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Despite technology, contract cycle times are lengthening

May 30, 2019

Read most corporate strategies and words like ‘speed’, ‘accelerate’ and ‘velocity’ jump from the page. Boards and executives understand the importance of rapid change, the ability to be adaptive to unpredictable events and market conditions.

Contracts sit at the heart of this. They are the instruments through which much of that change is enabled. Cutting cycle times sits at the heart of the corporate agenda.

With so much pressure, the time it takes from bid to contract surely must be reducing. Digitization is bringing ‘frictionless commerce’; organizations continue to invest heavily in new technology; cloud-based solutions offer much faster implementation and adaptation. But overall, the benefits from all this investment and top-down pressure just aren’t occurring. While cycle times on high volume, simple sales and acquisitions have improved, those on more complicated (and important) relationships have on average lengthened.

IACCM’s recent research points at several causes.

1. The number of stakeholders involved in review and approval continues to increase.

2. While automation is proving increasingly effective for commodity acquisitions, it has struggled to streamline more complex types of contracting – often because of challenges in gaining internal adoption.

3. Continued fears about risk, regulation and reputation are proving critical barriers to process change. As our recent study on Self-service Contracting indicated, most organizations are struggling with increased empowerment.

Ultimately, the executive focus on speed is driven by their view that failure to move fast and flexibly will be a source of lost competitiveness and a threat to business survival. Unfortunately, the data suggests that for most, the message simply is not getting through.

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