Given that the typical organization deals with hundreds of thousands of contracts per year, it’s surprising that more companies aren’t turning to enterprise contract management (ECM). In one study, over 70% of respondents said their contract process was not automated, with 58.6% using e-mail and 49.4% using shared drives. ECM systems can bring structure and automation to the contract management lifecycle by ensuring contracts are properly reviewed, their provisions are enforced, their intent is realized, and their weaknesses are recognized and corrected.
However, organizations face challenges when implementing ECM. Many older but still relevant contracts exist in paper form, which makes it difficult to store them in a centralized repository. Further, contracts can vary widely in terms of their source, type, format and structure. With the spike in merger and acquisition activity, these issues are only amplified, as companies need to synch their existing contract management approaches and systems.
And yet, it’s vital for businesses to improve their contract management situation. Without easy visibility into contract activity, organizations are unable to maximize the value of negotiated agreements and ensure compliance with contract terms. Even if they’ve structured and digitized the contract process with larger vendors, that’s not always the case with smaller partners, whose processes are still paper-based, which can result in increased risk, lost revenue and increased costs.