The vast majority of contract managers track and manage their contracts in Excel, where the information lies tethered to the desktop or a folder that only one or two people have access to. Could you imagine a sales department that kept all their contacts in a spreadsheet individually? What about an accounting department that tracked debits and credits in a spreadsheet and did payroll by handwriting checks? And yet, while sales, accounting, and marketing departments have embraced online technology that has been purpose built for them, contract managers have been left out in the cold.
At last year’s IACCM conference, Layne Jeffery, Enterprise Sourcing & Procurement at UnitedHealth Group, led a conversation helping companies locate where they were in the technology adoption curve for contract management. With over 100 contract managers in attendance, Layne asked audience members to locate themselves on a continuum of technology adoption for managing contracts.
Here are the estimated results of hands raised for each solution used at the IACCM conference:
If anything, this sampling skews towards the most advanced companies that understand the importance of managers and is not a representative of most companies in business. The results are even worse for companies not represented at IACCM.
At ContractWorks, we conducted over 100 interviews with companies large and small and found that less than 2% were using a contract management solution, and several of those had abandoned implementation after several years.
What’s remarkable about the results is that technology adoption for managing contracts is not as much competition between providers, but competition between emerging purpose-built solutions v. Excel and jury-rigged solutions.
Clearer Skies Ahead for Contract Managers
You can’t blame managers for believing that the technology wave disrupting so many industries and improving efficiency in so many functions seems to have passed them by without so much as a ripple. The future for contract managers and software, however, looks bright due to some intersecting trends:
Purpose-built applications like Salesforce, Benefits, HubSpot, are worth billions
In 2000, Loudcloud estimated the cost of a customer running an internet application was $150,000 a month. Today, that same Software as a Service application would cost $1,500 a month, 1/100 of the cost 15 years ago.
The combination of successful multi-billion dollar companies that targeted specific use cases business functions, coupled with the radical decline in cost of delivering those services, means that the financial incentives and cost reductions are in place for further proliferation of purpose-built applications built for smaller and smaller niche functions and audiences.
Capterra, an online business software comparison site, highlights some of the emerging trends that point to an increasing number of options for contract managers:
116: the number of contract management software providers
70%: The percent of solutions that are web-based
With increasing investor interest in purpose-built applications and development costs for online solutions dropping sharply, a broader range of companies with managers should be able to find an increasing array of options that suit the needs of their company at a cost they can justify.
Marc Andreessen, a leading venture capitalist and founder of Netscape, famously said that “Software is eating the world.” There will be few businesses and functions that won’t benefit from the development and proliferation of lower-cost solutions that emphasize ease of use and online Company-wide access and utilization. Managers may not have initially benefited from the wave of online solutions that have helped other business functions, but that is changing due to the financial incentive and cost reduction for creating purpose-built online applications that can serve niche functions like contract managers.
The future may have been delayed, but now looks bright for contract managers and the contract management software solution options now and in the future. New entrants have emerged, some are sophisticated online solutions while others are emphasizing ease of use and pricing, leading more and more companies and managers to leave the archaic jury-rigged world of Excel for solutions designed specifically for managers. Solutions that used to be available only to large or enterprise companies are now affordable, implementable, and valuable to small and midsized companies. The past may have been a little overcast and bleak, but the future looks increasingly like clear skies, sunny, and breezy for contract managers looking for software.