In today’s high-volume, low-margin warranty renewal environment, many OEMs and channel partners are focused on the extension of value-added services to the global marketplace. But while an expanded market presence offers significant opportunities for growth, it also introduces a variety of risks and challenges – not the least of which is the question of whether or not country-specific contracts are financially and legally enforceable.
The creation and management of legal contracts is no small back-office task, especially for large IT providers. Forty-six percent of technology resellers and distributors generate at least 1,000 to 10,000 quotes per month, and 73 percent do so across at least 10 different product sets, according to research recently conducted by Managed Maintenance, Inc. The scope and complexity of contracts requires significant attention from companies’ legal teams, adding time and expense to the process.
Legal contract tasks become even more daunting when you factor in the alignment of quote types, contract types, billing details and other variables to a geographically diverse customer base. Too often, the last mile of the process becomes a herculean feat fraught with legal risk and process inefficiencies.
It shouldn’t take high overhead to effectively manage contract lifecycles. To bring overdue structure and speed to the legal contract lifecycle, IT organizations must reconsider the value of integrated, automated tools.
The Broken State of Legal Contract Management
A recent study of corporate counsels’ perspectives on legal contract management demonstrates the flawed state of contract management in many organizations. Sixty-two percent of legal professionals claim that Microsoft Word is still their main tool for contract creation, and only 27 percent use electronic signatures. Largely due to the inadequacy of these tools, half of legal departments lack the necessary insight into critical contract information, such as cycle times, the number of active contracts and term success rates.
For large IT organizations, ineffective tools and processes exacerbate an already complicated contract landscape. Managing this complexity is not as simple as developing a library of templates to cycle through. The creation of a single legal contract can hinge on a laundry list of variables due to factors such as:
Location: Almost every country adheres to different contract laws, each mandating unique clauses and terms to embed in B2B contracts. As IT organizations’ client bases become more geographically diverse, their contracts must account for multiple languages and currencies as well. End customer and purchaser locations drive even more compliance considerations, forcing deeper dependencies and cycle times with legal counsel.
Quote type: The type of quote being converted adds another layer of complexity to contract creation. Quotes generated between a manufacturer and end customer, manufacturer and distributor, or distributor and end customer each require particular contract language that significantly impacts an agreement’s enforceability.
Contract type: The product or service category being sold also dictates the information needed in an IT organization’s legal contracts. In an increasingly sophisticated sales environment, a manufacturer or distributor’s contract types extend well beyond hardware and software. Maintenance, labor-based services, renewals and subscription licenses are each possible options that trigger their own contract contingencies.
Billing details: Payment criteria is one of the most multi-faceted areas of legal contract creation. Billing start and end dates, payment terms and methods, invoice frequency, and auto-renew needs are a handful of details that not only need to be spelled out in legal contracts – they vary tremendously from customer to customer.
Signatures: The enforceability of any legal contract depends on the right people signing on the dotted line. Sending contracts as traditional PDF attachments for customers to print, physically sign and scan is a tedious, error-prone process. While e-signature technology is a much more efficient alternative, it also requires organizations to be mindful of different countries regulations around electronically transferred personally identifiable information (PII) and encryption.
What Automation Brings to the Contract Creation Process
The variable nature of legal contract creation is a reality all large IT organizations face, but it’s not something they need to be prisoners of. Today, there is a market of advanced tools that unite IT quoting and contract creation, and automate many of the nuances outlined above.
With a robust contract management platform in place, IT sales teams only need a few inputs to kick-start the quote and contract creation workflow. From there, the system can instantly detect and dynamically insert the right details based on everything from client location to the service being sold. The output of this process is a concise summary of all relevant quote and contract details, along with a unique identifying code that can be used to track the entire customer lifecycle.
By trading in manual contract management for automated tools, IT organizations benefit from:
Deals that close faster: When sales and account teams have the means to convert quotes into accurate contracts, they can rely less on intervention from already overburdened legal departments. This eliminates the likelihood that contract drafts will be held up in review for weeks – a bottleneck that gives prospective customers more time to shop around.
Stronger compliance: When quoting and contract management is integrated in one digital hub, organizations automatically receive a comprehensive log of who (internally or externally) edited a legal document, who viewed or forwarded a contract, and who signed it. With this documented audit trail, critical information can’t slip through the cracks, and legal teams won’t have to sift through emails and disparate platforms to find important information in the event of a dispute.
Enhanced visibility: Advanced contract management technology enables the tracking of legal documents in the signing process, creating visibility to country-specific clauses and a clear audit trail across a multi-national customer base. The result is a faster and more easily scaled contract management framework that removes risk and friction from the process.
Reduced expenses: With a tool to automate legal contracting processes, IT providers can reduce their dependence on the manual intervention of legal teams and take advantage of software designed to create more efficient and cost-effective workflows.
In the global market, manual processes and fallback standardized contract templates or ‘umbrella’ agreements are no longer comprehensive enough to ensure that contracts are financially and legally enforceable on a global scale. The way contract information is transported electronically, stored and signed are all country-specific compliance factors that could derail contract enforceability.
By embracing a more digital, automated approach to legal contract creation and management, IT organizations can mitigate risk, reduce costs and achieve process efficiency – factors that ultimately enable companies to compete more effectively on the global stage.
Contact Sales today to learn more about ONEview, and how it can help your business automate and streamline legal contract management processes.