found the following buy-side ROI drivers:
- 2-7% direct savings on purchase costs
- 55% improved compliance management
- 25% increased discount/rebate capture
- 50% reduction in contracting cycle times
- 25-50% reduction in contract administration costs
These benefits are in addition to transparency, risk management, and compliance. One of our customers put it best:
“It has allowed us to focus key resources on what’s important to our business rather than waste time on administration.”
Why Contract Management Really Matters
Recently, we have seen a significant increase in the number of new customers signing up for online contract management. We are attributing this change in attitude to several factors:
- Inclusion of electronic signature capabilities such as DocuSign make it easier to take paper entirely out of the process
- The systems have gotten easy enough to use that it is no longer a chore to get the multiple departments on board (e.g. procurement, legal, sales, etc.)
- Integration between contract management and other modules such as e-sourcing and supply base management have gotten much better, making it easier exchange information and empowering stakeholders
- On-boarding approaches have been improved making it easier to migrate existing information into the new system without major I/T resources
- An increasing openness to combining buy-side and sell-side systems into a single program
The question we are asked most often by prospective customers is not WHY to use contract management but HOW to justify the investment to decision makers. Learn how to build buy-in for contract management here.
Contract management programs have really taken off in recent years. It is currently the Scanmarket module experiencing the highest growth. If you have a plan, you can make sure your organization is taking advantage of this powerful approach.
For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please visit us at scanmarket.com or contact your Scanmarket Account manager.