Although organisations are successfully undertaking digital transformation initiatives to streamline businesses processes, contract management – a vital function within companies of all sectors and sizes – remains largely manual resulting in a significant impact on revenues and operations. New research by 4C estimates the average resulting loss of business at over $12.9 million per year, with over a third of respondents facing annual loses of $1 million or more.
The EMEA-wide survey also found that the lack of contract process automation is resulting in wasted resources, with companies spending an average of 69 hours per month processing agreements and one in ten (10%) spending over 200 hours per month – equivalent to one working month.
“While Middle East businesses have made exemplary strides in digital innovation, these have often been in the front-end systems that customers directly engage with. However, it is just as important to effectively digitize back-office processes which have just as much impact on customer experience. This is why a centralized system that unifies front and back end functions to deliver visibility through the entire process lifecycle can prove incredibly valuable to any organization,” said Jake Callaway, Managing Director, MENA at 4C.
“When we undertook this research, we were surprised to find that just eight percent of respondents have a fully automated process for managing agreements. Considering that business relationships ultimately hinge on underlying contracts, by failing to optimize their preparation, signing, activation and management, organizations are exposing themselves to risks that could easily be mitigated,” he added.
4C’s research supports Callaway’s advice as it found that the vast majority of companies have experienced issues as a result of non-automation. These include:
- Unintentionally allowing agreements or contracts to expire (42%)
- Human error, such as incorrect document disposal (58%) and time delays to projects (59%)
- Agreement crossover, with for example people signing different versions of the same document (43%)
Shedding light on the challenges that companies face in the automation of contract management, the survey found that 36% cite concerns around data security. Internal issues are also a key barrier, with competing business priorities (37%), company culture (34%), a company preference for hard copy agreements (33%) and a lack of stakeholder buy-in (30%) emerging as the main internal challenges.
Despite these hurdles, an encouraging majority (59%) of organizations see full digitisation and moving towards automation of their manual agreement processes as very important to their business. These organizations outlined their key perceived benefits to be regulatory compliance (41%) and data safety (36%). A further third stated cost reduction (33%), while just under a third expect higher employee productivity (32%) and an improved customer experience (31%) to be outcomes of their investment.
“In the era of Industry 4.0, the very pace of business has transformed. Where once, it was accepted that finalising a contract could take days or weeks, today, speedy, convenient and accurate completion is expected in hours or even minutes. With automated systems, companies can build a culture of accuracy and efficiency, where innovative technology lightens the load of contract management. It is imperative that organizations embrace sophisticated digital tools that enable a more sustainable future,” said Callaway.