How Agreements Are Managed Today
How companies manage their contracting process is now critical. It must be digital, efficient, user-friendly, secure and accessible.
A commissioned study conducted by Forrester Consulting on behalf of DocuSign asked nearly 1,000 global business leaders about how they manage agreements. The biggest takeaway: Organizations that can improve internal processes and deliver a superior and seamless digital experience to customers, employees, partners and suppliers will win.
- Manual agreement processes still burden 9 out of 10 companies, resulting in poor customer experiences, delays in starting projects and delays in recognizing revenue
- Electronic signature is becoming a standard practice, 68% of contracts signed in certain departments utilize e-signatures
- The focus should be on finding other uses for e-signature across the organization as well as connecting it to other parts of the agreement process
- Improving customer experience is the top reason cited for investing in better tools
- Contract lifecycle management stages and challenges
- Key recommendations for a contract automation strategy
Keep reading for a look into global agreement processes and the reasons other companies plan to invest in operational improvements this year. This is a summary of The State of Systems of Agreement 2020, a DocuSign commissioned study by Forrester Consulting.
Customer experience is the most important innovation driver
One of the most impactful findings of the 2019 State of Systems of Agreement report was that respondents viewed customer experience as the top reason to change technology tools. That finding is true again in 2020, with 79% of respondents identifying customer experience improvements as either a high priority or critical priority.
The good news is that survey respondents identified improved customer experience as the most common benefit of a digital agreement process. In fact, 55% of respondents in 2020 reported increasing customer experience via digital agreement processes. One of the interviewees in the survey even commented on the physical effort required to sign documents before e-signature: “The stacks of paper we had people sign were two or three inches high—people would walk out with their hand cramping, then it had to be FedExed overnight.”
There’s even better news though. Most of those respondents also had only partially digitized systems of agreement, so there’s still plenty of room to grow and give more attention to customers. The truth is that organizations don’t have to make a choice between focusing on customer experience or employee experience. Those two outcomes are connected. As digital agreement technology gets more connected, customers have more power to self-service. When the customer can’t complete a task on their own, the same improved systems also make it easier for employees to spend more time with customers and answer questions faster than ever. Happier employees make happier customers and vice versa.
Manual agreement processes burden 90% of organizations
If your organization is still struggling to streamline contract management workflows, don’t worry. You’re not alone. An overwhelming majority of organizations in the Forrester study report manually inputting agreement details, duplicating existing documents as a template or creating every new agreement from scratch. All of these processes are inefficient, time-intensive and error-prone.
These outdated methods of creating agreements translate to direct and indirect impacts on revenue. The respondents in Forrrester’s research reported poor customer experience (46% of respondents), delays in starting projects (43%), and delays recognizing revenue (42%) as the most common problems related to inefficient agreements. Among respondents, there’s a global understanding that perpetuating these agreement inefficiencies will only result in higher costs and lower quality of work.
There are two primary takeaways from the overwhelming amount of organizations that realize their agreement processes are too manual. The first is that there’s an opportunity to get ahead of the competition by building a connected, automated system of agreement. The technology to build a digital agreement system is still new and the first organizations to capitalize on those tools will gain a massive competitive advantage. The second takeaway is that other organizations are realizing the need to improve agreements too, so the ones that operationalize that vision fastest will win the race to improve internal processes and deliver a superior product to customers.
“The biggest [impact] is time to revenue; the time it takes between [start to finish] is the time it takes for us to recognize revenue. Those signatures are money . . . we’re getting our money faster now.”
Individual agreement steps have been digitized, but remain disconnected
Among the respondents in the Forrester survey, there have certainly been attempts to digitize systems of agreement, the problem is that organizations are taking one step and stopping rather than continuing to digitize the entire end-to-end process. The result is pockets of digitization and even some automated processes, but gaps between steps that create siloed workflows. These first steps are important to take, but there’s enormous value in taking advantage of the momentum created by those digitization footholds and expanding further.
The systems of agreement described by our respondents likely have multiple separate point solutions that provide small tactical benefits but miss out on larger strategic shifts. These point solutions still require manual effort to carry work from one step to the next, minimizing their total value.
Consider the example of a common first step: electronic signature. This stage in the system of agreement is important to digitize because it removes unnecessary paper costs, shipping delays and complicated printing/scanning/faxing workflows. Digitizing signatures certainly has benefits, but in the grand scheme of agreements, there are far more significant efficiencies to be gained by connecting and automating steps before and after the signature.
If an organization has solved document signatures with an e-signature tool, imagine how much more powerful that process could be with an integration to a CRM that allows sales reps to populate a preapproved template with account details and send that agreement for signature directly from the CRM interface. That connection would dramatically increase overall efficiency by connecting agreement preparation and signature phases. Another step could be taken to automate actions that need to be taken once the agreement is completed by the signer. Another step could be taken to automatically send an expiring agreement out for renewal without a manual review. The more an organization finds ways to connect tools in its system of agreement, the more value it will get out of that system.
The holistic agreement process
In Forrester’s research, respondents identified current challenges with individual steps in their agreement workflow. Often, these challenges can be solved by connecting the separate steps together into a single efficient system of agreement. Below is a quick summary of individual steps in the agreement process as well as some common challenges at each stage. As you read through, imagine how a well-connected system would simplify the flow of information and improve any organization’s overall ability to execute.
- Document generation—Before an agreement can be signed, it has to be drawn up with details about the work that will be delivered and the payment for that work. Unfortunately, 90% of organizations are still preparing agreements manually, which leads to long delays and error-prone documents. By using agreement technology like DocuSign Gen, agreement platforms can be integrated with a CRM tool to automatically pull data, create custom contracts and send for signature all from the native CRM interface.
- Contract signature—Electronic signature has been adopted by at least one team at most organizations, but there’s still untapped potential in connecting signature to more parts of a company. In Forrester’s survey, 56% of respondents still struggled with document visibility and 48% experienced delays due to information errors. While the signature collection is much more efficient, the process doesn’t improve if the data is bad or the company isn’t prepared to put the agreement into action.
- Acting on agreements—Once an agreement is signed, the terms need to be executed for work to be done. This action looks different for every organization, but the next step is typically the creation of a work order, an invoice, an inventory purchase, etc. According to Forrester, 56% of respondents still have manual processes in place to kick off post-agreement processes, which leads to duplicate work, errors in data transfer and additional delays in delivery.
- Contract search and analytics—It’s very rare that an agreement is simply signed, executed and forgotten about. The language of that contract needs to be accessible to all parties for reference and analysis. Yet, 59% of Forrester’s respondents report inability to effectively search agreements’ full text and 47% are exposed to risk from inability to detect problematic contract language. Intelligent contract analytics tools can create a single database of all existing agreements, use AI to scan those documents and pinpoint specific language that contains opportunities or risks.
To learn more about how today’s leaders are using connected agreement tools to improve internal and external results, download the State Of Systems Of Agreement, 2020 report. You’ll find more information about the trends covered in this blog post as well as key recommendations from Forrester about the steps necessary to embark on your own digital transformation and build a state-of-the-art agreement process.