Pandemic highlights broken contract processes: Office of Contracting may be the fix
In collaboration with KPMG Law, World Commerce & Contracting (WorldCC) surveyed executives from across the globe, gathering insights into the process of contracting across industries ― and how to fix perennial and costly problems in the contract development process.
- Almost 90% of organizations have ineffective and fragmented contracting processes
- 76% of organizations want to prioritize digitalization of contracts
- A potential solution lies in setting up an “Office of Contracting”
The COVID-19 pandemic has highlighted a significant problem with contracts, as revealed by a report released by World Commerce & Contracting (WorldCC) and KPMG Law, entitled Can the contracting process improve without an owner?
For decades, organizations have tried to simplify the contract process―testing and implementing contract management tools and systems, but to little effect. Now, as digitalization gathers pace, streamlining the contract process is a major priority. As the report makes clear, this issue is not isolated to one business or industry type. It is a global problem that is slowing organizations down.
“Contracts directly impact the health and wealth of every organization. Yet, for all their importance, on average, contracts suffer more than 9% value erosion,” says Jason McQuillen, a partner in KPMG Law in Australia, head of its Legal Operations Transformation business and report co-author. “They only gain executive attention when things go wrong, and the focus is on who to blame. The dominant, widely acknowledged reason for this is simple: no one owns the contract delivery process.”
Only 10.8% of organizations consider their end-to-end contracting process to be “very effective.” As one research respondent commented, “Getting a contract is like having a root canal.” Cost was also an area of contention among respondents, with the least efficient processes reportedly averaging more than US$10,000 per contract, simply for reviewing and processing activities.
Tim Cummins, WorldCC President and report co-author, comments: “Contracting has never been addressed effectively. The report highlights a clear frustration with departments involved in the contracting process, lengthy cycle times, and CEOs believe they are losing money.”
Focus on digitalization
Digitalization of the contracting process is now a priority for 76% of respondents, yet only 26% of respondents believe that their technology team is well equipped to support their digitalization initiative. Digitalization alone cannot fix the broader issues.
“I’m optimistic that the impact of the pandemic will encourage organizations to change things, and digitalizing contracting is now a business priority,” says Nicola Brooks, Director for KPMG Law in the UK, head of its Legal Operations Transformation business and report co-author. “But most organizations will not succeed by focusing on this in isolation. Rather, to succeed, organizations need to have an operating model as part of this.”
What’s the solution?
The report concludes that sustained progress and improving the quality of the contracting process depends on achieving a single point of process ownership and accountability. WorldCC and KPMG Law say that introducing an ‘Office of Contracting’ within each organization is the solution to tackling a fragmented and costly process. The OOC would be a small group responsible for all contracts across the enterprise and the process surrounding it. They would work in harmony with the multiple functions, coordinating and coalescing.
Stuart Fuller, Global Head of Legal Services at KPMG, concludes: “The WorldCC and KPMG Law report shows that there is a clear problem in the contracting process. The solution needs clear ownership within the organization, and external support from trusted advisers with real, global experience in this critical area for business, who can drive value creation and end the value erosion.”
About the research:
The report is based on input received from a series of round-table discussions and an on-line survey conducted by World Commerce & Contracting in the period from January to March 2021.
More than 40 executives participated in the roundtables and shared their views on the key trends in commercial and contract management. This was supplemented by input from more than 300 survey respondents, together representing a range of industry and geographic perspectives and size of organization. While taking account of all responses, the report focuses primarily on the 200 organizations with annual revenues of more than US$500 million since the complexities being examined are strongly related to the size of the business.
About KPMG International
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. More: home.kpmg.
About World Commerce & Contracting
World Commerce & Contracting is a not for profit association and the only global body promoting standards and raising capabilities in commercial practice.
The organization works to inspire individuals and organizations through research and ideas and equips its members with knowledge and networks that support successful contracts and commercial relationships. More: worldcc.com
To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.
About Business Wire
For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.
