The merger of contract management processes with sales processes will become a top priority for CEOs and CFOs as the ability to get contracts signed, tracked and filed becomes a critical component in driving revenues. According to a recent study by Aberdeen Group: "Within the next two years, the percentage of a company?s revenue that is dictated by contracts will increase from 56% to 68%." From renewals to projections and compliance, the ability to close the contract in the shortest timeframe possible and readily access the executed contracts across the enterprise will become the leading performance indicator of a company?s long term success. Many companies have a contract management process that typically involves legal, procurement and finance. However, this process is not typically aligned with the sales process, and the gaps and bottlenecks between the two processes deliver sub-optimal revenue performance. By aligning the sales and contract management process, discovering the particular bottlenecks and the identifying KPIs to measure the success of these merged processes, companies can identify when and where to automate, and determine what services and solutions will work best to optimizeing efficiencies from contract creation to contract close.
Title: Key Performance Indicators to Align the Contract Management Process With Your Sales Process Summary: The merger of contract management processes with sales processes will become a top priority for CEOs and CFOs as the ability to get contracts signed, tracked and filed becomes a critical component in driving revenues. According to a recent study by Aberdeen Group: "Within the next two years, the percentage of a company?s revenue that is dictated by contracts will increase from 56% to 68%." From renewals to projections and compliance, the ability to close the contract in the shortest timeframe possible and readily access the executed contracts across the enterprise will become the leading performance indicator of a company?s long term success. Many companies have a contract management process that typically involves legal, procurement and finance. However, this process is not typically aligned with the sales process, and the gaps and bottlenecks between the two processes deliver sub-optimal revenue performance. By aligning the sales and contract management process, discovering the particular bottlenecks and the identifying KPIs to measure the success of these merged processes, companies can identify when and where to automate, and determine what services and solutions will work best to optimizeing efficiencies from contract creation to contract close. Step One: Identify the Alignment between Contract Management and Sales Aberdeen?s research "has shown that, on average, 18% of an enterprise?s sales cycle is attributed to contract creation, negotiation and approval. For example, if a company has a sales cycle of 90 days, approximately 16 days are taken by contract related activities. With this in mind, a one day reduction in a company?s sales cycle is worth, on average, approximately $80,000." When taking the steps to align the contract management and sales process, companies should determine what percentage of the overall sales cycle is attributed to purely sales activities; what percentage deals with the contracting process -- creation, negotiation, delivery, signature, recording and archiving; and what percentage of the contract process affects sales performance. Typically, for most companies, it is the end of the contract process - signing, recording and archiving -- that affects sales performance as sales teams chase down customer signatures and file or digitize executed contracts. From here, companies can determine where there may be overlaps or gaps in both processes, and what steps can be optimized. For example, depending on the type of contract or the value of the contract, you may not be able to optimize the negotiation phase, but you can probably automate and optimize the contract creation phase, and the signature, recording and archiving phases. It is equally important to identify the divisions, decision makers, approval processes and reporting capabilities that come into play. For example, who needs visibility into the entire sales and contracting process? Who needs visibility into just the contract signature process? Which departments are responsible for managing the contract once it is signed? How easy is it for finance and legal to access previously executed sales contracts and account information? Once you have answered these types of questions, you can begin looking for the real bottlenecks and find efficiencies across organizations. Step Two: Identify the Bottlenecks Once you have identified the best way to align the contract management and sales process, take the time to understand the bottlenecks that will occur. For example, many companies have aligned the contract management and sales process by using an automated contract management application and/or a CRM application. However, they still experience a bottleneck in the time it takes to get a contract signed, tracked and filed. In this example, companies should determine whether the bottleneck is in the time to deliver contracts via fax or mail, the time it takes the customer to sign, the inability to have the contract and the revenue recognized within a certain timeframe, or visibility into the signature process - or maybe all of the above. In this example, a contract signature workflow application may be the critical missing piece required to implement an end-to-end solution and successfully align the contract management and sales process. Once these and other bottlenecks have been raised, companies... [download for more]
