This post is based on a recent Spend Matters Perspective:
Sourcing, Contract Management, and Supplier Management Cloud -- Business Users Benefit From Savings Enablement. You can download the full research report for free via the previous link (registration required).
Contract management technology can bring significant benefit to procurement, legal and sales organizations. Not only can effective contract management technologies help organizations implement savings programs more quickly by closely linking the sourcing and contracting process -- including having T&Cs from within an RFx cascade into a contract after an award decision is made -- but they can also allow companies to monitor compliance and re-source contracts before expiration. More advanced use cases of contract management drive further value by linking buyer compliance to supplier terms and invoices, including proactive compliance tools in both eProcurement and direct purchasing systems that flag/reject PO issuance and/or invoices if certain contract conditions are not met.
In the area of contract management, advanced integration between SAP back-end systems (and heterogeneous environments) is rising as a business priority. For example, to populate and replicate agreements within a sourcing and contract management toolset directly into ERP/ECC with the subsequent creation of outline agreements based on already negotiated and agreed-upon terms -- which occurred within a sourcing event -- can save weeks (even months) in implementing an award decision.
This type of data synchronization can have a dramatic impact on overall cycle time reduction for contracting. It can not only accelerate the implementation of sourcing savings, but also reduce the time needed to bring new products to market and lower the use of unnecessary legal resources. Moreover, the approaches to tightly linking and orchestrating business processes between procurement, legal and other functions can ensure contract quality (accuracy and completeness), compliance (spend under standard contract terms) plus proper access and change management procedures across commodities, BUs, term libraries, changes, workflows, revision history (including rollbacks), and whatever else a client chooses to include.
For our full analysis of the importance of contract management, sourcing and supplier management integration from a frontline business perspective, check out our research brief:
Sourcing, Contract Management, and Supplier Management Cloud -- Business Users Benefit From Savings Enablement.