EY Law, Harvard Law survey highlights barriers to improved contracting

Reuters

May 13: Businesses are facing technology, change management and process management obstacles to improving how they handle contracts, according to a new survey from EY Law and the Harvard Law School Center on the Legal Profession.

While 92% of businesses surveyed are trying to change how they manage contracting, their efforts are plagued by inefficiencies that lead to “lost revenue and missed business opportunities” for more than half of organizations, EY Law and Harvard Law said Thursday.

“Revenue growth is a fundamental goal for any commercial organization and effective contracting processes play a crucial role in making that possible,” Kate Barton, EY global vice chair of tax, said in a statement. “Contracting teams around the world know the value they can bring and they are making real efforts to transform, but the survey brings into sharp focus a whole range of obstacles that they must navigate if they are to make the improvements they are aiming for.”

The report is based on a survey of 1,000 contracting professionals across businesses’ legal departments and procurement, commercial contracting and business development teams.

Overall, the survey found the four main obstacles to transformation to be change management, unmet expectations, inability to hire the right people and lack of time.

The report cited a lack of process management that increases risk for businesses. More than two-thirds of respondent organizations don’t make staff use a template for drafting contracts, for example, and 49% say they don’t have a clear process for storing contracts after they’re executed.

There are also technology challenges: 99% of survey respondents said they don’t have the technology and data that’s needed for transformation. While many businesses have invested in some contracting technology, almost half reported issues with implementation.

To address the role of inexperience and lack of time to choose and implement the right technology, the report says some organizations outsource or co-source with external providers to either deliver services or bring in expertise.

The report lays out other suggestions for organizations looking to make changes to their contracting processes, including better accountability. The survey found an overall lack of alignment and fragmentation on that front – 59% of legal departments think they are the ones leading change, while 56% of contracting teams think they’re responsible.

“The importance of getting contracting right cannot be underestimated,” John Knox, EY global legal managed services leader, said in a statement. “For many organizations it is something of an ‘Achilles heel,’ but with the right transformation efforts focused around people, process and technology, contracting can actually become a business enabler and differentiator.”

https://www.reuters.com/business/legal/ey-law-harvard-law-survey-highlights-barriers-improved-contracting-2021-05-13/