Contract Management Cost Justification
At this exact moment in time, much of the country is more focused on the weather than on the economy. The distraction is permissible because most U.S. companies have been experiencing improved profits and are expecting improvements in the economy next year. After all, the “Great Recession” officially ended in June of 2009 (according to the National Bureau of Economic Research).
This means the cost containment that’s been in full effect over the last several years will ease and companies will be looking for technology investments to gain efficiencies and competitive ground. From compliance to overlooked incentives to better reporting and business intelligence, companies want more.
So, okay, the purse strings have loosened and CIOs are charged with finding the next great technology breakthrough, but how do they justify the cost?
In our recent article, How to Cost Justify a Contract Lifecycle Management Solution, we outline the steps we see most often in the cost justification phase of technology selection. Briefly, those steps are:
- Diagnose and describe the problem with your existing system (or lack thereof)
- Identify potential solutions and how they fit with your IT architecture
- Put legs under your concept — look at these key areas: Improved productivity and efficiencies, risk penalty reductions, and economies of scale
- Get to really know the vendors you are looking at — invite them for a visit
Two of the key pain points we address with our clients and prospects are (1) policy compliance; and (2) process efficiency. In these situations, cost justification can be calculated by understanding the cost of doing nothing. For example, there is a new study by the Ponemon Institute that substantiates what you already know — “companies that invest more in compliance initiatives typically have lower expenses when something goes awry.” Nothing earth shattering here but, the study does go on to provide quantifiable data that is worth a second look — “The study found the cost of compliance was on average more than $3.5 million, significantly less than the $9.4 million in estimated costs for failing to comply with regulations.”
That seems like a pretty good investment.
If you’d like to see what you are missing in having a rules-driven, compliance solution to complex contract management problems, click here to contact us and schedule a product demonstration.