It appears that the days of massive stacks of paper, endless rows of filing cabinets, and clunky, ineffective ways of managing contracts are rapidly coming to an end. Although contracts are the lifeblood of nearly every organization in every industry, traditionally the management of these documents has been disjointed at best.
That’s all changing, as the contract management market begins to expand, and contract lifecycle management platforms take hold. According to a recent report, “Global Enterprise Contract Management Market-Trends Analysis Product Usability Profiles & Forecasts to 2023,” the enterprise contract management market is expected to expand from $1086 million to $3167 million — more than tripling in value — within the next six years. The compound annual growth rate for the industry is predicted to be a healthy 16.65 percent.
What is driving this unprecedented growth? A number of key factors.
We live in a data-driven society. About 2.5 quintillion bytes of data are created every day, containing information and insights that can do everything from tell businesses how much laundry soap to put on the shelf in a single store to predict how a potential business deal will impact a company’s bottom line. The demand for these capabilities is a chief driver of contract lifecycle management tools, which offer unprecedented capabilities in terms of data analysis.
A company’s contracts contain a wealth of data, which until the advent of contract management software, was often cumbersome to extract, and potentially riddled with errors. Teams of lawyers and analysts spent weeks and even months combing through databases and printed documents to parse out relevant information, costing large companies millions of dollars.
With advanced tools like Exari Vision, on the other hand, detailed insights can be captured with just a few clicks, thanks to artificial intelligence-driven algorithms and data analysis. Not only is the process faster, but it’s also more accurate — businesses have the capability to analyze all aspects of their contract data, evaluate risk, and make better decisions.
Depending on their industry, companies have more compliance regulations to meet than ever before. While complying with regulations such as HIPAA, PCI DSS, GDPR, and other financial regulations comes with costs, noncompliance is even more expensive. In the financial industry alone, experts estimate that it costs organizations about $5.47 million to comply with IT regulations for data protection — and nearly $15 million in noncompliance costs, when you consider fines, lost productivity, and lost revenues.
Because the costs of noncompliance are so high, many companies are looking for ways to improve their compliance and reduce risk, and contracting is often high on the list. With an automated contracting platform like Exari, it’s possible for problematic contracts to be flagged before they are executed, saving the business time and money. For example, if a party in a contract fails to meet minimum insurance standards, the clause will be automatically flagged for review, ensuring that the issue is addressed before it becomes a costly problem.
The ability for contract management software to provide better visibility into the enterprise’s contracts can mean a significant boost to the bottom line. Every year companies lose millions on expired contracts, often because the expiration dates passed without anyone noticing. A contract management platform allows a company to more proactively address contract renewals and expirations, saving the company lost business and potentially allowing for the negotiation of more favorable terms. In fact, according to research from the Aberdeen Group, companies that proactively manage their contracts renew 56 percent and renegotiate 49 percent of them, whereas those that do not only see about a 25 percent renewal and renegotiation rate. That can potentially translate into millions of dollars, making contract management software an attractive investment.
In many companies, contracting is often seen as a slow and laborious process, with too many people involved and too many steps. Contracts management is full of tales of bottlenecks created by overwhelmed legal departments, inefficient processes, and the lost deals and revenue that come with them. With contract management software in place, contracting speed increases, making it possible to close more deals quickly and spend less time on administrative tasks — and more on important strategic priorities. Exari Contracts™, for instance, offers an intuitive template-based "interview" process that allows for self-service contracting, giving teams the ability to develop certain types of contracts in a matter of minutes using pre-approved clauses. Productivity increases, your business becomes more efficient, and your people can focus on more important priorities.
Exari is proud to be on the cutting-edge of a growing and increasingly important industry. Contract management is vital to any industry, from healthcare to insurance to finance to energy and beyond, and our tools make it possible to get the most from these all-important documents. Schedule a demo today and learn more about how we can help you gain more control over your contracts.