As a seller, you’re often driven by your customer’s contract management process. But when your business reaches a certain level of complexity, not having your own automated contract management solution means you start losing visibility into the contract lifecycle—which can wreak havoc on your company through compliance problems, lost sales from too-slow negotiation cycles or missed renewals, and even legal challenges. In fact, 60% of corporate litigations are related to contract disputes,[i] so reducing that risk through contract automation makes a lot of sense.


One expert considers it crucial. Christopher Dwyer, research director for Ardent Partners, notes that up to 75% of all corporate revenues are directly linked to sales contracts—a huge impact that underscores the importance of managing them effectively. Yet many sellers overlook automated contract management, despite the big benefits it can provide. An automated contract lifecycle management (CLM) solution standardizes and streamlines the contracting process, delivering the transparency and collaborative capabilities you need to negotiate and execute sales contracts quickly and efficiently—a key business advantage that can significantly boost your bottom line.


How can automated contract management benefit your business?

Sure, faster negotiation and lower risk sound good, but is sales contract automation really worth the effort and cost? As Dwyer and Carol Martz from the legal department of the Cleveland Clinic made clear in a presentation at Ariba LIVE 2014, the answer is a definite yes. Benefits of automating include:

  • Up to 10% higher revenue. While contract compliance issues typically cause sales leakage of 2-3%, automated CLM drives compliance up, protecting that revenue for your business. It can also increase revenues 5-7% through 50% faster negotiation cycle times, 15% higher renewal rates, and improved collaboration during and after contract execution.[ii]
  • Greater visibility. A paper-based process makes it difficult to access the information in contracts, limiting you "not just in terms of visibility or data, but true sales intelligence,: Dwyer says. With comprehensive data analytics and reporting from automated CLM, you can mine valuable contract information and use it strategically.
  • A faster, more efficient CLM cycle. Automated CLM gives you enterprise-wide management capabilities so you can centralize and standardize all sales contract functions, get approvals faster, and use limited legal resources more accurately.
  • Better customer relationship management (CRM). Automated CLM supports direct collaboration with customers and tells you exactly where you are at every stage in the process, and can also be integrated with your existing CRM program and/or software. The ability to easily track dates and milestones, ensure that negotiation specifics are actually in your contract, stay on top of deliverables, and fulfill agreed-on requirements strengthens satisfaction and sales.


Best practices for implementing an automated solution

The following recommendations can help maximize your organization’s CLM capabilities.


1. Build a template that’s easy for users to adopt. By designing a wizard-style template to guide various users along a customized path, you can ensure they see only the appropriate tasks, documents, and approval workflows. And to make sure the flow you create will really work, you first need to “know what your process is and get it down on paper,” Martz says. Answer these questions:

  • Who’s asking for the contract?
  • Who will use the system, and what will their roles be?
  • What dollar thresholds
  • Who needs to see which documents, and when


You can also gather metrics on how long tasks actually take and use this identify bottlenecks if the process isn’t moving quickly enough, providing a good timeline for your contracts overall.


2. Promote contract visibility throughout your company. “Make sure all stakeholders, not just those in sales, really understand the implications of sales contracts,” Dwyer advises. Role-based access along with dashboard self-service search and reporting tools give users the visibility and resources to use CLM effectively.


3. Manage risk at the contract and engagement levels. It’s essential to track and understand what’s going on within all contracts—not just some of them, or only those in your own department. You can establish an alert system to help users monitor status and ensure you don’t miss deadlines, fail to fulfill terms and conditions, or overlook legal mandates. For example, automating physician contracts makes it much easier for the Cleveland Clinic to stay compliant not only with internal policies, but state and federal requirements as well, despite rapid growth and a sharp increase in the complexity of healthcare regulations.


4. Move from tactical to strategic contract management. “Don’t think of this as just another series of processes that unfortunately you have to do day in and day out,” Dwyer says. “Think about it as more strategic: ‘Hey, if we do this the right way, there’s going to be tremendous value across the organization.’” For example, you can take advantage of the centralized contracts repository and data analytics to inform your negotiations on upcoming contracts. “It’s always interesting to be able to dig into that information and say ‘We signed this contract with this organization four years ago, what were the negotiations like last time, or what was the pricing like last time?’ All that information is very important,” Dwyer says.


Learn more

For more information about how automated contract management can deliver value to your business, listen to the full session on the Ariba Slideshare site. To learn about the Ariba Contract Management solution for sales contracts, go to this web page and download this datasheet.




[i] Source: Fulbright & Jaworski, 2010 Annual Litigation Survey

[ii] Source: International Association of Contracting and Commercial Management (IACCM)