Contracts are far from simple documents nowadays; they have evolved into a dynamic representation of a enterprise’s relationship with its customers.

Despite this, contract management in most organizations usually involves largely manual, labor-intensive and disjointed processes. This results in poor visibility into contracts and compliance, lengthy creation and approval cycles as well as missed revenue and cost-saving opportunities.

Research by AberdeenGroup on “quote to cash” revealed that:

• on average, enterprises lose 9% of their revenues due to missed deadlines, lost sales, “maverick pricing”, transactional errors and regulatory penalties

• 68% of companies lose revenue due to disconnected processes on the sell-side (which include a.o. pricing, proposal creation, negotiation, contract management, order management and invoicing)

• on average, 18% of an enterprise’s sales cycle is attributed to contract creation, negotiation and approval – for many enterprises a one-day reduction in the sales cycle is worth a significant amount

• Best in Class companies have sales cycle times that are 10 to 15 days shorter than other companies

• an astounding 85% of enterprises are using manual (34%) or only partially automated (51%) processes to carry out sales contract management activities

• Best in Class enterprises show a significantly better performance on proposal creation, contract approval workflow, pricing compliance and contract analysis

• 40% of companies have fragmented processes around contract management and CRM

• 36% of companies face repetition in processes involving proposal creation and contract creation

• 30% of companies have limited visibility into commitments / obligations from a sales / service contract

• 29% of companies face lengthy contract creation and approval times added to the sales cycle

• Best in Class companies realize a 21% reduction in Days Sales Outstanding (DSO)

Many organizations realize the need to better manage customer contracts, as they contain essential data that must be monitored throughout the lifecycle of the contract.

The main factors driving improvements in contract management on the sell-side:

• improve management of customer relationships (43%)
• the management of sales/customer contracts is becoming more important in the organization (41%)
• effort to reduce sales cycles (37%)
• revenue leakage (34%)
• increased complexity of customer relationships (29%)
• pressure to mitigate and assess risks (28%)
• pressure to better meet obligations to customers (26%)

Processes that present opportunities for improvement are:

• proposal creation (47%)
• approval internal creation negotiation / approval (45%)
• pricing compliance (39%)
• contract analysis (32%)
• contract creation (30%)
• using contract to ensure compliance in the order management & invoicing cycle (30%)
• contract negotiation (29%)
• contract repository (22%)
• contract renewals (20%)

Contract management software provides significant opportunities to improve the sell-side, from quote to cash.