What the Pandemic Taught Us About the Need for Digital Contract Transformation
As we enter what we hope to be the end phases of the COVID-19 pandemic, many organizations are still struggling with business process reengineering and change management in today’s new operating environment. Digital transformation is vital for businesses to succeed, but according to Deloitte’s 2020 Legal Operations Survey, most organizations have yet to realize the full potential that digital transformation has to offer. Gartner estimates that legal budgets spent on technology will increase dramatically over the next four years, but many organizations are wary of more technology hype that can’t deliver.
CLM Can Deliver and Is Here to Stay
Contract lifecycle management (CLM) software allows in-house legal teams to modernize the way they provide essential services to their business partners throughout the organization, and can also play a foundational role in the organization’s overall digital transformation strategy. As the COVID-19 pandemic began to take hold, many companies turned to CLM software to help digitize their contract processes, and analysts predict that the market is anticipated to grow between 10.2% and 11.87% and reach more than $3B over the next five years. At my own company, Contract Logix, we saw customer usage of our contract management software grow by triple-digit percentages during COVID-19. Similarly, the use of electronic signatures increased by quadruple-digit percentages, another proof point that companies need a faster approach to how they negotiate, draft, and execute contracts globally.
In a post-COVID economy, organizations must accelerate digital transformation initiatives now more than ever. For legal (and other) teams involved in contract management, focusing on digital contract transformation (DCX) achieves the most benefits in the shortest timelines.
The Benefits of DCX
The role that automation, centralized management, real-time analytics, collaboration, and improved security plays in CLM can help any organization achieve many of its short- and long-term goals. DCX helps streamline the contract negotiation process by reducing the labor required to draft initial agreements, negotiate the document with all parties, and collect feedback without compromising the final version’s accuracy. Agreements can be signed and executed electronically, automatically marrying them back to the software. By shortening the negotiation, approval, and execution phases of the contract, CLM software immediately adds value to the company. It also frees up legal resources to focus on higher-value and more strategic activities like risk mitigation instead of routine daily tasks.
Digitally transforming contract management gives businesses the agility to respond effectively to any situation as it arises. Every resource and stakeholder has access to all the latest and appropriate information, many activities and business processes are automated such as workflows for approvals or obligation and date management, and team members can securely and appropriately perform work from any connected device. Teams can also generate metrics about the process from day one to benchmark and track contract-related KPIs and review where any improvements are necessary.
A Digital Answer That Avoids the Tech Hype
Gartner’s survey found that corporate legal departments will capture only 30% of the potential benefit of their CLM investments mainly because “most legal departments plan poorly for such initiatives. A common mistake is to pursue a legal technology roadmap without sufficient regard for business or end-user needs. Typically, organizations that consider how a technology will advance specific operational functionality or business outcomes fare better than those that don’t.”
Careful planning, budgetary support, and recruiting the best talent aren’t the only elements required for a successful DX project. Often, the desire to blow up everything is what dooms the initiative from the start. The right DCX approach avoids this. DCX helps organizations streamline and automate the most important facets of contract management and related business processes. It also leverages data that organizations ALREADY have to optimize their processes, mitigate risk, and ultimately finalize business faster. Data-driven CLM software makes DCX not only possible, but achievable in a fast and uncomplicated manner. CLM software provides the modern tools necessary for organizations serious about digital transformation. However, successful DX strategies require more than just technology, they require everyone in the organization to embrace change management.
COVID has changed the world forever. And when it comes to digital transformation, it has revealed the absolute need for businesses of all types to accelerate their DX strategies. Contract management plays a foundational role in any DX initiative and in-house legal teams can become leaders, not laggards in helping their organizations by embracing DCX.
Article originally posted on: https://www.legalreader.com/