This article was originally published on Business2Community.
While digital transformation is a term or buzzword (depending on your audience and level of fatigue), digital contract transformation (DCX) has less of a following, which is surprising given its importance.
Contracts are a business’ lifeblood, and play a critical role in helping companies manage their relationships with all parties in the supply chain, but poor contract management processes continue to impact companies’ bottoms lines. The risks due to ineffective contract lifecycle management include overlooked penalties, missed obligations, lost revenue, lost savings, lost contracts, unexpected renewals and expirations, hidden clauses that leave a company open to liabilities, and potential overall brand damage. There are a number of contract management vendors offering solutions, but few manage to tie contract management into an organization’s overall digital transformation strategy.
Before COVID-19 hit, 92 percent of companies thought their business models would need to change given digitization, and business leaders were expecting that 80% of revenue growth would hinge on digital offerings and operations. Now, analysts estimate that digital adoption by consumers and businesses has jumped five years forward in about eight weeks. COVID has shown just how heavily reliant we are on digital technologies and how important it is to have the agility and flexibility to minimize business risk during disruptive times.
Digital Contract Transformation allows businesses to digitize their contracts and contract lifecycle management (CLM) processes, making them fundamental pillars to overall digital transformation efforts. Data is a business’ most valuable asset, and harnessing that data gives businesses the ability to benchmark, track and optimize the key performance indicators most important to them. It essentially allows organizations to do more with less, finding underperforming services, and additional cost savings opportunities, as well as ensure governance and compliance.
While all organizations are different, businesses that have successfully implemented digital contract transformation strategies followed the following key steps:
- Centralize business agreements in a digital, cloud-based contract repository.
- Use automated alerts and tasks to keep track of your most important contract deadlines.
- Use clause & template libraries to assemble contracts with compliance and speed.
- Practice religious version control.
- Create automated contract workflows that eliminate manual processes.
- Leverage an electronic signature process to get contracts executed fast.
- Set role-based and feature-based permissions to ensure security and compliance.
- Get real-time process visibility with dashboards and reporting metrics.
- Have one standard and online contract request process that all employees can follow.
- Capture and store full contract history data to demonstrate full regulatory compliance and audit purposes.
One thing that’s crystal clear from the COVID pandemic is that digital transformation efforts will not be going away anytime soon and are likely to accelerate. Data and KPIs are foundational to digital transformation, and businesses run on contracts. Digital contract transformation is (and will continue to be) a foundational element of an organization’s broader digital transformation strategy because it not only modernizes contracting efforts, but it enables them to harness the data in their contracts to deliver actionable business insights that are at the heart of digital transformation.