Gartner’s 2015 predictions for the procurement technology market, “Predicts 2015: A Maturing Procurement Technology Market Creates New Opportunities for Value Creation” is a good read if you can get your hands on it. With all of the technology that has been deployed over the past 15 years, companies still need to find ways to keep ahead of it. I am actually taken back by the need for enterprises to approach both technology and processes (AGAIN), specifically when it comes to procurement and contract lifecycle management.
Gartner discusses how this market is poised for change. Why many large enterprise buyers have multiple ERP systems because of mergers, acquisitions and/or a two-tier ERP strategy. How organizations are growing increasingly frustrated by the problems that multiple ERP systems can create. These environments are definitely poised for change. We are seeing tremendous opportunity for organizations to get a handle on technology at the intersection between procurement and contract lifecycle management. In their key findings, Gartner calls out that complex organizations stand to lose the most if technologies continue to be fragmented. This doesn’t surprise us as we’ve seen this play out with our clients as well.
The specialized procurement and sourcing solution market, Gartner states, emerged in the wake of the Internet’s expansion in the mid-to-late 1990s. That market has started to mature in the areas of general-purpose e-procurement and e-sourcing; and is now offering opportunities for companies to further invest in more specialized tools that enable greater value to be extracted from the original investments. I agree that while some vertical industries have been slower to adopt tools for automating procurement, they are starting to realize the benefits and taking steps to transform their procurement processes along with contract management.
The research note covers an interesting spectrum of strategic sourcing, procure to pay and enterprise contract lifecycle management (ECLM). On the ECLM side, Nigel Montgomery predicts: “By the close of 2017, contractual complexity and audit scrutiny will drive a 40% or higher increase in contract lifecycle management (CLM) solution adoption.” The term ECLM is rooted in this very market force. You can read more about adopting an ECLM strategy here.
The reasons why enterprises should consider ECLM are many. Are you concerned about the risks associated with poor contract management, including potential major losses in penalties, lost revenue through ineffectual terms, a damaged brand due to poorly constructed or missed terms in the contract? There’s also the risk of lost savings and opportunities through poor administration of contracts or lost contracts, unexpected renewals and expirations, and hidden clauses that leave the company open to liabilities and other disadvantages.
In a nutshell, the benefits of a mature contract life cycle management (CLM) process include improved legal collaboration and faster approval times. That’s important because it enables increased transactional scale without increased personnel costs. When you have increased governance and control over what is signed, when and by whom it is signed, the resulting ramifications of contract inclusions become obvious. The enterprise CLM (ECLM) approach will streamline the adoption of CLM across the organization. It is a vital component in a strategy aimed at efficacy, efficiency and moving to a paperless office environment.
Contact us to find out how you can take your CLM solution to the next level in your journey to become more proactive, work smarter and be faster to the deal. Learn about the ECLM strategy that’s right for your business.