Will Contract Management Software Ever Rule the World?

Will Contract Management Software Ever Rule the World?

The contract management sector is growing at an impressive rate. In 2019, the global market was valued at $1.5 billion. In four years from now, the market is expected to almost double to $2.9 billion.

Several different things could be contributing to this impressive rate of growth. Firstly, changes are occurring within the world of sales, compliance, and licensing, meaning that in the future, businesses will have to deal with even higher levels of complexity—something challenging when managing contracts manually. Secondly, new AI and machine learning developments are happening, which have added new functionality to contract management software, creating more generous benefits for organisations. Thirdly, smart contracts now exist, which are capable of automatically executing, controlling, or documenting various legal actions and elements based on contract terms or entire agreements. Once again, organisations are realising the benefits and considering contract management software as a viable solution.

 

How Hospitals are Benefitting from Contract Management Software

Hospitals deal with a high volume of contracts, which must also meet various compliance and performance standards. However, individual institutions have been unable to use contract management software in the past because it has not conformed to the required international standards. Now, this has changed, and many platforms are now compliant with important international standards such as HIPAA. Most hospitals have also realised that using a contract management platform will help keep patient data private and secure, which has become necessary in the last couple of years. Various breaches of patient data within the NHS have taken place. Significant cost savings are a further benefit to hospitals that use contract management software. Overall labour costs can be reduced, as well as other expenses resulting from data litigation and breaches of security. Then, of course, there are the general benefits of using contract management software, such as mitigated risk and improved workflow, which greatly benefits hospitals.

 

How SME’s are Benefitting from Contract Management Software

SME’s typically employ less than 1000 members of staff and usually operate on high productivity and low-cost business models. They only deal with a low volume of contracts, which is why many of them attempt to lower costs using manual contract management. While this approach may work well at the moment, it would be less suitable if an SME were to eventually take on more and more contracts. The risk could become out of control due to contracts being renewed under different terms or existing contracts closing out. Contract management software should be used to mitigate this risk and lower the costs relating to admin and compliance.

 

Why the North American Market Remains the Largest for Contract Management

North America is one of the largest markets for contract management software because many software developers are based in this region. Furthermore, R&D is heavily invested in this sector. As mentioned previously, healthcare businesses are a significant customer for contract management software, and it just so happens that the healthcare market is booming North America. So why else could the North American market be performing so well? There is a requirement for companies to maintain organised contract records, and acts also exist that demand compliance. Contract management software is the perfect way to ensure compliance and is a lot easier than manually managing contracts.

With Increasing Competition, how are Providers Remaining Competitive?

More and more companies who provide contract management solutions are either acquiring one another or working together, rather than competing. In the case of acquisition, companies benefit by offering further functionality, which they weren’t able to offer beforehand. Some companies join forces with their competitors, benefiting from ‘the best of both worlds.’

This happened with Volkswagen, where they worked with another company that was previously responsible for tracking its battery supply chain from origin to the factory. Perhaps the most significant advantage of doing this, was Volkswagen’s ability to now easily track documents within the existing supply chain and vet third party suppliers.

In other cases, contract management providers are improving their software functionality by making it compatible with well-known CRM systems or combining different systems to provide a more feature-packed product.

 

Will Contract Management Software be Ruling the World any Time Soon?

Although contract management software will probably not rule the world at any point, it is experiencing substantial growth thanks to greater demand. More and more industries are realising  the benefits of such a system, particularly Hospitals and SME’s, who use it to improve security and lower costs and risks. Additionally, contract management systems have become more favourable thanks predominantly to the introduction of AI, which has enabled new functionalities.

Contract management software providers are facing increasing competition. To stay ahead, they are adding new features to their platforms to shine amongst their rivals. In other cases, it has also been necessary to either join forces with their competitors or even acquire them so they are no longer a threat.