Modern contract management driven by AI is the next step in the evolution of enterprises. It delivers an intuitive experience that empowers professionals across departments to work more productively while enabling teams to be more efficient, agile, and responsive to the changing business environment.
When we talk about contract management, the focus goes beyond legal teams and how they are involved in negotiations. The spotlight moves on to creating contract management efficiency and reducing bottlenecks. It is important to highlight the other players involved within the contract lifecycle management who take critical decisions in an enterprise. Once we analyze all the implicated parties within contracts, it becomes easier to understand why contract management is everybody’s business.
The C-suite officers in a company are responsible for making major decisions with respect to their domains. This blog will highlight their interests and explain how contract lifecycle management aids their interests.
Responsibilities of different C-suite stakeholders
- Chief Legal Officer or General Counsel
In a recent Bloomberg Legal Operations survey, 8 out of 10 people surveyed said that their office adopts new legal tech with an eye toward increasing efficiency. Law firms and in-house legal teams are largely responsible for the overall business strategy keeping in mind policy management, risk mitigation, and contract compliance. By adopting an efficient legal technology like a contract management solution, legal teams are assisted with all these functions and more that support contract drafting and assembly. This technology allows stakeholders to spend more time reviewing the contract thereby significantly reducing risks and improves compliance.
- Chief Sales Officer/Head of Sales
Sales teams’ priority lies in closing deals by generating contracts quickly. They need to review term compliance and aim to reduce legal review hindrances. PerformING cost-benefit and needs analysis of existing/potential customers to meet their needs is an important part of their job. The Sales team is responsible for making detailed negotiations with clients so as to establish the terms of the contracts. These negotiations must be quick yet beneficial for both parties. The sales team needs to aim for faster contract closures.
- Chief Procurement Officer
All large enterprises have a team dedicated to procuring goods and services from vendors. This involves processing supplier terms and tracking the renewal dates once the contracts are signed. Procurement teams need to seek approval from other stakeholders in the enterprise. The constant back and forth regarding supply and consumption makes them an essential part of the contract management process. It is the responsibility of the CPO to ensure that vendors and suppliers are complying with the terms and conditions and act accordingly.
- Chief Finance Officer
Finance teams need greater visibility to reconcile contracts and billing. They are expected to generate accurate revenue expectations for the enterprise. The finance team needs to ensure better ROI increased control, higher revenue, and lesser costs. Data breaches, compliance issues, and IT failures, which are a threat to a company’s financial strength, need to be checked in contracts. CFOs are responsible for optimizing their company’s top-line and bottom-line performance. Identifying the immediate challenges to revenue streams, commercial outlays with third parties, and assessing their impact on the bottom-line to deliver the best outcomes is a major responsibility of the CFO.
Optimizing Efficiency through Contract Management
With rapidly changing and the growing complexities in the business environment, expectations out of different teams are way beyond cost savings. To accelerate, protect, and optimize their business, it is about time they completely transformed how they thought of managing contracts. The need to transform and achieve high levels of efficiency with proper Contract Management software in place is the highest organizational priority.
They may not be a primary party to the enterprise’s contracting process, but they have an apparent interest in contracting outcomes. They need to partake in their companies’ contracting process to actively conduct a primary analysis of the potential financial outcome and reduce the likelihood of a future financial setback.
A contract management software assists the teams in performing all the functions listed below to improve revenue efficiency, improve cost savings, and accelerate contract closures without compromising on the quality of the contracts. These benefits precisely prove why all the C-suite stakeholders should be aligned while selecting an AI-driven advanced contract management technology for the organization.
- CLOs/ Legal Teams – In-house corporate legal teams can respond faster to external events, internal requests, and crisis situations by:
- Extracting obligations, deliverables, milestones, policy, and regulatory commitments
- Performing terms and clauses deviation analysis from defined standards across native and 3rd party contracts
- Identifying missing clauses and other risks associated with a contract and alerting all stakeholders of potential penalties and losses
- CSOs/Sales team – Sales operations teams can optimize resources and focus on initiating, maintaining, and expanding customer relationships by:
- Spotting trends in negotiation terms & identifying key contract levers that enable teams to close business quicker
- Forecasting revenue accurately using contract data and usage trends, tracking obligations & liabilities effectively
- Extracting customer intelligence for potential upsell or cross-sell opportunities to maximize customer lifetime total value.
- CPOs/Procurement teams – Procurement teams can increase savings, monitor risk, and perform supplier evaluation by:
- Extracting the terms, pricing, delivery obligations, payment terms, renewal clauses, and product/service performance SLAs
- Auto-identifying clauses that allow the organization to terminate or pause contracts
- Obtaining the intelligence to perform accurate spend analysis, understand contract risks, and reduce procurement costs
- CFOs/ Finance teams – Realize maximum contract value while managing risk with proactive insights and compliance by:
- Proactively monitoring performance against obligations and entitlements, & ensuring best practices to manage compliances with international law
- Extracting key details and analyzing them against external sources including financial and market information, to build up a risk profile for the business
- Improving visibility and notifying stakeholders for the contracts impacted by index changes, currency fluctuations, or geopolitical instability
CXOs face a clear choice today: either stay digitally agile or become obsolete. To streamline organizational functions, it is imperative to create agile contract management and analytics capabilities. The right digital tools – from analytics to AI – will allow CXOs to make data-driven decisions and set the best economic practices. Companies need to actively keep in touch with the commercial terms written in their contracts to drive insightful decision-making.