What’s the ROI of Managing Contracts Digitally?
When we ask customers why they started managing their contracts digitally, the answer is usually that they needed to solve a specific problem. For example, they wanted to replace slow pen-and-ink signatures with instant electronic signatures. Or they were tired of wasting hours every day tracking down agreements. Or they needed deadline notifications so they could cancel old contracts and avoid fees. Sometimes, all the above.
Fortunately, these stories have happy endings. Customers tell us that digital contract management has eliminated these problems, and more – which is always nice to hear. But what would be even nicer is if we could translate those solutions into measurable return on investment (ROI). Hard numbers tend to make a stronger case than compliments alone.
What’s the ROI of digital contract management?
The ROI of digital contract management is often thousands of dollars per month at a large organization. On average, admins say they spend 30 to 85 percent less time managing contracts after switching to a digital contract management system. That adds up to several hours saved per employee per week.
To get more details, we’ve sat down with three contract management professionals, and asked them exactly what’s changed, number-wise, since they started managing their agreements digitally.
Here’s what they have to say, in their own words.
Steve Storck, Denison University: “30 percent less time spent on contracts”
Maybe this sounds familiar to you: each of Denison University’s contracts had to be emailed to the signer, who then had to print it out and sign it in pen, then use a scanner or camera to turn it back into a digital file. This was a cumbersome process at the best of times – and in many cases, it didn’t even work.
“There were times where the other party didn’t have a scanner, so they’d be trying to take pictures of the agreement – which did not work well,” recalls Steve Storck, purchasing manager for Denison’s department of business services. “It was frustrating, not knowing how a contract would come back.”
Even at a business that only deals with a few contracts per week, pen-and-paper contract processes can turn into time-consuming headaches. Multiplied across Denison University’s 2,300 students and 850 staff members, who collectively generate upwards of 4,000 agreements per year, the simple task of getting contracts signed was taking hours of every work week.
Denison adopted a digital contract management system to save time in their contract workflows. “Now we just bang out contracts from templates and fill in the blanks,” Storck says. Admins can share documents for approval in real time, and collect legally binding e-signatures in the same shared docs. All the agreements live in one contract database, where they’re easy to find. “We can do all that really quickly,” Storck says, “so we’re saving a whole lot of time there.”
How much time are they saving, exactly? Storck says admins across the university spend 30 percent fewer hours correcting and organizing contracts since they switched to a digital contract management system. He says they’re also able to renegotiate agreements more accurately, which has helped them capture thousands of dollars in additional value.
“It’s been a real lifesaver for us,” Storck says. “It has all the functionality we need, and we’re still finding even more ways in which it’s useful. So I highly recommend it.”
Jenny McMullen, Yates Construction: “Thousands of dollars saved every month”
“Each time we executed an agreement, I had to take the time to manually email it back to the other party,” recalls Jenny McMullen, corporate contract administrator at Yates Construction. “That one repetitive task took a lot of hours out of my work week.”
And McMullen wasn’t the only one losing valuable time. Yates has 5,000 employees, along with numerous outside contractors working with their 15 regional offices. And outside contractors like to negotiate. Which means that at all those offices, entire admin teams were spending dozens of hours every week on contract negotiation emails.
Even if you’re a small or mid-sized business (SMB) owner, you can probably relate. Take your hourly rate, and multiply it by the number of hours you spend shuffling contract paperwork. That’s how much you could recover by setting up an automated signing workflow – which is what Yates Construction did, by adopting construction contract management software.
Now, instead of emailing each version of a contract, admins at Yates just share a live document with all parties. Outside contractors and internal reviewers can redline changes and respond to comments in real time, right inside the document. All messages and comments live right inside the agreement,” McMullen says. “Instead of five separate email chains with five different people, we’ve got everything in one place.”
Yates Construction has seen an ROI of thousands of dollars per month. “When you think of all of the dozens of administrators in the company [managing contracts digitally] on all of our projects,” McMullen says, “that adds up to thousands of dollars every month in saved labor hours.”
Jennifer Neville, Sevita: “My hours saved, many dollars saved on contracts”
Like many growing companies, Sevita started out storing each individual contract in whatever way seemed best at the time. This worked reasonably well for a while – but as the healthcare provider grew into a large enterprise with more than 40,000 employees, their lack of centralized contract management began to add up to significant financial losses.
For example, no one had company-wide visibility into other teams’ vendor contracts, which meant admins often missed opportunities to renegotiate for better terms. Even worse, nobody seemed to know which vendor contracts were nearing conclusion, which meant the company frequently lost revenue due to payouts on open contracts that should’ve been terminated.
Even at a growing SMB, overdue fees can take a painful bite out of your budget. And on the flipside, a single company-wide contract negotiation process can help you capture a lot of additional value from your vendor relationships. Think back over this past week, and you’ll probably remember a situation where you could’ve saved money if you’d had all the data.
That was the problem Jennifer Neville was brought in to solve. As Sevita’s associate general counsel for corporate, she was tasked with putting a company-wide contract automation process in place. The company adopted Concord’s contract lifecycle management (CLM) software, which enables admins to negotiate, approve, and collect signatures in live documents. They can also set deadline alerts, which notify appropriate staff members to cancel expiring contracts.
“I don’t think we’ve paid out a contract since we’ve implemented Concord, because now we can track when the notice is coming up,” Neville says. In other words, Sevita’s ROI is clear: “Many hours saved, many dollars saved in contracts that we meant to terminate and forgot.”
For businesses of every size, digital contract management also helps identify opportunities to capture additional value. In addition, it saves money on late fees and unintentional renewals, by providing advance notice of upcoming deadlines. Across all these areas, automated CLM workflows help SMBs fight inflation.
Every day when we talk with customers, we see investments in contract management pay for themselves many times over, delivering returns that keep growing as a company scales.
