Contract Management’s Day Has Arrived

When building buy-in for Contract management, get your story straight first.

Thursday, October 20, 2016
BY: Glenn Danielsen, Director of Sales Scanmarket A/S

In the world of Strategic Sourcing, it’s sometimes difficult to anticipate how early and how broadly a particular solution will be adopted by the broader community. The best example currently is Contract management. Contract management solutions have been on the market for some time but, frankly, it took them a while to start gaining real traction with customers. This is true despite some very real and proven benefits. A study from the NCMA (National Contract Management Association) found the following buy-side ROI drivers: 

  • 2-7% Direct savings on purchase costs
  • 55% Improved compliance management
  • 25% Increased discount/rebate capture
  • 50% Reduction in contracting cycle times
  • 25-50% Reduction in contract administration costs


These are in addition to the clear, intuitive benefits of transparency, risk management, and compliance.

 

One of our first Contract management customers put it best,

“It has allowed us to focus key resources on what’s important to our business rather than waste time on administration.”

Recently, we have seen a significant increase in the number of new customers signing up for online Contract management. We are attributing this change in attitude to several factors:

  • The systems have gotten easy enough to use that it is no longer a chore to get the multiple departments on board (e.g. procurement, legal, sales, etc.)
  • On-boarding approaches have been improved that make it easier to migrate existing information into the new system without major I/T resources
  • An increasing openness to combining buy-side and sell-side systems into a single program


That said, the question we are asked most often by prospective customers is not WHY to use Contract management but HOW to justify the investment to the “powers that be”. Based on what we have seen other customers do to successfully get a Contract management program approved, our advice is centered less on building the most bullet-proof business case than on having good answers up-front to the following questions:

  • What were the key benefits the organization will get from a Contract management solution? How will these benefits be measured?
  • What specific risks will Contract management help manage?
  • Is the legal department on-board from the beginning? How about sales?
  • What’s the plan for file conversion and on-boarding? How much I/T time will be required?
  • What’s the plan for on-going administration?
  • What’s the plan for geographic, user and business unit rollout?
  • What are the risks in NOT adopting a Contract management system?



In the words of one of our new customers,

“There really wasn’t much need for convincing. The benefits were too obvious. We just needed to prove we had a plan.”

 

Contract management programs have really taken off. It is currently the Scanmarket module experiencing the highest growth. If you have a plan, you can make sure your organization is taking advantage of this powerful approach.

For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please visit us at www.scanmarket.com or contact your Scanmarket Account manager.

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