I discussed the law department business case for contract automation with a focus on cost reduction. Now, I want to look at opportunities for the sales department.
In a 2007 report, Sell-Side Contract Management: Opportunity-to-Order Optimization [subscription required], the Aberdeen Group determined that the #1 reason for improving the management of sales contracts is to reduce revenue leakage.
Sounds like a good reason. But what does it mean in dollar terms?
Let's revisit Company X from the law department business case: the assumption was that Company X does US $10Bn in annual revenues, and the conclusion was that Legal could save over $1M per year by improving its contracting.
Now, we're going to look at Company X from the sales perspective. According to the Aberdeen report, on average:
As with the law department scenario, the question is how much that $335M+ can be reduced. Again, I would argue that improving the process should be able to reduce leakage by 10% which, in the case of Company X, means additional revenue of over $30M per year.
Once again, the notes from the law department business case bear repeating:
Ultimately, the goal is to improve the process across functions so that Sales, Legal, Pricing and other departments can work together seamlessly.