Subscribe to releases from Business Wire
Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Business Wire
Kyowa Kirin Provides Update on Application for Marketing Authorisation of Istradefylline in Europe for the Treatment of ‘OFF’ Episodes in People Living with Parkinson’s23.7.2021 17:05:00 EEST | Press release
Kyowa Kirin Co., Ltd. (TSE:4151, President and CEO: Masashi Miyamoto, “Kyowa Kirin”) today announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) issued a negative opinion for istradefylline as an add-on treatment to levodopa (L-Dopa) based regimens in adults living with Parkinson’s, experiencing end-of-dose motor fluctuations. Kyowa Kirin International remain committed to istradefylline and people living with Parkinson’s and are currently reviewing the options available, which may include re-examination. “We are disappointed by the CHMP opinion. However, we remain confident in the benefit-risk profile of istradefylline and are committed to making a difference to the lives of people living with Parkinson’s, an area which has had few innovative therapies for decades,” said Abdul Mullick, President of Kyowa Kirin International. “There are currently few new treatment options available to manage end-of-dose motor fluctuations in Parkinson
ForumPay Teams Up with Bambora to Conquer the Crypto-to-Fiat Payments Market23.7.2021 16:16:00 EEST | Press release
ForumPay, an international cryptocurrency-to-fiat payment service provider, has established a partnership with the global payments provider Bambora, a Worldline brand, to bring seamless crypto payment solutions to merchants and online shoppers. The partnership will cater to a large global audience and offer expanded payment options for both shoppers and merchants. ForumPay continues its march to dominate the growing crypto payments ecosystem for merchants around the world. “ForumPay provides merchants with a seamless, secure and instant processing solution to accept payments from the more than 54 million active crypto wallet users around the world. By providing a payments service for processing crypto into fiat that functions as naturally as card payments, ForumPay enables merchants with a familiar feeling payments alternative that also gives them a competitive advantage by tapping into the fastest growing consumer base on the planet.” says Joshua Tate, CEO of ForumPay. “We are very ex
Wipro Recognized as 2021 Microsoft Modernizing Applications Partner of the Year23.7.2021 15:54:00 EEST | Press release
Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO), a leading global information technology, consulting and business process services company, today announced that it has won the 2021 Microsoft Partner of the Year Award in the Modernizing Applications category. In addition, Wipro was also named as a category finalist in the 2021 AI Partner of the Year category, solidifying its reputation as an innovator in multiple sectors. This recognition highlights Wipro’s deep expertise and ability to go above and beyond for its customers, powered by an established partnership with Microsoft. Even when working with complex customer environments, spanning across hundreds of servers with different applications of different versions, Wipro was able to help customers meet their business needs and leverage the power of public cloud in an efficient way. “Global enterprises have embraced modernization at an unprecedented scale and pace, and the demands of the past year show no sign of easing. We are honor
Merck Announces Appointment of Head of China & International for Healthcare23.7.2021 14:45:00 EEST | Press release
Merck, a leading science and technology company, today announced that Hong Chow will join its Healthcare business sector as Head of China & International on October 1. In this role at Merck, Chow will lead China, Japan as well the regions Europe, Latin America, Asia-Pacific and Middle East, Africa and Russia, the franchise of Cardiovascular Metabolism & Endocrinology (CM&E), and the Global Business Innovation team. Chow will report to Peter Guenter, Member of the Executive Board of Merck and CEO Healthcare. She will serve as a member of the Healthcare Executive Committee, and be based in Shanghai, China. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210723005186/en/ Merck Announces Appointment of Head of China & International for Healthcare (Photo: Business Wire) “Hong’s international experience and strong track record of bringing innovative medicines to patients in need across both developed and emerging markets, most nota
H.I.G. WhiteHorse Refinances Grupo Recoletas23.7.2021 14:03:00 EEST | Press release
H.I.G. WhiteHorse, a credit affiliate of global investment firm H.I.G. Capital ("H.I.G.") is pleased to announce that it has arranged a refinancing package for Grupo Hospitalario Recoletas (“Recoletas”), which includes a significant growth capital component. Recoletas is a family-owned Spanish private hospital operator headquartered in Valladolid, Spain, with a leading position in the Castilla y Leon Spanish inland region. It operates 8 hospitals with c. 540 beds and 13 medical centres across 7 regions. H.I.G. WhiteHorse has committed €110 million in unitranche loans to refinance the borrower's existing indebtedness and provide additional capital to finance growth, supporting the Company’s expansion. Recoletas is currently developing ambitious projects to expand its healthcare services provided through hospitals and medical centers, as well as diagnostic imaging centers and radiotherapy units. Amando J. Rodríguez, President and CEO of Grupo Hospitalario Recoletas, said: “We are very ha
Schlumberger Announces Second-Quarter 2021 Results23.7.2021 13:50:00 EEST | Press release
Schlumberger Limited (NYSE: SLB) today reported results for the second-quarter 2021. Second-Quarter Results (Stated in millions, except per share amounts) Three Months Ended Change Jun. 30, 2021 Mar. 31, 2021 Jun. 30, 2020 Sequential Year-on-year Revenue* $5,634 $5,223 $5,356 8% 5% Income (loss) before taxes - GAAP basis $542 $386 $(3,627) 40% n/m Net income (loss) - GAAP basis $431 $299 $(3,434) 44% n/m Diluted EPS (loss per share) - GAAP basis $0.30 $0.21 $(2.47) 43% n/m Adjusted EBITDA** $1,198 $1,049 $838 14% 43% Adjusted EBITDA margin** 21.3% 20.1% 15.6% 118 bps 561 bps Pretax segment operating income** $807 $664 $396 22% 104% Pretax segment operating margin** 14.3% 12.7% 7.4% 162 bps 694 bps Net income, excluding charges & credits** $431 $299 $69 44% 525% Diluted EPS, excluding charges & credits** $0.30 $0.21 $0.05 43% 500% Revenue by Geography International $4,511 $4,211 $4,224 7% 7% North America* 1,083 972 1,097 11% -1% Other 40 40 35 n/m n/m $5,634 $5,223 $5,356 8% 5% *Schlum
Wyss Center Partners With Artiria Medical to Accelerate a Novel Therapy for Cerebral Vasospasm23.7.2021 12:59:00 EEST | Press release
The Wyss Center and Artiria Medical today announced a new partnership to accelerate the translation of a novel technology that has the potential to reduce deaths and improve quality of life for stroke patients. Artiria Medical, an early-stage medical device company focused on disruptive neurovascular products, has been developing the technology and is now joining forces with the Wyss Center, a non-profit organization dedicated to bringing state-of-the-art therapies to the patient. The team has received support from the Swiss Innovation Agency, Innosuisse, to test and validate the efficacy of the therapy preclinically, in preparation for human clinical studies. Stroke is the third leading cause of disability worldwide with more than 80 million people living with long-term impairments as a result. Some strokes result in bleeding in the brain. Such hemorrhagic strokes can lead to severe cerebral vasospasm - an uncontrolled contraction of brain arteries - in the days that follow, depriving
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.Visit our pressroom