The Covid-19 pandemic has disrupted lives and businesses like never before. Countries are going under quarantine and businesses are closing down every minute, adversely impacting the economy to an extent where the virus could cost the global economy at least $5.5 Trillion in lost output over the next 2 years. To remain operational under these bleak circumstances, companies are forced to operate remotely or put a halt to operations. This has been the biggest challenge for organizations without infrastructure and processes to support remote working.
One area of businesses that’s caught in the crossfire is Legal Operations, specifically Contract Management. With little or no time to prepare, organizations that depend on physical storage of contracts, harddrives, or scattered discrete systems with IT firewalls and restrictions, are stranded with limited or no access to them. This means they can barely view, review or negotiate contracts as the situation demands or evaluate their force majeure clauses across contracts, making these companies prone to larger risks and financial losses.
An unprecedented situation like this is highlighting the urgency of being better equipped to handle a global crisis of this level. Here are 5 Reasons Covid-19 Pandemic is making companies accelerate their journey towards digitized CLM solutions:
No Access to Office Infrastructure
The Covid-19 crisis has left businesses scrambling to stay operational. Payments are delayed, operations temporarily suspended, and deliveries halted with countries shutting doors to control the pandemic. To have a fighting chance at coming out successful, companies need to review thousands of contracts for clauses like force majeure, fixed terms, termination of convenience, etc., understand and negotiate terms, close contract deals and reassess the entire contract management strategy. And to accomplish this, they need a scalable solution that can pull out the right clauses automatically, reviewing and comparing contract language, and suggesting accurate as well as proven alternatives in real-time, and from any location.
Ensuring Business as Usual
One of the most important steps businesses are trying to take is to support their customers and vendors and ensure Business Continuity (BC). But not many are succeeding in doing so. Failure to sign-off or renew contracts create business risks on future as well as existing revenues, and any delays or deliberations can have snowball effects with regards to cash flows, profitability and exposure to litigations. An IACCM survey carried out between 16th and 20th March shows that 60% of the participants said their contract performance is moderately or severely impacted, compared with just 37% two weeks ago. Such a situation demands for foolproof contract drafting, faster contract reviews and negotiations, and intelligent analytics – facilitated by collaborative tools and proactive workflow management within smart CLM solutions.
Need for Improved Risk Analysis
A situation like Covid-19 calls for additional measures to analyze contract risks and protect organizations from non-compliance and missed obligations. With shifting regulations, businesses are more prone to risks that can further damage their financial standing. An advanced AI powered solution enables companies to analyze and mitigate risks well on time. Metadata and clause extraction identifies hidden risks in contract clauses and post-award contract tracking tools can ensure obligations and compliance management. Smart analytics can further help companies with data to make informed decisions and identify supply chain opportunities based on contract performance and past trends.
Increased Need for Contract and Clause Level Visibility
Covid-19 has made the business landscape extremely volatile, exposing businesses to increased risks and uncertainties. While businesses are struggling to keep afloat, the last thing they need is a slip in compliance or obligations. That is why the contract management team needs to ensure they have all contract data at their disposal and are equipped to review and update clauses and terms as required, aided by smart clause libraries. A smart, integrated CLM solution acts as a single source of truth and enables companies to minimize risks and optimize contract performance.
Preparing for an Actionable Contingency Plan
Covid-19 pandemic has given businesses a lot to think about. It has unconventionally pointed out inadequacies in organizations and the immediate need for a future-ready backup plan. On the contract management front, this means companies need to opt for integrated, AI powered, cloud based SaaS contract management solutions that can be implemented remotely within a short time span and accessed seamlessly from across geographies.
The move towards digital and artificial intelligence has been on the cards for years, but an adversity like Covid-19 has accelerated this shift extensively. Digital solutions like Enterprise Contract Management are acting as enablers for this much needed transition and are helping companies overcome this adversity with powerful workflows, smart analytics, and a 360 degree view of all contracts for uninterrupted operations.