This is the final post in our series covering everything you need to know to drive change with contract management: organizational alignment, how to use contracts to enhance collaboration, building the business value for why, and benchmarking data to measure success.
Building the Business Value for Why
It’s one thing to create enthusiasm around a change—it’s another to have a solid business case for it. Yet with the time and money that can be saved, not to mention the risk minimized, creating successful change around contract management initiatives is essential.
Money Talks—And We’re Talking Millions
The bottom line of every business is around revenue generation. For a Legal team to create the business case for a change in contract management, it’s all about the numbers. Gartner reports the average lawyer spends 25%–40% of their time on work that doesn’t even need to be done by a lawyer—at an average annual cost of $2.7 million for Legal teams. Whatever the size of a company, nothing gets executive buy-in faster than seeing those numbers of revenue that could be saved.
So, what’s the business case for other teams? Unless the money loss is tied directly to their role, as it was in the example of the Sales team above, often a business case takes more than just the revenue loss numbers. One key point to be made is on time. If teams can save time on manual tasks, that means more hours to do the projects they enjoy. For example, Legal could estimate some numbers on how long a Marketing team spends on average per contract in creation, Legal approval, and time spent going back and forth with influencers or freelancers. According to Forrester, a contract lifecycle management platform can cut legal contract review time by 80-90%, making it possible for Marketing to execute contracts in 10-20% of the time it takes now. Coming to the team with those numbers shows them how much more time they should—and could—be spending on creativity, not contracts.
With both of these examples, think of how this message resonates with Sales and Marketing teams. To the earlier point of taking an empathetic approach, recognizing and acknowledging the ways this will positively impact these teams demonstrates both understanding and empathy of team goals.
Another key point to be made in the business case is around time. If teams can save time on manual tasks, that means more hours to do the projects that have higher business impact. For example, Legal could estimate some numbers on how long a Marketing team spends on average per contract in creation, Legal approval, and time spent going back and forth with influencers or freelancers. According to Forrester, a contract lifecycle management platform can cut legal contract review time by 80-90%, making it possible for Marketing to execute contracts in 10-20% of the time it takes now. Coming to the team with those numbers shows them how much more time they should—and could—be spending on creativity, not contracts.
The Risk of Being Unprepared
While Legal teams are spending time—and consequently— money, on tasks they don’t need to be doing, high-value work on key issues like risk management goes by the wayside. The percentage of Legal departments that don’t incorporate risk requirements into business workflows is astronomical: 85%, with 79% who don’t track the efficacy and impact of risk mitigation plans when they are made.
For Legal, the message is clear, but this is a valuable story to share with other departments as well. Being unprotected means a company may be under fire in the news for legal issues—a nightmare for PR to clean up in messaging, and a hassle for Sales as prospects are skeptical of a company with a poor reputation. Risk impacts everyone. Highlighting the ways other teams can be impacted will help drive the message home.
Benchmarking Data to Measure Success
For implementation to be successful, knowing the benchmark data to measure back against is key. While there are many components that go into proving the ROI of a contract management platform— time, money, and decreased spend—cost savings is often the first number executives want to see.
The current cost of contracts vary depending on the complexity of contracts or current spend on cost per agreement. Aberdeen reports that companies with contract automation have 24% shorter sales cycles and a staggering 90% renewal rate. Using these numbers can help build the business case for a platform, as well as track its success in the future.
Driving change is never a simple task. Yet through benchmarking data, building a strong case, and the right messaging to all employees, Legal has the power to drive successful change and create a lasting impact on the organization by giving teams more time and energy to focus on the work they love.
Concord’s mission is to help companies achieve scalability and efficiency by automating their most central process, contracts. The cloud-based solution enables over 300,000 users around the globe to create, collaborate, sign, store, and manage their agreements all in one place. Founded in 2014 and headquartered in San Francisco, Concord is built by business for business.