Organizations that make data-driven decisions position themselves for long-term success. Their culture, tools, and abilities are centered around the common goal of collecting quality data and analyzing it quickly and accurately to make informed business decisions. When managed effectively, quality contract data translates to contract analytics, providing the insights necessary for organizations to decrease contract cycle times with sharpened control, governance, and visibility. Learn how to turn contracts into a pivotal source of business intelligence that supports strategies, tactics, and goals.
The Importance of Data-Driven Decisions
What does effective contract data management entail? The objective is to have data at the optimal maturity level. Organizations that are successfully managing their contract portfolios with more control, reduced spend, and increased revenue are managing their contract data effectively.
Organizations that are not able to trust the data in their contract management system due to a lack of organization, legacy systems, and improper contract classification, typically avoid using data. When organizations avoid leveraging data due to a lack of understanding of the value and risk that contract management can bring, or due to a lack of contract management system integration, they are missing opportunities.
Data-driven organizations that focus on collecting quality data, and that are committed to supporting analytics to influence outcomes, are positioned to leverage contract data. The aforementioned approach leads to positive results including more opportunity realization, obligation compliance, purchasing power, improved spend management, risk mitigation, and contract process automation.
These organizations with mature data are also building better relationships with counterparties, partners, vendors, suppliers, and customers.
Contract Management Data Empowers Decisions
How do organizations transform contracts from a cost center to a revenue and savings driver? Data-driven organizations use contracts as the foundation for their success. The strategy starts with contract metadata like customer name, contract type, and key dates that drive contract process with structured searching, workflows, and reporting. Next comes contract process data such as workflow status timing, version tracking, and touchpoints needed for approvals and contract-closeout. Contract metadata and contract process metrics provide the insight required to streamline processes, save money, and reduce risk.
To make data-driven decisions, track how your projections perform against results, contract spend versus market share growth, customer type and behavior trends, compliance and risk statistics, sales and rebates, vendor performance, customer close-rates, retention, and ROI. Begin your contract analysis with contract management reports for cycle time, contract status intelligence, and contract performance statistics. These reports will allow you to measure your contract performance against your organization’s established contract management KPIs for efficiency, efficacy, and risk mitigation.
Making Data-Driven Decisions With Contract Data
The decisions contract data can help you make are endless as long as you have data integrity. Here are common decisions contract management, legal, and procurement professionals can make:
- How to manage contract administration tasks with the insight of how prioritization will impact other processes
- Determine if a contract is worth negotiating based on historical data on how similar contracts performed against standards
- Decide if a vendor is worth the risk of doing business with based on their history of supply chain disruption, penalties for non-compliance, location in an area prone to natural disasters, economic uncertainty, or political unrest
- Increase or decrease prices with an accurate prediction of how price changes will impact your market share
- Know when to renew, cancel, renegotiate, up-sell, or cross-sell, based on transactional and behavioral data
Organizations that make better business decisions based on their contract data will be able to save time and money, reduce financial penalties and non-compliance, maintain more effective customer and channel partner relationships, adjust to competitive market demands, and take advantage of more opportunities.
The Right Technology to Manage Contract Data
Contracting that lacks quality data has been shown to devalue contracts as much as 40%.
While many organizations have embraced digital transformation and business process automation, too many organizations are still struggling to manage high volumes of contracts with a contract database that is essentially a mix of spreadsheets and various contract repositories. Manual contract management cannot support the uniformity, organization, and control necessary to ensure consistent and quality contract data is available to make informed decisions. An advanced contract data management system utilizes contract artificial intelligence to improve data accuracy and reliability with automated data entry that displays key data. Rules-based sentiment identifies contract language that may increase risk, positioning you to make informed decisions. More visibility and statistics, such as contract value compared to averages, will help you quickly analyze data to make strategic decisions. Intelligent contract workflows and alerts create actionable recommendations and recurring reports to ensure the decisions you make are based on real-time data.
Empower, Decide, Improve
Legal teams and every department that touches contracts within your organization must be unified to implement contract management software in conjunction with a commitment to data maturity. The commitment will be worthwhile because data-driven decisions supported by analytics can lead to a contract ROI as high as 20%.
Contract Insight® can help organizations make data-driven decisions that improve contract management ROI through contract performance, saving, cost reduction, compliance, and risk mitigation. To learn more about Contract Insight, contact CobbleStone Software today.