The pandemic brought with it a series of consequences that impacted almost all companies and productive sectors, both in Mexico, Latin America, and the world. This generated a factor of uncertainty and economic inactivity, which continue to be transcendental for decision-making and strategic plans and growth of companies.
This fact allowed organizations to find opportunities for improvement, evidencing the need to digitize and automate processes and move forward with productivity. In this aspect, technology was key.
According to a survey by the international consulting firm Gartner in 2020, 69% of company boards of directors decided to accelerate their business initiatives related to digitization, as a consequence of the outbreak of the pandemic. And 86% of respondents considered technology a transformative role in business priorities.
Several Mexican and Latin American multinationals identified the need for software that would allow them to integrate and manage all of their contract lifecycle processes on a single platform. This cycle includes request, drafting, collaboration and negotiation, approval, electronic signature, repository, traceability and management, reporting and analysis, termination or renewal.
Thus, adopting a technological tool in contract digitalization CLM (Contract Lifecycle Management) went from being a “nice to have” to a “critical to have,” that is, from being a desirable asset to a vital one for business.
According to the World Commerce & Contracting (WCC), among the ten most common obstacles that companies commit in the contract management process are the poor handover between teams for the implementation of the contract, the lack of clarity in the use and understanding of the contract, as well as the limited use of technology applied to this management. This last aspect is the most relevant in terms of the impact on the productivity and generation of results of the companies.
Digital transformation and the use of technology applied to the contract became a priority for organizations to be more disruptive and competitive since the pandemic showed companies the need to have control of their contractual processes in a much more agile and efficient way.
In Webdox [contract management software company], we have observed that the main benefit that entrepreneurs in the region have seen from the implementation of a digital contract management system is the ability of the platform to provide agility, compliance, quality, and control, generating a network of contractual collaboration thanks to its knowledge of the local market, integration with third parties and total information security.
These aspects are fundamental for companies that want to remain competitive and are determined to strengthen their digital transformation path, integrating the processes of all their internal areas, such as human talent, purchasing, sales, finance, and, especially, legal and legal departments.
It is evident that, since the arrival of the pandemic, one aspect that has been accentuated in all companies is cost reduction and process optimization. According to Gatekeeper, administrative costs associated with contracts can be reduced by 30% by automating contract management. In turn, such automation can accelerate negotiation cycles by 85%, reducing erroneous payments by 75% to 90%, notes Price Waterhouse Coopers.
All these challenges have a clear impact on business. The World Commerce And Contracting Association (WorldCC) reports an average annual revenue loss (or value leakage) of 9.15% due to a lack of control in contract management.
For Latin American companies to grow at the same speed as the market in a globalized environment, it is necessary to have a CLM that allows legal areas and management to focus on strategic issues.
To propose a non-promotional opinion piece, write to [email protected].
You may also be interested in: Why Now Is the Time To Invest in Emerging Economies