Contract Management and risk of revenue leakage for IT and Service Industry.
Dec 12, 2019 By Prasad Varade
Lack of visibility into SLAs and MSAs often drives poor customer service. With margins under pressure and competition to win and retain accounts, IT and Service Industry need to actively manage customer and supplier contracts to identify and address risks, inefficiencies and leakages throughout the contract lifecycle.
Contracts define every single dollar coming into business or going out of business and describe where, what, with whom and on which terms we are doing business. If contracts are mismanaged then it can become one of your biggest liabilities, Failure to provide compliance or an audit trail can expensive financially and in terms of reputation of your organisation. Further, inaccessible data, missed deadlines, and untracked or unauthorized changes are just a few more things that can go wrong if you do not have a strong contract management process in place.
. Slow contract creation and approval introduce delay to close the deal.
. Missed renewals and expiries dates.
. Tracking regulatory compliances, obligations and risk associated with contracts.
. Missed cost saving opportunities due to lack of visibility into all procurement contract.
. Revenue leakage due to poor contract governance and performance monitoring.
. Supplier contracts are disconnected from customer contracts, raising the risk of missed
deadlines/deliveries due to unforeseen dependencies, especially in situations where work
1. Your sales teams busy in accessing NDAs and contract templates cause delays in the
2. Missed customers renewal deadlines without contact from sales.
3. Your sales team spends more time repairing customer relations after accidental
expirations or renewals than selling new products or services.
4. You lose your customer to competitor because sales reps busy in finalising the contract
and cant respond quickly enough.
5. Customers walk away due to the perception of poor service.
Managing hundreds of contracts, including SLAs, outsourcing agreements, supplier contracts, consulting agreements, funding agreements, confidential disclosure agreements, and more -introduce the high risk if we are not using new generation technology. Transformation of contract management process brings the visibility, accessibility, automation, and centralization necessary to integrate operations and contract strategy.
This allows companies to greatly reduce risks associated with missed contract obligations, regulatory noncompliance, and operational errors such as performing work outside the scope of a contract that the company may be unable to bill for.
1. Gain visibility into contractual obligations and manage milestones to ensure adherence
to the scope of work and meet delivery timelines and budgetary expectations.
2. Track expiries and renewals of IT product licenses via automated email alerts.
3. Manage contractual risk and track mitigation plan.
4. Easily manage complex contract hierarchies from back to back contracting to subcontracts.
5. Enables real-time access to reports and data to encourage transparency and
fact-driven decision making.
6. Automation of contract review and approval cycle through standardized workflows and
reduce contract lifecycle time from weeks to just few days. -Enables you to close the
sales deal faster.
7. With automation and contract management at the core of the sourcing process,
procurement teams can reach agreements with suppliers faster, negotiate more
effectively, accurately track supplier compliance, and maximize savings.
Good Contract Development and Management could improve profitability by the equivalent of massive 9% of annual revenue.
- International Association for Contract & Commercial Management (IACCM)
60 % of the companies surveyed report that they lose 10 % or more of the contracts value because of poor governance between the customer and the provider.
- International Association of Outsourcing Professionals (IAOP)
A survey of outsourcing suppliers found that without close contract governance, businesses stand to lose up to 40% of a contracts value.
- A KPMG Survey
Administrative costs associated with contracts are reduced by 25%-30% through implementing automation.
- Aberdeen Research