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Contract Analytics – A Business Differentiator for Procurement Organizations

Fresh off the Ariba Live event in Las Vegas, it’s clear Ariba continues to move their Procurement platform and its overall value well forward.

Being one of the early platforms in the Procurement space, and having worked with Ariba since 2000, I have seen the product and messaging evolve in many different directions. Whether it was the evolution of the fee-based model for the supplier network, or variations of auction usage for different industries or supply categories, many themes continue to pop up.

Procurement has moved well beyond just wanting a seat at the table or having influence in an organization. Through the numerous procurement executives explaining their use cases and results, one can quickly see that the desired influence has been achieved. Having said that, procurement executives continue to want, and are often being forced to find new and creative ways to influence the business through improved processes and technologies. Global dynamics mean with increased influence at the executive table comes new ownership and demand being put on these groups.

When I look back, one theme in the procurement technology landscape that changed the game some time ago was Spend Analytics, helping procurement organizations truly get a handle on the amount of money being spent in various areas of the business. The access to this data allowed organizations to interrogate their spend in new ways; dissecting and reviewing data from new angles and with a stronger lens. Ultimately, this visibility has led to a wide range of cost reduction opportunities, spend control and compliance within the organizations that adopted it.

As procurement organizations evolve, there remains constant questions that come up around how well organizations are managing their contracts. Sure, there is the connection with the pricing terms and what is being charged in an invoice, which is a pain point and a source of significant ongoing work, but there is also a world of unstructured data that exists in these agreements with nuggets of detail that are becoming more important. Am I managing to my cost reduction clauses? Are my payment terms truly standard, both for days but also their wording? How many standard vs. non-standard termination clauses do I have? What do our contracts say about breach notification? These are hard, but important questions to answer.

Enter Contract Analytics

Spend Analytics was a natural first application for procurement organizations to get a handle on spend across the business, but dealing with unstructured contracts was really, really difficult. The increased influence that procurement now has and the changing requirements mean risk, audit, compliance, regulatory and legal initiatives can all touch procurement. Increasingly these initiatives require contract data that is not easily captured from vendor agreements. Enter the field of contract analytics to leverage technology based on artificial intelligence to not only find contracts in an organization, but to extract key terms and clauses when an organization needs it, and adapt to the ongoing daily changes and requests that exist.

Ariba Live each year is a great forum to engage with the procurement teams and discuss their challenges and solutions. Never more than this year did we truly see procurement teams trying to wrestle with the concept of contracts, and the ongoing analytics that are now being required. Discussions around migrating data into Ariba Contract Management and Ariba Contract Compliance are part of the overall value of Contract Discovery and Analytics, but more and more discussions continued with how that data, can be leveraged to provide ongoing insight and help deal with complex use cases outside of the contract management solution.

Simply put, organizations are realizing that they can never “future proof” a data model in a contract management solution, and need flexibility to find terms and data from within contracts to be able to properly respond to various requests for information and proactively influence the business. We are excited to have a close relationship with Ariba to sit beside their procurement platform to not only augment the data in their systems but to help deal with the wide range of uses cases where Contract Analytics are required.

Much like Spend Analytics has allowed for interrogating a company’s spend, Contract Analytics allows for interrogating contracts in new ways where visibility generates opportunities, uncovers risk, manages change, and ultimately becomes an ongoing business differentiator.