The Staggering Cost of Poor Agreement Management (And How to Fix It)
Agreements are the lifeblood that facilitate transactions, partnerships, and strategic initiatives. However, a new report by Deloitte and DocuSign reveals a startling reality:
“Poor agreement management practices and systems are costing organizations nearly $2 trillion in annual global economic value.”
The report, titled "Unlocking the Value of Agreement Management," surveyed over 1,000 business leaders worldwide and uncovered the root causes, value drivers, and potential solutions for addressing agreement management challenges. Here are some of the key insights:
Disconnected workflows are the root cause. According to the report, "On average, companies spend an extra 18% of their time on agreements, resulting in over 55 billion hours wasted globally per year." This inefficiency stems from the lack of seamless collaboration and integration across stakeholders and systems.
Value destruction is unevenly distributed. While customer-facing functions like sales and marketing contribute 40% of the global value loss due to missed revenue opportunities, support functions account for a staggering 60% of the value loss due to time wastage and operating costs.
Customer and partner relationships suffer. The report highlights that "48% of businesses reported their customer relationships deteriorated significantly due to agreement delays," and "66% reported inefficient agreement workflows as a driver for negative customer satisfaction."
Critical capabilities are needed. To address these pressing issues, the report identifies four critical capabilities that organizations should prioritize: seamless collaboration, AI-enabled search and analytics, process integrations, and persona-based workflows.
The study also breaks down the pain points across the eight stages of the agreement journey, from initiation to implementation. For instance, "62% of respondents struggle to locate and access previously approved contracts for reference," and "54% have to manually track and analyze key terms, deadlines, renewal dates, and enforcement needs."
These findings underscore the urgent need for organizations to modernize their agreement management processes. As the report notes,
"2 out of 5 companies are looking for solutions with smarter capabilities, and more than half plan to increase spending on agreement management solutions over the next three years."
By embracing technologies like artificial intelligence, process automation, and integrated collaboration tools, businesses can streamline their agreement workflows, reduce costs, mitigate risks, and unlock significant value. As Deloitte and DocuSign aptly state, "It's powerful and instructive for anyone looking to get more business value from their agreements."
In the face of these compelling findings, it's clear that organizations can no longer afford to neglect their agreement management practices. By taking a holistic approach and investing in modern solutions, businesses can turn agreements from a bottleneck into a strategic advantage, fostering stronger customer and partner relationships, accelerating revenue, and driving long-term growth.
