Innovation is one of the hallmarks of the technology industry where solutions and services evolve at the speed of light. Technology companies have little option but to continuously strive to be more agile and resilient, staying one step ahead of the competition. An integral component of this sustained business growth is intelligent, seamlessly integrated contract data.
Analyzing the life cycles of approximately 3,000 software and online services companies since 1980, McKinsey found that growth was the key driver of success. In fact, given the competitive nature of the technology industry, the study concluded that companies must either “grow or die”. High-growth companies yielded returns to shareholders five times greater than medium-growth companies. In addition, companies that McKinsey dubbed “supergrowers”— those with annual growth rates greater than 60% after passing $100 million in revenues — were more successful long-term and eight times more likely to reach $1 billion in revenues than companies growing at less than 20% annually.
Such sustainable growth calls for a synthesis of top-line management and profit orientation with managing risks that can emerge from anywhere within the enterprise. These include financial risk, reputation risk, regulatory risk, and market risk. However, a primary source of risk is a dissonance between contract contents and business realities. Manual, inefficient contract processes are often-overlooked barriers to an organization’s ability to overcome these risks and related challenges. While AI-powered contract lifecycle management (CLM) can help, forward-looking organizations are moving beyond CLM into contract intelligence.
Contract Intelligence mitigates risks and drives business performance
Contracts form the foundation of business transactions and relationships. Every dollar in and out of the enterprise flows from clauses and provisions in contracts with suppliers, customers, shareholders, financiers, service providers, employees, government, etc. It is not just about closing the business deals and meeting sales targets. The company must also be sure each deal is structured to deliver the intended benefits, and then, after execution, make sure those benefits are fully realized.
To compete and win, companies must achieve unprecedented levels of transparency and agility across their organizations. Contract intelligence leverages the power of AI to transform the critical business information found in contracts into structured, connected, and on-demand data – generating accelerated implementation, maximization of value, and real-time compliance. By connecting contract data, contract intelligence allows technology companies to greatly reduce risks associated with missed contract obligations and operational errors. This is increasingly important given the complex regulatory environment in which technology companies operate – one that continues to be stricter and more complicated.
Contract intelligence is key to growth
Contract intelligence has also proven to be a must-have for technology leaders due to its ubiquitous and foundational nature. It overcomes the complexity of the technology partner ecosystem by providing holistic visibility into partner, reseller, and distributor relationships, as well as contract agreements; clarifying inter-party obligations; promoting frictionless trade; and enhancing business transparency for all stakeholders.
By offering a 360-degree view of contracts and relationships, and providing the contract authoring, automation and insights needed to prepare for growth, organizations can scale compliance across thousands or even millions of contracts and employ continuous monitoring and smart rules to its entire contract portfolio to automatically minimize risk and trigger appropriate actions as conditions change. Additionally, contract intelligence learns and grows with your business, absorbing new information to become smarter and faster over time.
Technology is a complex and contract-intensive industry. That is why efforts to address the biggest challenges facing today’s technology companies must include reimagining how they manage and gain value from its contracts. That is why contract intelligence is more than just contract management. It is an evolution of what contract management can do.
The article has been written by Vivek Bharti, Vice President of Product Management, Icertis