January 3, 2023
Ways to Reduce Operational Cost using Contract Management Software in 2023
Businesses everywhere are tightening their belts and slashing their budgets to weather the storm of an economic downturn. Everywhere you turn, companies are closing their wallets to cut down on frivolous spending. For RevOps, that means your job of optimizing the revenue generation process becomes that much more important – even more so if your company recently reduced headcount.
There are a few ways you can reduce operational cost from an administrative perspective such as:
1. The initial step in achieving cost reductions from admin perspective is through inventory analysis of SaaS apps and resources. Identify which apps are being used, stakeholders using the platforms, and cost of each software subscription, in order to forecast the ROI and evaluate the effectiveness.
2. Secondly, minimize cost of the software applications by getting rid of tools with overlapping features.
3. Keep track of all the tool renewals and ensure that the subscription price tier matches with the expected usage.
However, a smooth sales process and true cross-functional alignment are a business imperative for companies who are trying to make it to the other side of the recession in one piece. Of course, a lot goes into uniting revenue teams without incurring additional operational expenses. But one secret weapon that RevOps often overlooks is Contract Lifecycle Management (CLM).
CLM can help revenue operations teams improve efficiency across processes and reduce operational costs. Contracts can be among the more expensive line items in a business and require a lot of time for employees who have other things to tend to. As such, optimizing the cost of your business contracts is already a step towards reducing costs.
How Much Do Contracts Cost?
Not surprisingly, a lot. What is surprising is just how much.
Every contract has a “face value” – that is, its price tag or the dollar amount that the contracting parties agreed upon between them. For instance, contracts with small and growing businesses can be anywhere from $100 to $10,000 dollars, while an enterprise contract can have a face value of up to $100K.
Yet, according to an EY Law Study, more than 50% of surveyed organizations responded that poor contract management directly contributed to lost deals. Which means that the deal size, if the deal goes through at all, can be significantly reduced due to a haphazard contract process. In fact, according to WCC, poor contract management can cost a business 9% of their annual revenue.
Often, RevOps teams, especially at growing companies that may or may not yet have a legal function, don’t account for the cost of contract administration. Specifically, the cost of legal review — i.e. the salary of your in-house counsel or the billable hours of your external counsel — as well as the costs of a delayed agreement or one that has to go through an excessively extensive review process.
If these costs remain unaccounted for and unaddressed, they can have long-term effects on your bottom line, which is a direct problem for RevOps. CLM can help you lower contract admin costs by streamlining some of the more time consuming parts of the contract process — the ones more prone to costly human errors.
5 Ways Contract Management Can Help With Operational Cost Reduction
The good thing is, you don’t need a team of twenty to be able to get a handle on your contracts. The best contract lifecycle management software can help RevOps leaders finetune their sales process, even with a reduced headcount. Here are five ways a CLM can help you reduce operational costs and meet your goals:
CLM Sweats the Small Stuff So You Don’t Have To
It’s easy to let small things fall through the cracks when you’re already juggling millions of other bigger things. Simple things like accepting redlines in Word, routing contracts to the right approvers, and attaching the contract to the Salesforce record are no doubt crucial to tracking and maintaining the customer relationship. But they can be easy to forget or lose track of if you’re not absolutely on top of it, or if there are fewer people available to pay attention to it.
In 2023, RevOps can make better use of their limited time by automating some of the more time-consuming aspects of your contract execution process. CLM can help you to automate contract creation, approval workflows, and post-signing hand-off. Because it syncs well with CRMs, it’s the perfect tool to bridge the gap between the contract process and the rest of the customer journey.
CLM allows you to build workflows and assign task owners so that the lower headcount doesn’t interfere with getting the deal done on time. And as an added bonus, introducing more efficiencies into the process with CLM means your sales team can spend more time selling.
