While digital transformation is a term or buzzword (depending on your audience and level of fatigue), digital contract transformation (DCX) has less of a following, which is surprising given its importance.

Contracts are essential for businesses and play a vital role in helping companies manage their relationships with everyone in the supply chain. However, poor contract management processes still affect companies’ profits. The risks from ineffective contract lifecycle management include missed penalties, unfulfilled obligations, lost revenue, missed savings, lost contracts, unexpected renewals and expirations, hidden clauses that expose a company to liabilities, and possible damage to the brand. Many contract management vendors provide solutions, but few integrate contract management into a company’s overall digital transformation strategy.

Before COVID-19 struck, 92 percent of companies believed their business models would need to change due to digitization, and business leaders anticipated that 80% of revenue growth would depend on digital offerings and operations. Now, analysts predict that digital adoption by consumers and businesses has advanced five years in just about eight weeks. COVID has highlighted how dependent we are on digital technologies and how crucial it is to be agile and flexible to reduce business risks during challenging times.

Digital Contract Transformation allows businesses to digitize their contracts and contract lifecycle management (CLM) processes, making them fundamental pillars to overall digital transformation efforts. Data is a business’ most valuable asset, and harnessing that data gives businesses the ability to benchmark, track and optimize the key performance indicators most important to them. It essentially allows organizations to do more with less, finding underperforming services, and additional cost savings opportunities, as well as ensure governance and compliance.

While all organizations are different, businesses that have successfully implemented digital contract transformation strategies followed the following key steps:

  1. Centralize business agreements in a digital, cloud-based contract repository.
  2. Use automated alerts and tasks to keep track of your most important contract deadlines.
  3. Use clause & template libraries to assemble contracts with compliance and speed.
  4. Practice religious version control.
  5. Create automated contract workflows that eliminate manual processes.
  6. Leverage an electronic signature process to get contracts executed fast.
  7. Set role-based and feature-based permissions to ensure security and compliance.
  8. Get real-time process visibility with dashboards and reporting metrics.
  9. Have one standard and online contract request process that all employees can follow.
  10. Capture and store full contract history data to demonstrate full regulatory compliance and audit purposes.

One thing that’s crystal clear from the COVID pandemic is that digital transformation efforts will not be going away anytime soon and are likely to accelerate. Data and KPIs are foundational to digital transformation, and businesses run on contracts. Digital contract transformation is (and will continue to be) a foundational element of an organization’s broader digital transformation strategy because it not only modernizes contracting efforts, but it enables them to harness the data in their contracts to deliver actionable business insights that are at the heart of digital transformation.