In our earlier blog we discussed 2 common challenges associated with a decentralized paper based approach for contracting. They were – Lack of visibility and Issue with compliance.
Today we will discuss 2 more challenges. They are;
1. Difficulty standardizing contract terms
Organizations often face challenges with standardizing contract terms and templates on account of the following reasons;
- Different spend categories have different clauses. For instance, indemnification. Standardizing this clause manually across all spend categories is a tedious task.
- Lacks of standardization for spend on services – Services are often customized and so there is difficulty in standardizing the template. This may result in off contract spend.
- Global spread – Incorporating rules & regulations of different countries and creating a standard template is a complex and time consuming task.
2. Longer cycle times
Contract creating process may often run into glitches due to;
- Approvals – Getting approval for paper based contracts is time consuming.
- Negotiation & redlines – Negotiation and changes in the contract terms & conditions involves frequent to and fro amongst the involved parties.
- Unclear approval hierarchy – As the hierarchy is not visible, chasing the correct individual and getting approval further extends the contract completion time.
- Manual signatures – Manual signatures means the documents have to be scanned and mailed, every time a contract is made. This often takes time.
In the next blog we will see how technology can be leveraged to resolve these issues.
