How Business Agreements are Handled Today
How companies manage their contracting process is now critical. It must be digital, efficient, user-friendly, secure and accessible. To provide clarity to organizations considering improvements to their own agreement workflows, nearly 1,000 global business leaders were polled about how they manage their agreements.
The study, The State of Systems of Agreement, 2020, conducted by Forrester Consulting on behalf of DocuSign, analyzes how agreements are prepared, signed, acted on and managed. The result is a complete snapshot of today’s agreement processes, including quantitative data and qualitative interviews with technology decision makers and global business leaders.
While there are definite improvements compared to last year, there’s still a heavy reliance on manual processes, which translates to longer delays, incomplete information, and a significantly worse customer experience. The study’s research is vital to understanding both the current landscape and opportunities for improvement.
Here are four key findings from the report:
- Manual agreement processes still burden 9 out of 10 companies, resulting in poor customer experiences, delays in starting projects and delays in recognizing revenue
- Electronic signature is becoming a standard practice; 68% of contracts signed in certain departments utilize e-signatures
- The focus should be on finding other uses for e-signature across the organization as well as connecting it to other parts of the agreement process
- Improving customer experience is the top reason cited for investing in better tools
Customer experience is the most important innovation driver
A year ago, one of the most impactful findings of the State of Systems of Agreement report was that respondents viewed customer experience as the top reason to change technology tools. That finding is true again in 2020, with 79% of respondents identifying customer experience improvements as either a high or critical priority.
Respondents identified improved customer experience as the most common benefit of a digital agreement process. In fact, 55% of respondents in 2020 reported a better customer experience using digital agreement processes. One interviewee in the survey had this to say:
“The stacks of paper we had people sign were two or three inches high—people would walk out with their hand cramping; then it had to be FedExed overnight.”
Most respondents in the survey had only partially digitized their systems of agreement, so there’s still plenty of room to improve the client experience.
Organizations don’t have to make a choice between focusing on customer experience or employee experience. The two outcomes are linked. As digital agreement technology gets more connected, customers have more power to self-serve. If a customer can’t complete a task on their own, the same improved systems also make it easier for employees to access information so customer issues are solved quickly. Happier employees make happier customers and vice versa.
Manual agreement processes burden 90% of organizations
If your organization is still struggling to streamline contract management workflows, don’t worry. You’re not alone. An overwhelming majority of organizations in the Forrester study are manually inputting agreement details, duplicating existing documents as a template, or creating every new agreement from scratch. All of these processes are inefficient, time-intensive and error-prone.
Manual methods of creating agreements translate to direct and indirect impacts on revenue. Respondents reported these common negative consequences of outdated processes:
- Poor customer experience (46%)
- Delays in starting projects (43%)
- Delays recognizing revenue (42%)
Among respondents, there’s a global understanding that perpetuating these agreement inefficiencies will only result in higher costs and lower quality of work.
There are two primary takeaways from the overwhelming amount of organizations that realize their agreement processes are too manual.
- An opportunity to be more competitive Building connected, automated systems of agreement is an opportunity to get ahead of the competition. Digital agreement technology is still new and the first organizations to capitalize on those tools will gain a massive competitive advantage.
- Recognizing the need to improve internal processes Businesses are realizing the need to improve processes, too. The ones that operationalize the fastest will win the race to more efficiencies and superior products and service.
“The biggest [impact] is time to revenue; the time it takes between [start to finish] is the time it takes for us to recognize revenue. Those signatures are money… we’re getting our money faster now.”
Individual agreement steps are digitized but disconnected
Among the respondents, there have certainly been attempts to digitize systems of agreement. The majority, however, digitize individual steps but stop short of connecting the entire end-to-end agreement process. The result is pockets of digitization and some automated processes, but the gaps between steps create siloed, disjointed workflows.
Taking these first steps are important, but the real value is in leveraging the momentum created by those digitization footholds and expanding further – until all steps in the agreement process work together. Separate point solutions provide small tactical benefits but miss out on larger strategic shifts. It still requires manual effort to carry work from one step to the next, minimizing their total value.
Electronic signature is a common first step to automation. This stage in the system of agreement is important to digitize because it removes unnecessary paper costs, shipping delays and complicated printing/scanning/faxing workflows. Digitizing signatures certainly has benefits, but in the grand scheme of agreements, there are significant efficiencies to be gained by connecting and automating steps both before and after the signature.
If an organization has solved document signatures with an e-signature tool, imagine how much more powerful that process could be with an integration to a CRM system. It would allow sales reps to populate a pre-approved agreement with accurate account details and send that document for signature directly from the CRM interface – linking the agreement preparation with the signature phase to dramatically increase efficiency.
Completed agreements can also kick-off post agreement processes by automatically triggering other actions that need to be taken once an agreement is signed, like notifying stakeholders or creating a work order. Another automated step might send an expiring agreement out for renewal without a manual review. The more an organization finds ways to connect tools in its system of agreement, the more value it will gain from that system.
The holistic agreement process
In Forrester’s research, respondents identified challenges with individual steps in their agreement workflow. Often, these challenges can be solved by connecting the separate steps together into a single efficient system of agreement. Below is a quick summary of individual steps in the agreement process as well as some common challenges at each stage. Imagine how a well-connected system would simplify the flow of information and improve an organization’s overall ability to execute.
- Document generation Before an agreement can be signed, it has to be drawn up with details about the work that will be delivered and the payment for that work. 90% of organizations are still preparing agreements manually, which leads to long delays and error-prone documents. By using agreement technology solutions, agreement platforms can be integrated with CRM tools to automatically pull data, create custom contracts and send for signature, all from the native CRM interface.
- Contract signature Electronic signature has been adopted by at least one team at most organizations, but there’s still untapped potential in connecting e-signature to more parts of a company. 56% of respondents still struggle with document visibility and 48% experience delays due to information errors. While the signature collection is much more efficient, the process doesn’t improve if the data is bad or the company isn’t prepared to put the agreement into action.
- Acting on agreements Once an agreement is signed, the terms need to be executed for work to be done. This action looks different for every organization, but the next step is typically the creation of a work order, an invoice, an inventory purchase, etc. According to Forrester, 56% of respondents still have manual processes in place to initiate post-agreement processes, which leads to duplicate work, errors in data transfer and additional delays in delivery.
- Contract search and analytics It’s very rare that an agreement is simply signed, executed and forgotten about. The language of that contract needs to be accessible to all parties for reference and analysis. Yet 59% of Forrester’s respondents report inability to effectively search agreements’ full text and 47% are exposed to risk from failure to detect problematic contract language. Intelligent contract analytics tools can create a single database of all existing agreements and use AI to scan documents to pinpoint specific language that contains opportunities or risks.
Today’s competitive business leaders are using connected agreement tools to improve internal and external results. Executives realize the importance of linking processes for business efficiency and happier customers. Their teams are now auditing agreement processes to solidify workflows and identify opportunities for improvement – through the entire contract management lifecycle.
Get the State Of Systems Of Agreement, 2020 report for help on connecting your entire agreement process.