Inefficiency in contract management leaves money on the table, finds DocuSign report
SAN FRANCISCO, Aug. 26, 2019 /PRNewswire/ -- To offer companies insight into the latest trends and best practices for handling contracts in the modern workplace—and to help them optimize their processes as a result—DocuSign (NASDAQ: DOCU) today released the fifth annual "State of Contract Management" report.
The report—previously published by SpringCM (the company acquired by DocuSign in September 2018)—analyzes the benefits and pain points of various methods of contract management, and examines employee attitudes towards the role of emerging technologies like artificial intelligence (AI).
"Agreements and contracts are the very lifeblood of organizations, enabling businesses to run efficiently. But the process of preparing and managing them remains anything but smooth," said Scott Olrich, chief operating officer at DocuSign. "Inefficient tracking methods and human errors are just a few of the ways that businesses are hampering the contract lifecycle. And we intend for this report to help them overcome some of those challenges."
The findings of this year's report indicate some improvement over last year with respect to the efficiency of contract lifecycle management (CLM) processes. For example, fewer respondents this year (16%) view contract approvals as a "big problem" compared to last year (21%). However, given that one of the most commonly reported method for CLM consists of manual inputs into spreadsheets, most companies are clearly still operating with inefficient processes.
When asked about the biggest challenges faced in the contract process, respondents cited the top three as: approvals (at 53%), clause management (33%) and workflow (27%)—all of which could be greatly mitigated by the use of digital CLM tools.
Other key findings include:
- Using the wrong tools paves the way for human error and security breaches.
Almost 40% of respondents said that human error impacts the contracting process often or very often. Eighty percent of employees admit to sending a contract over email—a platform that can be especially vulnerable to security breaches—and more than 25% have shared contracts via fax or postal mail (34% and 29%, respectively). These methods are inefficient, hard to track and increase the likelihood of a contract ending up in the wrong hands—indeed, almost 30% of respondents have sent a contract to the wrong party.
- Manual CLM processes are time consuming and complex.
Thirty-three percent of respondents said a typical contract takes 30+ hours to negotiate—likely due to versioning and modifications, and 52% said contracts go through three to four versions on average before getting signed. What's more, 39% said they have been unable to locate contracts they were searching for, and 84% said the approval process has caused deals to stall.
- Process inefficiencies abound, largely due to tools that are not purpose-built.
The most common way to manage contracts remains Microsoft Excel or other spreadsheet software (31%), while only 27% use a purpose-built CLM tool like SpringCM. Twenty-two percent use a combination of spreadsheets and CLM tools, leaving the door open for human error and inefficiency. Finally, 13% of respondents rely on shared drives, and 7% simply use email.
The data from this year's "State of Contract Management" report reveals a greater openness to emerging technologies. Sixty-one percent say AI can help eliminate human error, and even more believe the technology could help expedite approvals. But only 21% would trust AI to redline a contract, indicating that people are still a vital part of the process—CLM tools simply help make the most of respondents' time and prevent errors.
"Manual remains synonymous with inefficient," added Olrich, "and with the pace of business today, companies that don't embrace modern CLM processes will fall behind. There's still a place for the human touch in contract negotiations, though. And the winners will be those companies that combine all these efforts to free people up to make more strategic contributions."
To learn more about common practices in CLM and to assess where your company falls on the path towards modernizing its systems of agreement, download the full report here.
The report consisted of a survey of 802 full-time employees who play a role in the contracting process. The individuals surveyed came from a wide variety of industries, departments and roles, and all were from companies with more than 250 employees. Participants were asked approximately 30 questions about their experiences and perceptions around contract management at their organizations.
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DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature: the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, more than 500,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and to simplify people's lives.
For more information, visit www.docusign.com or call +1-877-720-2040.
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SOURCE DocuSign, Inc.