A well-designed enterprise contracting capability knits together multiple departments (and their supporting technology systems) so that contracting is conducted with full knowledge of the extent of the corporation’s relationships with suppliers, customers and partners (including those with multiple roles) across the enterprise. In this scenario, the company acts upon obligations proactively, executes quickly, and manages risk efficiently and effectively. With digitized the contracting process, contracts become sources of structured data, which can be harvested and analyzed. Systems integrations are critical for the transfer of data, not only to move things along, but to provide insights to support decisions and prompt timely action over the course of a business relationship. In particular, contracting technologies offer data to Legal leadership that has been unobtainable historically. With contracting technology in place, GCs can contribute data and insight to corporate strategy, rather than being confined to the siloed perspective of risk mitigator (aka “barrier”) and cost center.
That said, we can’t ignore cost when assessing contracting technology options. Critical to obtaining support and budget for investments in contracting solutions is developing a business case that features reasonable and tangible benefits, justifying the return on investment. Though many vendors offer “ROI calculators” or indicate benefits exceeding millions of dollars due to “potential” risk avoidance, strong business cases contain actionable “hard” benefits that are likely and verifiable. To make the case for the technology, you will need to verify the baseline for critical metrics and put a value to future improvements. Once the solution is deployed, you will need to capture actual data for the critical metrics to prove the business case.
We have identified 5 benefit categories below, some of which are easier to measure/estimate than others:
| BENEFIT | Ways Contracting Technology Can Help |
| FASTER CONTRACT EXECUTION | · Automating workflows with smoother handovers (e.g., standard intake questionnaires to identify the right template and route the request to the right person, with built-in escalation, approval and signature matrices) · Actively tracking contracts through the process – for the business requestor and the negotiating team – with alerts for the person on point for next steps · Enabling self-service for low risk, low complexity contracts with guardrails · Providing visibility into capacity and workload for better assignments · Using data on turnaround and handling times to identify and fix workflow bottlenecks over time · Identifying terms that are always negotiated and redrafting standard terms to reduce the number of turns on a contract · Reducing handling times through higher quality structured requests, plus easy access to related contracts, standard templates and playbooks/clause libraries |
| BETTER CONTRACTING RISK MANAGEMENT & COMPLIANCE | · Easily retrieving all contracts, tagged with their important characteristics in a “single source of truth” repository · Aligning to corporate taxonomy, rendering data consumable outside of Legal · Understanding relationships by establishing parent-child hierarchies to identify full sets of related agreements · Making data on clause positions (e.g., force majeure, assignment/novation) readily available when needed · Capturing important data elements (e.g., renewal date) for reporting and alerts · Using standard templates and playbooks/clause libraries to consistently enforce company positions · Easily updating templates and playbooks/clause libraries if there is an important change (e.g., new regulation, new corporate policy) · Exposing audit trail of the contract creation process with escalation, approval and signature confirmations · Tracking obligations and avoiding breaches · Enabling prompt billing for speed to revenue, as well as the opportunity for faster payment to earn discounts according to contractual terms · Reducing work at risk (no legally binding agreement) and improving revenue recognition via consistent clauses |
| HIGHER REVENUE CAPTURE | · Taking a more strategic, partnership-focused approach to contract negotiations supported by visibility into multifaceted relationships between companies · Maximizing discounts and volume of both buy and sell side, avoiding any off-contract rates · Improving tracking of outbound licenses and full recovery of royalty stream (in concert with the IP Department) · Booking revenue earlier through improved turnaround times · Avoiding auto-renewals to renegotiate rates · Reducing time to FDA approval for clinical trials at life sciences companies, leading to earlier revenues and more time on patent · Identifying lost opportunity for capital (i.e. paying too early) and managing non-standard payment terms |
| LOWER COST CONTRACTING | · Getting right work into right (less expensive) hands through standardization and centers of excellence for routine agreements · Using data on throughput and contract types to right size and shape contracts team · Achieving better cost-to-serve metrics for contracts (buy and sell) by allocating the right resource |
| GREATER JOB SATISFACTION | · Legal professionals can focus on their highest and best use while reactive, high-volume, low-risk, low-complexity contracts are shifted to self-service or more junior resources (with standard templates and playbooks) |
Lindsey Pitt, Vice President of Legal Business Advisory, brings more than 25 years of experience to Epiq. Over the past decade, she has been responsible for consulting on, designing, and launching some of the legal industry’s most innovative tech-enabled contract management and legal operations solutions. Lindsey is a graduate of Cambridge University and has an MBA from Harvard Business School.
