The COVID-19 pandemic has highlighted a significant problem with contracts, as revealed by a report released by World Commerce & Contracting (WorldCC) and KPMG Law entitled “Can the contracting process improve without an owner?”
For decades, organizations have tried to simplify the contract process, testing and implementing contract management tools and systems, but to little effect. Now, as digitalization accelerates, streamlining the contract process is a major priority. As the report makes clear, this issue is not isolated to one business or industry type. It is a global problem that is slowing organizations down.
Only 10.8 percent of organizations consider their end-to-end contracting process to be very effective. As one research respondent commented, “Getting a contract is like having a root canal.” Cost was also an area of contention among respondents, with the least efficient processes reportedly averaging more than US$10,000 per contract, simply for reviewing and processing activities.
Digitalization of the contracting process is now a priority for 76 percent of respondents, yet only 26 percent of respondents believe that their technology team is well equipped to support their digitalization initiative. Digitalization alone cannot fix the broader issues.
What’s the solution?
The report concludes that sustained progress and improving the quality of the contracting process depend on achieving a single point of process ownership and accountability. WorldCC and KPMG Law say that introducing an Office of Contracting within each organization is the solution to tackling a fragmented and costly process. The OOC would be a small group responsible for all contracts across the enterprise and the process surrounding it. They would work in harmony with all involved parties, coordinating and coalescing.