Digitisation, IoT, Artificial Intelligence… 3 expressions that have the ability to scare, excite and bring value to businesses at the same time. Digitisation has been around for a while now, and while everyone wants to learn about it, it still seems to be a taboo topic when it comes to ways of integrating it into business processes.
Digitisation has also been a hot topic in procurement, and the benefits and challenges of going digital are obvious and we’ve already talked about them in our Procurement in the digitalisation age blog, but here comes the tricky part: how do you actually go digital in procurement?
There are of course multiple aspects to consider, but once you start looking at the pieces that build-up a digital procurement function, you will come to realise things are easier than they seem, as it’s all about upgrading you existing processes rather than re-building them from scratch. This is why our procurement experts have come up with the Top 10 procurement processes that should be digitised to drive superior value.
The eBook covers the following 10 areas to consider:
- Category planning and initiative tracking
- Contract management
- Reporting and spend analytics
- Management of purchase order creation
- Supplier management and risk
- Supplier saving and tracking
- Contracts and/or savings approvals
- Supplier market research
- Supplier payments and invoicing
Digitisation and technology can help companies give more structure and at the same time deliver better results. To start off, let’s take contract management.
Going Digital with Contract management
Contracts are legally binding agreements between parties, and the way in which they are phrased can have a great impact on business profitability in a very large way due to the emphasis on revenue and expenses. Besides this fundamental aspect, there are a few challenges regarding contract management that businesses should take into account:
- It is a time-consuming element
- Many businesses still do not have structured policies and tools in place, risking service delivery quality, supplier relationships and additional costs
- Paper-based contract management can be messy, as contracts can be easily misplaced
While traditionally contracts have been managed through folders and file cabinet storage, time after time this practice has proved inefficient. Digitisation enables the process to become much slicker with paperless tasks such as electronic signatures, storage and retrieval, and automated contract renewals.
The road to Digitising Contract Management
While the obvious answer to digitising contract management is Integrating with an automated contract management software, there are a few steps to consider before doing so.
The first step should be running an analysis of your current contract management process in order to understand:
- The pain points and benefits of the current process
- Who are the involved parties
- What are the current company guidelines regarding contract management
- The current rate of contracts being handled by the company
- Contract lifecycle and storage
This analysis will help identify where there is need for improvement and what automated contract management solution would be the best fit for the business.Another important element is that the company builds a business case that is relevant and that all employees understand the reasons behind the change and what the business wants to achieve.
As a second step, the business needs to understand that contract management is spread across the entire organisation, not handled by only one department. It is imperative that all relevant departments are trained on how to use the new system, and the company should make sure each department receives personalised training and demonstrations.
As implementation continues the business should make sure that the employees are fully compliant with the new protocol and that they understand it.
Finally, the company needs to make sure, every step of the way, that digitising contract management is consistent with the organisation’s digital strategy, while measuring the impact it has on it. This is why, while building the business case, it is important to set up KPIs that will measure the impact of the digital process. Going digital will increase your efficiency and access to information, but it’s important to track metrics on this throughout implementation.
Integrating with an automated contract management service will help free up countless man hours and automate countless processes associated with managing a contract, thus creating more value for a company. However, contract management is only a small part of the process and this needs to be integrated in a larger procurement digital strategy, in order to deliver the full value. For example, without a contract management solution it is incredibly difficult if not impossible to truly understand how the agreement is consumed by the organisation.
Stay tuned for part 2 of this blog series, as we explore reporting and spend analytics and the role they play in building a digital procurement strategy.