2021: the year when a light is shined onto contracts

Only 48% of organizations consider themselves ‘good’ at monitoring the in-life financial performance of their contracts. A new study from World Commerce & Contracting reveals the types of contract and the industries most affected by the resulting value loss and erosion.

The report, released to the 500 participating organizations today, confirms persistent problems created by the fragmentation of process, systems and resources that are applied across the contracting lifecycle. Without connectivity, there is limited visibility and therefore a lack of the data needed to support urgent action.

There is also a view that, even when senior management is aware of possible value erosion, the problem seems too complicated to fix. The fragmentation that causes losses is so pervasive that fixing it would require too many changes to business systems and operations.

Fresh thinking, fresh capability

Has the time now come when these problems can be addressed? For many CFOs, the pandemic has created heightened urgency in protecting revenues and reducing costs. There is a view that new technologies may prove game-changing, with digital platforms that could aggregate and drive data flows between systems. Artificial intelligence and machine learning are starting to augment human resources, in ways that support simplification and promote self-service. New thinking about standards and contract design offer the prospect of increased market and business intelligence, for contracts to become tools that deliver operational efficiency.

The World Commerce & Contracting report shines a light on the types of contract and the industries where maximum benefits can be achieved. It complements other, related studies, undertaken in 2019 and 2020, such as the investigation into Post-Award Contract Management; the Most Negotiated Terms report; studies on Relational Contracting and governance; and recent papers on Supply Ecosystems, Friction Points and the use of Artificial Intelligence. Together, these offer a blueprint for change.

What does it mean for organization and jobs?

It is clear that such radical change will impact organizational structures and potentially lead to more fundamental restructuring of jobs. There are already signs of a growing integration of contract management and relationship management. New systems will empower the front office and reduce the need for many of today’s back-office support activities. At the same time, better integrated data enables a more agile and adaptive approach to commercial and contracting practices, which in turn requires an increase in the strategic resources needed to manage and implement change. These impacts are being assessed in a new World Commerce & Contracting study which will be released later this month. To be among the first to receive the results, you can participate here.

World Commerce & Contracting research reports are available to members in the Research Library at https://www.worldcc.com/Resources/Research-Library. In a few cases, they are available at a summary level only, with the full report restricted to members of the WorldCC Research Forum.