Nearly every business engages with them—from their employees to their customers to their vendors and suppliers, and beyond. This can add up to hundreds, if not thousands, of contracts being negotiated, signed, and renewed each year.
When it comes to managing these contracts and the processes surrounding them (whether it’s on paper, a spreadsheet, or using a contract management tool) chances are, you’re continually improving. And if this means going from manual to automated, replacing a solution that isn’t getting adopted, or consolidating many systems into one–the next step is diving into the search for the right contract management solution.
As the primary user or leader of the team that will be primary users, you watch demos, read case studies, evaluate and finally narrow down which solution you want to go with.
But often, this is where the real struggle begins.
Because now, it’s not just about you and your team: You have to make a business case for your chosen solution that’s compelling to the sales team, finance team, IT team, and possibly others.
Explaining the organizational benefits of a contract management solution
To help you build your case for a contract management solution to others within your company, we’ve created a useful guide, full of tangible insight into what teams across the business really expect from a contract management solution.
First and foremost it’s critical to pinpoint the high-impact, organizational benefits that extend beyond the legal team. Here are a few examples:
Customer renewals: Without a system in place, sales executives can accidentally miss upcoming renewals, meaning they miss an opportunity to increase a price or negotiate a longer-term contract.
Vendor procurement: If contracts are disorganized and live in multiple places across the company, you could be paying multiple vendors for the same product or service, or paying one vendor for many different products and services with different terms and conditions for each one, and without realizing any economy of scale.
Subscriptions on auto-renew: With disorganized contracts, your organization may be accidentally paying for years of unnecessary subscriptions, as they automatically renew without anyone noticing (until it’s too late).
Crisis management: If world events take a turn that has your organization looking to cease business relationships with vendors from a specific area…Or if a virus shuts down part of your company’s supply chain and you need to quickly find and replace any suppliers in that region… Just to use two completely hypothetical examples – of course! Having a robust contract management solution in place can make these types of requests possible to fulfill in a matter of minutes without any manual searching.
Customizing your business case for different stakeholders
Next, how do you illustrate the value of the solutions’ specific capabilities to your decision-makers? The key is through identifying your company’s strategic goals and demonstrating how a contract management solution aligns with – and ties back to – each one. You have to find the right points to emphasize when you’re trying to get other leaders on board.
What do your CRO and sales team care about most? Are they experiencing slow contract turnaround time that’s killing deals? Or is their larger pain point that sales reps don’t have insight into the status of their contracts?
How do you present the idea to your CFO and finance team? Are they watching as the company misses new revenue opportunities like price uplifts at renewal, or is money flying out the door because they don’t have a centralized handle on your vendor relationships?
What types of challenges do your CTO, information security, and IT teams face that could be solved with a modern contract management system? Perhaps they’re most concerned about the security risk of uncontrolled access to sensitive contract data or having to manage complex integrations during deployment.
Calculating the ROI of a contract management solution
You know that adopting the right contract management system will yield incredible returns on the business’s investment. If you’re in legal, you can see the hours coming back into your day to do meaningful, high-value work.
But you’re not the only one who’ll reap the benefit, so it’s key in building your case to show the broader organizational ROI benefits of your contract management solution. Like saving hours and hours previously spent on tedious, manual, repetitive tasks, from highly skilled and highly paid staff like in-house legal counsel, or revenue-generating staff like your sales executives.
On top of this less tangible, but still incredibly significant ROI, your company will realize hard dollar savings and increases in revenue, thanks to capturing contractual opportunities to generate (or save) money that have gone unnoticed for years.
Most companies would jump at the chance to increase their revenue, reduce costs, and better manage risks. The right contract management system can do all of that, plus make your work less tedious and more enjoyable!
Foster Sayers is the General Counsel for Pramata. He is on a mission to make Contract MVPs. Using his experiences implementing best practices with leading private equity firms, Bain Capital and Vista Equity Partners, Foster is changing the way businesses manage contracts for the better!