3 Benefits Of Digital Contracting For Maturing Enterprises
Costs of end-to-end contract management are going through the roof. A CLM platform on the back of a sound digitization strategy is the answer to reducing costs while increasing efficiencies. But every company goes through different stages of CLM maturity and has its own journey.
A low-complexity contract costs a company $6,900 right from drafting, negotiating to execution, while a highly complex contract costs $21,300. Imagine the sheer cost of end-to-end contracting when your company has literally thousands of contracts. How do you achieve the returns on this investment? Digitization is the answer.
Rapidly incorporated as a viable tool for the organization to manage their expenses and risks, an effective CLM strategy helps the organization realize revenue and growth opportunities. The path to realizing value from your contracts is critical.
There are three simple stages and benefits of digital contracting.
Stage 1: Gain Visibility, Minimize Risks
A typical organization faces several challenges from a CLM perspective. Paper-based or email contracts are managed in silos across different business units, often across countries in large organizations. Contracts are often authored manually, and negotiated with very little insight into past performance and risk metrics. Once a contract is signed, it is usually lost among emails, offline file servers, or other enterprise IT systems, preventing contract managers from accessing and interrogating them for intelligence.
The first step in this journey towards better visibility and control is to ensure that contracts are not siloed, which can be done by leveraging the existing IT systems and retrieving data from them using prebuilt integration adaptors. Then comes extracting and digitizing the contracts by pulling out metadata, clauses, obligations, service levels, rate cards, and more.
A platform like Sirion offers the capability to bring all the data from the contracts under one centralized cloud-based repository. Once in the repository, the data on cloud is interrogation-ready, and becomes a great source of contract intelligence.
Stage 2: Faster, Smarter Contracting
This is where Sirion acts as a platform to bridge organizational silos and brings various enterprise teams – such as finance, procurement, and legal – closer together and empowers them with AI capabilities to not only self-service but also negotiate smarter.
With Sirion’s pre-approved clause and template libraries and self-service contracting capabilities, anyone can contract smarter, faster than ever before. With the platform, using standardized language, ensuring that compliance requirements are met, aligning to the company standard position, and conducting an AI-led legal review to minimize risky or missed clauses is easy.
Armed with a document assembly wizard and pre-built templates, Sirion CLM ensures that contract authoring is done within minutes with a few clicks. Plus, companies can get AI-led prescriptive insights on language selection to reduce risks. To close the loop, the configurable workflow with e-signature tool integration helps to simplify approval and execution.
Stage 3: Enhance Performance, Derive Value
Now that we have smarter contracts, the next step is to ensure that your organization has a clear line of sight into the deliverables vis-à-vis what was promised. This can be achieved by monitoring obligations and service levels till closure and analyzing historical performance data to predict failures and take proactive corrective actions.
With all the performance data captured, the next logical step is to ensure that both parties have a shared view of the data, reducing the likelihood of disputes. To do this, Sirion’s four-way reconciliation process helps to plug financial value leakage through automated reconciliation of invoices.
The solution extracts underlying obligations and service levels from executed contracts and maps performance data to contractually expected outcomes to automatically validate supplier invoices. This, in turn, enables enterprises to ensure that they pay for only what has been delivered, predict potential disputes, and take a data-driven approach toward supplier management.
Sirion’s shared ledger architecture helps set up a single pane of glass between buyers and suppliers and offers a common view of performance data, which can be used to preempt issues and disputes and take necessary actions to resolve them. Further, organizations can leverage spend analytics to develop forecasts and budgets across business lines or other aspects.
Why You Need To Reap The Benefits Of Digital Contracting
This three-pronged digitization approach to an effective CLM is critical for any enterprise trying to compete in a rapidly reviving economy in the post-COVID era. With the changing face of supply chains and new customer demands, enterprises must re-visit their overall strategy in the procurement of any goods and services. And being the cornerstone of all relationships, contracts can greatly enhance a company’s ability to accelerate business innovation and overall transformation.