Here at Blueridge Software Inc., the makers of Contract Assistant, we are knee-deep in the market for contract management solutions. We know there is a very real need for solutions like ours, and we see evidence all the time of the real-world benefits when our customers install our solution.
Quantifying the need for contract management solutions isn’t easy, but a recent study does put some eye-opening numbers on the map.
Recently the Corporate Counsel website posted an article from Rebekah Mintzer citing a survey by Huron Consulting Group (which provides business and advisory services to law firms and departments).
Huron recently polled 100 legal technology professionals on their organization’s practices. True, this is not a huge sample, but these are people working in organizations that specifically focus on contracts. Most of the organizations surveyed had more than 1,000 contracts in effect (and 30 percent had more than 100,000 in effect).
By the numbers
According to Mintzer’s article, of those surveyed, 25 percent had their contracts stored electronically in a single repository. That means a whopping 75 percent did not. Again, recall that these are legal tech pros (the people who should know how their organizations handle contracts). Of that 75 percent, however, 24 percent do have electronically stored documents, but these are stored in several places.
Some other numbers: 10 percent of those tech pros didn’t know how their contracts were stored. Another 5 percent stored their contracts as paper and a huge 36 percent stored contracts both electronically and paper.
Having documents stored electronically is of course a plus, but by not having a single database (which users of Contract Assistant do), organizations may be storing these documents in several departments. This only adds to “siloing” information, ensuring that contract information stays “hidden” and thus creates risk.
Mintzer reported that Huron Legal’s managing partner Jeff Catanazro noted how unorganized contracts lead to risks.
“According to Catanzaro, the failure to place contracts in a system where they can be reviewed, organized and managed through their life cycle means that companies might not just be missing sources of legal risk, they may also be missing sources of revenue. If a company is not keeping track of their contracts properly, for example, how will they know that they’ve purchased enough goods or services from a partner to qualify for a discount?”
Where does your organization fit it?
Now let’s consider the wider reality: what can the numbers be among other types of departments/organizations? It would be pure speculation to extrapolate this data any further, of course, but it does make one think.
If only 25 percent of 100 legal tech pros report their organizations are using a database of contracts (in some form), it’s a fair assumption this number is even smaller in the wider market.
If your organization falls into one of these categories, there’s still hope.
If your tech pros don’t know how your company is storing contracts, someone needs to act quickly to determine at least minimal efforts are being taken to hold business-critical contracts. If you want to explain the need for a contract management solution, try sharing this article with key decision-makers: “The best way to explain contract management software to your boss.”
If your company currently stores all your contracts as paper, you should read up on the benefits of converting to electronic records and a database. Don’t be shy about sharing this information. “Leakage” from under performing and under-managed contracts could be eating in to your company’s bottom line.
If your company stores contracts as both hard copy and electronic versions, at least that’s a start to capturing more value from contract management. But a single, searchable database is a huge improvement your organization should investigate. Here’s why: “Contract Management 101: Why data needs to be in a database.”
If your company stores contracts electronically but dispersed, it’s time to consider the benefits of one solution for your entire company. Consider the impact of an efficiently organized database for strategic reviews: “Strategically thinking about contracts can net real profits.”
No matter how your company does or does not store its contracts, remember it is the actively managing part that leads to reducing risk and more efficient operations. That process is made immeasurably easier once your organization commits to a solution.