For several years, Spend Matters has been collecting and publishing Series of articles on forecasting Insights on procurement, supply and service trends for the coming year from specialized technology and service providers in the market.
This year is no exception as we revolve around “opinionemphasizing the provider’s observations in the year they were behind and how they see the impact of those observations on the year ahead.
The series will run from mid-December to early January, after which our analyst Bertrand Maltaverne will offer his views on the key themes that emerge.
In no order of priority other than the date they drop into our digital mailbox, let’s hear today from Dipan Karumsi, procurement consultancy specialist KPMG.
Momentum Building in Contract Management
From the pandemic to 2023, organizations are seeing a significant increase in the number of data queries related to contracts. Leaders try to assess possible exposures, where contracts deliver value and where they don’t, and how contract breaches might impact the bottom line. Organizations realize that underinvestment in modern contract management capabilities leads to significant challenges in answering the simple but important questions needed to drive timely, business-critical decisions, such as termination rights, compensation, and minimum order quantities.
If we look ahead to 2023 and beyond, we see tremendous momentum in the contract management space. Many organizations have made good progress with tactical contract management capabilities in source-to-pay solutions, thus benefiting from centralized storage of executed contracts, as well as access to key metadata fields such as due dates, contract values, and rebate thresholds. Visibility. However, more needs to be done to allow access to the contract metadata and terms needed to proactively manage complex third-party relationships and protect the bottom line.
New digital CLM platforms equipped with advanced analytics and artificial intelligence can meet this need. As a result, contract management itself has evolved from a document management capability within a given function to a strategic capability across the enterprise. As remit expands, organizations are rapidly assessing how they can use this “source of truth” to better collaborate across functions for greater efficiency and effectiveness, including:
- Integrated buy-side, sell-side and enterprise contract management: Consolidate all contracts and workflows across the organization into one tool to optimize visibility and execution
- Contract Performance Management: Advanced monitoring of obligations and metrics to deliver on business value promises
- Third Party Risk Management (TPRM): Integrate TPRM to manage supplier risk before and during supplier relationships
- M&A empowerment: Advanced Contract Analysis to Quickly Assess Acquisition Synergy Savings and Divestiture Risk
- Compliance (LIBOR, etc.): Rapidly assess and respond to risks associated with regulatory changes
Going forward, we will help organizations understand how strategically delivering enterprise contract management will help manage risk exposure, drive revenue growth, drive cost reduction and increase compliance value. As organizations evaluate how to advance next-generation contracting capabilities, it is important to push the boundaries of contract management scope and transform contracts from document-centric to process- and insight-centric.
Thanks to KPMG for being part of this series.
Look for more Spend Matters insights on the year ahead in the coming weeks.
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