Contract management is a crucial part of the healthcare and pharmaceutical sector. This is particularly true since the coronavirus pandemic has brought an urgent need for partnerships, alliances, and agreements between companies to collaborate and share critical data. However, communicating the critical data efficiently and unambiguously between two/more entities can be infused with multiple clauses, legal risks, data concerns, and other privacy and regulatory issues. In such scenarios, manual contracts can heighten the risk of miscommunications, misunderstandings, and delayed contract closures.
According to the World Commerce and Contracting (WCC), a non-profit association that promotes standards and capabilities in commercial practice, poor contract management on average costs a company 9% of its annual revenue; this can translate into millions of dollars.
Therefore, investing in Automation and AI capabilities through Contract Lifecycle Management (CLM) software solutions can generate error-free agreements, comply with regulatory requirements, and save time.
What Is Contract Lifecycle Management and Why It is Essential for the Healthcare Industry?
Contract Lifecycle Management (CLM) is the administration of a company’s internal and external contracts/agreements right from the pre-contract request to the renewal/expiration. It includes all the steps necessary to close agreements on the agreed terms. The steps are:
- Initiate Contract Request
- Contract Creation
- Activate or Approve Contract/Agreement
- Contract Execution
- Contract Performance
- Contract Renewal/Expiry
A productive contract can bring financial success to your organization and positively impact the business. Yet, the WCC in its research on Contract Automation found that
- Over 90% of the users find it hard to read contracts or impossible to understand
- An average of 9% decrease in contract value erosion, if the contracts are well managed
These figures emphasize the need to simplify the contracts, legal wordings, and other regulatory requirements and streamline the contracting process to manage the contract efficiently.
A CLM solution can digitize most of the contract management processes and offer sophisticated capabilities (Artificial Intelligence, Natural Language Processing, and Blockchain) for Obligation Extraction and Monitoring, Self-executing Contracts, and Shared Data Stream.
How Can CLM Solution Help Streamline Contracting Processes?
According to the Contract and Commercial Management report on Health and Pharma Sector by WCC, the primary objectives of Contract Management are:
- Risk Mitigation and Management – 27% of the surveyed teams in the healthcare industry have put Risk Mitigation and Management as the top concern for contract management. These teams are looking for a software solution that can analyze the words used in the contract, spot contractual risks, and provide a platform to uncover various hidden risks that otherwise may be missed when reviewing the contract manually.
- Compliance and Business Controls – 22% of the teams consider Compliance and business controls as the next big priority. The teams want to automate most of the contracting process and ensure compliance with governmental and industrial standards and ensure the contract adheres to company standards and partner commitments.
- Financial Impact – 19% of the contract management teams want to make a positive impact on the financial aspect of their organizations.
- Negotiation Center of Excellence (COE) – 16% of the teams from the healthcare industry prefer to have a Negotiation COE that can collaborate and negotiate the clauses in the pre-award stage to unambiguously reach an agreement/consensus at the earliest and reduce the time.
- Business Productivity – 14% of the contract teams are focused on business productivity and are looking for a solution that can streamline the contract processes, increase teamwork, ensure a single source of truth throughout the lifecycle, and eliminate manual interference.
To address these objectives, CLM vendors, such as Conga, offer fully automated review and negotiation capabilities. Through Conga CLM, healthcare organizations can improve productivity by:
- Creating pre-built and custom templates for consistent formatting, standardized language, and accelerated delivery
- Centralizing all the contracts in one repository
- Notifying all the stakeholders about the latest developments
- Keeping the documents audit-ready
- Providing a dashboard to monitor the status
Forrester, a global market research company, conducted a commissioned study, “Total Economic ImpactTM of Conga CLM,” on behalf of Conga. According to the study, companies that have invested in Conga CLM have seen approximately 294% ROI and $19.3M in financial benefits over three years. The report also found that the time taken to complete and sign a contract has reduced from 25 to 15 hours, and the financial impact is equivalent to $3.9M value.
If you are keen to know how you can convert an intelligent investment in Conga CLM into a positive financial impact, connect with Forsys now!
We are a leading Conga implementation partner with a highly experienced team having completed 20+ end-to-end CLM implementations. We are a leader in the Lead-to-Revenue space helping organizations transform their businesses at strategic, technical, and data levels.
To know more about our expertise contact us.