Contract Analytics for Procurement: The Time Is Now
Jason Busch, founder of Spend Matters Inc. and one of the most respected analysts and researchers in the procurement field, poses an interesting question in his latest blog post – “Is contract visibility the next ‘must have’ solution for procurement?” He outlines his case for defence and comes to the conclusion that yes, it is, but tempers his vote of confidence with a question about the “time horizon”.
Busch identifies Seal Software as “arguably the first provider to bring the two elements of contract visibility and spend visibility together”. Whilst the qualification allows some objectivity, I would argue it is a little stronger than say, the “probably” in the old Carlsberg ad “probably the best beer in the world”. Seal introduced the concept of contract analytics in 2010 and has continued innovating around natural language processing (NLP) and Machine Learning models to the present, where the use of contract analytics in mainstream enterprises has crossed the chasm from early adopters to the early majority.
One of the most popular use cases for Seal since the beginning has been analysing contracts on the buy-side of indirect procurement. Procurement functions across many vertical industries - including financial services, hi-tech, discrete and process manufacturing, and life sciences/healthcare have implemented Seal to get better visibility into what lies in their contracts. As Jason points out, visibility is not only about what is in the contracts but also identifying all that the contracts to bring into scope in the first place. What is tantalizing, is tying the data extracted from contracts with the data residing in spend management systems. This combined data stream is what Jason is really referring to. It is what moves a technology from delivering data points to one delivering answers, and is what Seal was “arguably” the first to do.
As any scholar of Crossing The Chasm knows, a technology only goes mainstream when vendors offer a total solution to a business problem and the biggest companies of a particular market are implementing that technology. What this means is that tech for tech-sake is not good enough to cross the chasm into a tornado (apologies to non-Chasmists for the in-speak). A clear ROI and outcome-based approach are necessary in order for the tech to be widely adopted. To that end, Seal has introduced Seal for Procurement, which goes way beyond a technology that merely reads contracts. It is a solution to a gnarly set of business problems. Problems that procurement professionals have the world over, such as whether the actual payments to suppliers are in line with those agreed in the contract or whether there is revenue leakage based on agreed terms or options to change the payment schedules to better maximise working capital. It sounds relatively straight forward to discover these risks and opportunities with a certain amount of manual labour (reading contracts and then cross-checking with the spend data) but, in reality, for companies with more than a couple of hundred suppliers, this is almost impossible without massive heavy lifting from an army of paralegals.
Seal for Procurement combines the award-winning Seal Discovery and Analytics platform with a set of analytic accelerators specifically created to tease out the topics, sub-topics, and clauses most relevant to procurement professionals. Tied in is a set of dashboards to surface that information to provide answers to those gnarly questions that procurement professionals have. This brings together the data locked in contracts (contract visibility) and tying it to the data stored in the spend management systems (spend visibility) – and then surfacing that in an easy-to-consume and actionable set of dashboards. Jason believes that contract visibility is the next “must have” in procurement and he does an excellent job in his article at highlighting his reasoning and specific examples to support that position.
As for timescale, let me answer that question head-on—the future is now. The capability is here. Seal for Procurement delivers on the requirement to surface the most relevant information for procurement professionals in order for them to make informed decisions about spend, as it related to contractual agreements.
In early 2018 we presented a series of three webinars under the title of Procurement’s Path from Backroom to Boardroom. These examined three stages of maturity, from getting procurement contracts under control to the mastery of digital procurement transformation. Each webinar featured a Fortune 100 customer talking about their digital transformation journey and how they are bringing contracts and spend analytics together. These are very real implementations with defined ROIs to them.
In conclusion, yes, the nexus of contract visibility and spend visibility has become a “must-have” within procurement digitization and it is happening right now!
Check out Seal for Procurement <here> or attend our upcoming webinar, 5 Reasons to Leverage AI for Procurement Contract Visibility and Outcomes.