It Talks to the Rest of Your Tech
Rare is the department in this modern age that doesn’t have a tech stack of some size. In fact, businesses worldwide used an average of 110 SaaS apps in 2021, compared to 8 in 2015. So many have become dependent on tech to do their jobs, but many businesses are opting to cut costs by reducing tech spend.
While this is generally a smart decision, leaders should be sure to evaluate tools carefully when deciding which to keep and which to cancel. For example, tools that can be used by multiple departments, integrate with other tech tools in the business, and provide rich customer data should be prioritized over others that serve single use functions.
Since it’s RevOps’s job to unify revenue teams, it’s in your best interest to keep tools that talk to each other so that crucial business data flows easily through the business. Tools that talk to one another save you even more time on manual work and eliminate the operational cost of third party integrations to force your tools into conversation.
So when, for example, your CLM and CRM integrate with each other, there is less likely to be a gap in customer data. Even more, Sales and Legal can each access important customer information that the other might need to finalize the deal, and RevOps can get the 360 degree customer view they need to optimize revenue generation.
Unifies Data Sources
As mentioned above, the best CLM will integrate with your other tools to provide a unified process across revenue functions, providing an up-to-date view of your business data. Even better, it can show you your business data in relation to your business contracts.
Many businesses keep their contracts separate from the rest of their important documentation. While we understand the impulse, the outcome is more data silos and whole arms of the business not being aware of what the others are doing. Contracts are so integral to the overall health and success of the business that RevOps needs to be able to access them easily — not just Legal! — to combine with other key data and make critical decisions.
To extend the example above of integrating your CLM with your CRM, this kind of system integration allows you to unify data sources that “belong” to different departments, getting your teams on the same page and enabling smarter decision making, faster. As an added bonus, this integration helps you to ultimately reduce data inefficiencies and the costs associated with using bad intel to make critical business decisions.
Helps Manage Compliance Risks
As a RevOps professional, you are more or less aware of the existing compliance risks. You are also aware that depending on your jurisdiction and the regulations that apply, you need to keep an eye on whether or not your agreements include the necessary provisions and obligations for fulfillment. This goes double if you don’t have in-house counsel.
Yet, keeping track of this kind of thing is not in RevOps’ wheelhouse. And since it’s not in your competency (unless it is, in which case props to you), that might put your business at an even higher risk.
Luckily, CLM automations make it such that you can clean up handoffs to avoid breach of contract and other expensive non-compliance risks. CLM is a great addition to your small team, as it helps you keep track of key dates and terms in your agreement, and allows you to search your contracts for specific provisions. And since CLM gives all your teammates insight into your contracts, each party will be clearer on what their role in this agreement is.
CLM Helps You Prove ROI
Using a CLM can help you easily prove the value of the tool itself, especially in talks with leadership or the board about budget allocation. A CLM is living proof of what happens when you streamline a crucial yet tedious function in the business.
For example, you can use CLM to show how many contracts were executed, what kind of contracts they were, and where you do the most business. Using these numbers to prove how many contracts your team gets through and how quickly is a good indication of how well you’re doing with less.
Also compare the costs of executing contracts within a CLM, with CRM data populating the contracts and integrated into the information ecosystem of the agreement, versus using outside counsel or doing it yourself.
The economy is going through some things. And we don’t know when the storm will let up. Businesses that want to survive the changes to the landscape need to be in a position to adapt quickly to changing circumstances.
One way RevOps can meet their goal of reducing operational costs is by using contract management software to carry out the minute tasks and automate various processes during and after a deal so that your team can spend more time attending to more consequential tasks.
RevOps teams can use CLM to reduce the cost of contracts. Not only will it optimize the bottom line, but the CLM tool will get all revenue functions on the same page. It gives complete insight into the customer, what’s been done so far, and what more is needed, as well as internal team members insight into what their specific next steps should be. Even better, CLM integrates with other core business tools, giving a unified view of the data. It cuts down your tech spending while also facilitating healthy data and competent decisions made off it. This way, you get what you need to meet your goals, and your business can lower operational costs.
Learn more about contract management software.
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