Digital Leaders and How They Manage Contracts Differently
Organizations are under pressure to digitally transform business processes to deliver better customer experiences, improve productivity and reduce costs. One area that is increasingly becoming a priority is contract lifecycle automation.
What is a contract lifecycle?
When most people talk about contract lifecycle management, they are referring to the collection of technologies and processes used for preparing, signing, acting on and managing agreements. Agreements can include sales and vendor contracts, offer letters, policy updates and many other types of written agreements used across nearly every business function.
To assess how organizations are managing the contract lifecycle, DocuSign commissioned Forrester Consulting to survey 1,087 global decision makers.
The emergence of digital disruptors
We found a clear delineation between those organizations operating with more digitally mature contract processes (digital disruptors or digital leaders) versus those that were lower on the contract technology maturity scale. Digital leaders outpace digital laggards with the practices, processes and technologies used, as well as the benefits experienced.
Here are some highlights and top takeaways we discovered in this third annual study. For more detail, read the full study: The State of Systems of Agreement 2021.
What digital leaders do differently in managing contracts
1. Digital leaders outperform lower maturity digital laggards
Organizations that are further along in digitizing their contract lifecycle experience more benefits and outperform lower-maturity competitors. “Particularly, digital disruptors experience higher instances of silo breakdowns, faster deal cycles and easier information transfer—illustrating how a digital agreement process improves functionality and innovation across the board.”
2. Digital leaders were better able to meet the changing needs of the pandemic
The immediate shift to remote work as a result of COVID-19 required organizations to adapt quickly to maintain business continuity. With contract automation solutions already in place, digital disruptors respond more quickly to unexpected changes. As a result, they were better prepared to pivot to managing the contract process remotely when the pandemic forced that shift.
3. Pandemic-driven technology purchases will remain in place
Many businesses and institutions implemented or expanded their use of technologies such as web conferencing and electronic signature in response to remote work requirements. Now organizations are embracing these digital tools for their overall impact on business performance and 96% say they will continue to use the newly implemented solutions even as the pandemic subsides. This is important because digital technologies can help prepare organizations for disruptive events that are more likely to occur in the future such as supply chain interruptions, new market entrants and rapid growth.
4. Digital leaders utilize contract lifecycle management and contract analytics tools more fully than their lower maturity counterparts
Many organizations start with electronic signature technology to remove the bottleneck of requiring a physical signature. The next step is to consider contract lifecycle management (CLM) solutions that can automate contract workflows and standardize the process to reduce risk.
Our survey found 40% of digitally mature organizations are leveraging CLM software to connect and automate the contract lifecycle, compared to only 3% of lower maturity organizations. Leaders are also much more likely to use contract analytics software that automates the analysis of agreements with AI technology to help uncover risks, obligations and opportunities before- and after execution.
5. The more contracts an organization manages, the more they stand to benefit from automation
As the number of agreements processed increases, so too does the complexity of processing and scalability. Research shows that using digital technologies across the contract lifecycle enables digital disruptors to process higher volumes of contracts compared to digital laggards or those with more manual contract processes.
6. Integration between systems across the contract lifecycle matter
The survey results highlight the impact of disconnected technology handoffs in the contract process. In document generation, for example, 56% of respondents experience inefficiency due to manually transferring customer or product information from existing systems to contracts. Manually adding information also leads to rework to correct the errors that occur. Once a contract is signed, 56% of organizations must conduct duplicate work to re-enter data from signed agreements into systems of record. Point solutions to automate document generation or e-signature work may offer incremental productivity improvements, but tools in each phase need to be connected into a single, integrated contract lifecycle to make sure the digital transformation is successful.
7. Manual processes continue to cost organizations time, money and their sanity
One interviewee described how the implications of a manual process can be detrimental, especially during a pandemic: “Imagine if you're gathering 25 signatures for [a contract]. They'd have to hand it around to 25 people in the office. Not all of them are in the same place, certainly not now given the pandemic, and some that aren't even in the same country. That form physically gets posted around the world before it gets returned, and that elongates the onboarding process dramatically.”
Turn your organization into a digital leader
To get started or accelerate your organization’s efforts to automate the contract lifecycle, consider which contract workflows may be quick wins because they could be easily automated. Alternatively, there may be processes that are causing significant pain and offer a high value return based on the significance of the business impact.
Digital leaders manage the contract lifecycle by:
- Using templates to prepare contracts and integrations with systems of record to automatically add data to contracts
- Using electronic signature for most agreements and digitally verifying the identity of signers
- Automatically capturing most or all of the information in agreements into Systems of Record such as CRM, HCM and ERP systems
- Storing agreements in a way that can be searched from a single interface using automated, non-human search and analytics
- Using contract analytics, both before and after contract execution
Steps to take are included in the Forrester State of Systems of Agreement study.
Here’s some advice from the digital leaders we spoke to:
“Preparation is key. Having a solid foundation and process, where everybody is on the same page, understands who is responsible for what element of the process, how it’s going to work, and how it’s mapped out… there’s a lot of value in that. It makes rolling out more straightforward; having a rough idea of how it’s all going to work made it easier for us to upscale as quickly as we did.” – Legal industry customer
“There needs to be full support from the top down. [It helps] with consistency and understanding… start early with cybersecurity, compliance, legal teams, and strive to get their support and approval altogether so there’s common knowledge.” – Financial services customer
The DocuSign Agreement Cloud helps organizations digitally transform how they do business via contracts and other types of agreements. Learn more about how the DocuSign Agreement Cloud can help digitally transform your agreement lifecycle.
Read the full Forrester State of Systems of Agreement 2021 study.