The Future of Contract Management
The current state of contract management looks hugely different depending on which organization is under the microscope, but one thing that is certain is that the contract management process, like most processes in most industries, will be directly affected by software automation. In a recent study by Markets and Markets, the Contract Management Software market was expected to grow from $1.5 Billion in 2019 to over $2.9 Billion in 2024, a projected rate that would effectively double the size of the market in only five years. The truth may be even more bullish, especially with the COVID effect, which has driven companies toward automation at an increased rate due to the reality of more remote employees and decentralized organizational structures.
But why do we need software to manage contracts at all and why are so many businesses implementing these solutions as such? The answer can be different from company to company, but to combat the rising cost due to the review and editing by a multitude of necessary parties (procurement, operations, engineering, project management, compliance, risk assessment, regulatory review, legal, finance, etc.). Additionally, we see these trends driving adoption by companies:
- Changes in the legal compliance landscape
- More demand for agile contract management and ‘smart contracts’
- Advent of Machine Learning and Artificial Intelligence
Since managing contracts is expensive (one recent IACCM estimate was $6,900 for a low-risk procurement contract) and competitive by nature, there is no better time than right now to begin exploring how contract management software can smooth inefficiencies and drive automation for your organization.
Currently it is the larger companies benefitting from this software and for good reason. Large companies deal with large volumes of contracts, so having a structured approach is essential. Additionally, decentralized companies with many regional offices are currently benefitting from the ability to identify discrepancies and redundancy without manual review. Now that we are in a cloud-first world, contract management software of today allows for real-time collaboration guaranteeing that each change is acknowledged. In short, enabling legal teams with contract management software allows them to work more efficiently and better-informed by providing transparency to manage risk and ensure compliance across the entire contract landscape by storing all contracts, clauses, and related documents in a centralized repository.