This column is part two of a two-part series exploring how contract lifecycle management (CLM) platforms provide visibility into valuable contract data, giving CFOs the insights they need to advance their revenue protection strategies. Be sure to read the first column in this series digging into the challenges CFOs face as they “redefine and remodel” how the finance department supports the larger business.
The tumultuous economy has many CFOs rethinking all aspects of their role, from day-to-day operations and workflow processes to the technology solutions underpinning their primary revenue strategies. The current economic conditions require finance leaders to not only account for every dollar spent across the organization, but to ensure the return on investments justifies the spend. This is especially true when it comes to technology investments.
A commissioned Forrester Consulting study conducted on behalf of Pramata surveyed business leaders charged with making decisions about their organization’s contract lifecycle management (CLM) technology investments. The survey findings revealed 75% of respondents agreed that it has become increasingly more important to show how technology solutions deliver measurable value to the business. More than 70% confirmed greater budget scrutiny is being placed on the organization’s total technology spend while 69% said their organization would be making cuts to their technology budget this year.
When asked how a CLM platform impacts the business, 86% of the survey respondents said that it was strategically important. The only catch: To have a serious impact on the business, CLM technology must actually do what it promises and offer complete visibility into a business’ contract management process. Even more importantly, to maximize its value, insights gained from the CLM must be leveraged across business functions.
Such technology is not only critical to maximize the strategic value of contracts – it can have a significant impact on the CFO’s revenue goals: managing contract renewals and improving contract acceleration while offering a foundation for the business’ revenue protection strategies.
Contract Renewal: A top goal for contract management teams, sales, and CFOs
More than a third of the survey respondents from the Forrester study ranked contract renewal as one of their most critical contract management goals this year. For CFOs, contract renewal is a crucial component of their revenue protection strategy because it has a direct impact on the business’ financial health. Everyone knows, regardless of what industry you’re in, it is much less expensive to keep an existing customer than to win new business.
Quick Wins with CLM: By delivering centralized visibility and automated renewal alerts, an effective contract lifecycle management solution can help you avoid unwanted auto-renewals or missed service expiration dates.
A successful contract renewal process keeps existing customers happy while securing ongoing revenue streams. It also helps build long-lasting customer relationships that open the door to upselling opportunities.
While CFOs may not be the ones directly managing contract renewals, they definitely reap the rewards of a competent renewal management strategy. Contract renewal insights gleaned from contract management technology can help the finance team optimize their business’ pricing and contract terms. An effective CLM that offers complete visibility into contract data empowers CFOs to be more strategic with their role in the contract renewal process, enabling them to better protect revenue streams, build customer loyalty, and drive long-term growth.
How CLMs accelerate the contract management process
Contract acceleration is a key objective for contract management teams, but it is also vital to the finance department’s overarching goals. The longer it takes to move a customer from the first sales call to signing on the dotted line, the more difficult it is to forecast short-term revenue gains. And it’s not just about forecasting revenue results – businesses that are able to accelerate the initial contract phase enable a sturdy financial foundation that vastly improves the financial health of the organization.
So how does a CLM impact contract acceleration tactics? It starts with providing technology that can streamline requests and automate the contract management process. This includes solutions that deliver complete visibility into contract data, helping to minimize the time it takes to negotiate and finalize contracts and offering insights on contract obligations.. With the right contract management platform in place, CFOs can quickly identify major issues such as dropped start dates, missed renewal opportunities, pricing discrepancies, and more.
By accelerating the business’ contract management process, effective and efficient CLM platforms move the needle on a number of finance team objectives – helping to increase revenue and reduce risk.
Pulling back the curtain on your most impactful revenue protection insights
The CFO is responsible for designing and implementing reliable revenue protection strategies that cement the organization’s financial stability. These strategies include a wide array of responsibilities, from managing financial contract terms, analyzing existing revenue streams and forecasting the monthly, quarterly and annual revenue outlook to identifying the business’ most profitable products and services as well as the factors that advance (or impede) revenue growth.
The finance team works with various departments to ensure the business’ revenue protection strategies are working, in addition to finding gaps where new strategies may be needed. It is no surprise CFOs are frequently spread thin – analyzing revenue, developing pricing structures, monitoring expenses, assessing risk and communicating with stakeholders, all while keeping a big-picture view of the business’ financials. It’s an overwhelming job and can often feel like you’re trying to hit multiple targets that are in constant motion.
The reality is that contract management technology goes far beyond delivering legal efficiencies for general counsels and in-house counsel teams. In fact, the right CLM solution arms CFOs with the strategic insights, pulling back the curtain on revenue protection processes while also shedding light on untapped revenue opportunities.
For example, an effective CLM can help you manage financial contract terms at scale. If you don’t have visibility into your contract terms, you may be missing out on price lifts and upselling opportunities that can have a positive impact on annual earnings. Or, on the flipside, you may find yourself stuck making recurring payments on subscriptions your business no longer needs. This is a key area where finance teams use Pramata’s platform to gain full visibility into contract data and ensure they are not overlooking potential revenue opportunities or wasting money.
By using a CLM to master your contract terms, you can react to market conditions and changing economic factors in real-time. And with Pramata’s platform, you can take it a step further, generating automatic reports that give you immediate answers to the biggest questions your C-suite has about the risks living within your contract terms.
When leveraged correctly and adopted across the organization – including finance, sales, and procurement teams – a CLM can deliver maximum value in terms of technology spend. It is one of the few technology solutions that can impact multiple facets of the business, protecting the CFO’s biggest objectives while driving the finance team’s revenue goals forward.
If you’re curious how a contract management solution can be a strategic solution that positively impacts your revenue protection strategies, be sure to download the Forrester Consulting study commissioned by Pramata at:
Are you Maximizing The Strategic Value Of Your Contracts? How Leveraging Your Contract Lifecycle Management Technology Drives Organizational Awareness and Holistic Business Value