Vendor Contract Management: A go-to-market guide

Vendor contract management software is a must-have throughout 2024 and beyond.

Businesses face:

• An ongoing expectation of digital transformation from vendors and customers
• Increasing and complex regulatory requirements
• A greater onus on evidencing social and corporate responsibility
• Distributed workforces as employees continue with hybrid and remote models
• Potential supply chain disruptions due to geo-political tensions

Procurement and Legal professionals face several macro trends where ongoing manual vendor contract management will prove frustrating at best. At worst, it will result in increased business risk, the potential for non-compliance, and penalties that could disrupt your operations.

As you go to market, you must consider how the vendor contract management software providers you speak with can help your business address these macro trends. Investment is a strategic decision - and one you need to get right if you’re to bring the entire organisation along with you."

To help you make the best vendor contract management buying decision, we’ve listed out everything you should know before you start speaking with providers. These tips will help you to prepare for demos, handle unexpected questions, and get the most information from your conversations.

1. Price isn't everything

Investing in vendor contract management software will help your business to optimise its processes, streamline its resources and realise maximum value from its agreements while automating manual activities. However, it inevitably comes at a cost that will vary between each provider and the model they use.

While proving value is important and your business will be keen to protect its bottom line, tread carefully around potential providers who only speak to the monetary aspect of ROI."

If a provider can’t demonstrate how they can improve your business’s visibility, control and compliance, your investment will end up costing you more in the long run. These three pillars are the foundation of vendor contract management success and any solution needs to prove its worth in these areas.

You can use our free ROI calculator to set expectations internally and externally and use your results as guidance during your research.

2. Build a  business case before going to market

Vendor contract management software can be used across the whole organisation, driving multiple benefits across Procurement and Legal departments. But these benefits need to be quantified and, in many cases, will need to convince the Chief Financial Officer (or whoever will give sign-off).

When creating a business case to get buy-in, you should be talking to your CFO about:

• Restoring vendor and contract visibility through a centralised repository
• Improving control through vendor onboarding and workflow automation
• Maintaining compliance via third-party risk monitoring workflows
  
  

3. Allocate a budget or have a rough estimate in mind

Different vendor contract management software providers may offer you different pricing structures - so it’s important to know how much money you can invest.

It may be that your chosen provider offers a price-per-user model, which will quickly exceed your budget if you have multiple stakeholders, large teams or complex sign-off processes.

There are other costs you may need to consider besides the software itself, including implementation, training hours, additional integrations or extra modules."

Knowing your budget and internal expectations around costs can help you to reach a shortlist of providers more efficiently.

It can also help you to prioritise which vendor contract management features matter most to your business in the coming year.

4. Assess how many vendor contracts you have

Your ability to provide the number of vendors and contracts you have is a solid indicator of the current contract visibility across your organisation and whether your records are buried away in Excel, emails or hard drives.

It helps providers understand how much time and resources may be required for your digital transformation initiative.

Knowing how many contracts you have and how many vendors you work with can also be about price. The amount of contracts and vendors that you work with may determine the respective costs of different platform providers.

Look for a solution that offers storage for unlimited contracts and documents so your business can continue to grow, it can do so without costly overheads.

5. Be ready to explain how your vendor contracts are stored

Establishing where your agreements are stored offers a solid foundation for conversations about the future of your vendor and contract lifecycle management (VCLM) approach.

If information is stored in a combination of Excel spreadsheets, email, and shared drives then your business is likely working via fragmented processes and a low level of vendor and contact management maturity. If you cannot provide insights into where everything is stored, your business will likely have bigger problems to address.

This lack of visibility feeds into higher vendor and contract risk, poor performance, missed renewals and non-compliance."

Any potential provider you speak to should be able to raise these issues and demonstrate the value of a centralised contract repository. They will also be able to give you information about how to migrate your legacy contract documents and extract critical data.

6. Provide an overview of your vendor contract processes

Whether you have complex internal processes that need streamlining or your business is struggling to keep track of its vendors and contracts, it’s time to be transparent.

If there is tension between Procurement and Legal, or your Finance team is using different systems to the rest of the business, it’s time to bring any silos to the table."

By being open and honest about your processes, a provider will be able to demonstrate how their vendor contract management software can help you overcome any pitfalls.

They will be able to discuss native integrations, add-on modules, and dedicated features that can address common issues such as:

• Bottlenecks within the organisation
• Poor collaboration between teams
• A lack of accountability from stakeholders
• No audit or history of actions taken
• Your current systems not talking to one another
• Slow vendor onboarding and updates
• An inability to track vendor performance and risk.

7. Identify any data points that are important to your business

What’s important to your business will shape your expectations of contract and vendor management software and its role throughout your business.

Perhaps you need to speed up time-to-contract, reduce the amount of redlining, mitigate a greater amount of vendor risk, or increase collaboration with your vendors.

Without knowing what you track already and where you’re looking to make improvements, it will be difficult to prove ROI and value to the person who is responsible for budget sign-off."

Give potential providers as much detail about data points as you can as this will help to set expectations on both sides. A personalised demo that shows how the software can support your business objectives is far more powerful to take back to the board.

Wrap Up

By dedicating time to these seven areas, your business will be able to go-to-market for vendor and contract lifecycle management software with greater confidence.

It will save you time throughout your assessment and selection process as you will have already completed the collaborative work with stakeholders across your entire organisation.  If you’re ready for the next step, book a discovery call with one of our experts today.