About Accenture. About I-many

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2 About Accenture Accenture is the world s leading management and technology services organization. Through its network of businesses approach in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, Accenture can quickly mobilize its broad and deep global resources to accelerate results for clients. The company has extensive experience in 18 industry groups in key business areas, including customer relationship management, supply chain management, business strategy, technology and outsourcing. Accenture also leverages its affiliates and alliances to help drive innovative solutions. Strong relationships within this network of businesses extend Accenture s knowledge of emerging business models and products, enabling the company to provide its clients with the best possible tools, technologies and capabilities. Accenture uses these resources to serve as a catalyst, helping clients anticipate and gain value from business and technology change. About I-many I-many, Inc. (NASDAQ: IMNY) is the leading provider of enterprise contract management and trade management solutions. The company s solutions automate contracting processes, ensure contract compliance and track contract performance resulting in higher contract revenues and reduced operating costs. More than 200 life science, consumer goods, food service and manufacturing companies use I-many solutions. For more information, visit the company Web site at Its home page is

3 The state of active contract management 02 The buy side opportunity 03 The sell side opportunity 05 The challenge of contract management 06 Contract management defined 08 The opportunity for contract management 12 Contract management is an enterprise responsibility 14 Gaps in enterprise systems 15 Case studies across the contract management lifecycle 17 Conclusion 20

4 02 Managing contracts to increase revenue and profits The state of active contract management Contracts have proliferated in recent years with the average number of active contracts in the typical Fortune 1000 company reaching 20,000 40, In fact 80% of business transactions are governed by contractual agreements. Contracts have also become significantly more complex, with complicated legal language and a myriad of terms and conditions governing price, shipment, payment, quality, etc. Despite the importance of contracts to revenue and profits, most businesses do not have good processes or systems in place to manage them on either the buy or the sell side. Key processes such as contract creation, execution, fulfilment, evaluation, and renewal are managed piecemeal throughout an organization with little alignment to organizational measures and objectives. Even when formal processes are in place, they often rely on untrained personnel and leverage antiquated manual systems with limited integration (if any) across the enterprise. The benefits of integrated contract management reach across an organization s key buying and selling activities. Based on our client work in this area, we believe in a typical Fortune 1000 company integrated contract management capabilities can deliver a 3-5% reduction in procurement expenses; 50-75% decrease in manual work related to contract negotiation and management; and tens to hundreds of millions of dollars in increased net revenue through the avoidance of inflated contract liabilities. 1 Source: Institute for Supply Management

5 03 Managing contracts to increase revenue and profits The buy side opportunity On the buy side, inefficient contract management directly impacts corporate spend on goods and services. The adoption of e-procurement solutions cemented the first wave of savings on the buy-side by eliminating maverick spend and enforcing more contract-based purchases across the enterprise. The majority of this spend, however, is limited to catalog-based purchases of commoditized goods (the lower-hanging fruit ). Enterprises are just now awakening to the much larger saving opportunities around purchases of higher-value goods and services. For most enterprises, these categories of purchases constitute the majority of corporate spend (a typical pharmaceutical company, for example, spends 60-65% of its procurement expenses on services versus 25% on buying commoditized indirect goods). These purchases are characterized by heavy internal collaboration, bid solicitation and proposals, evaluation of bids, selection of suppliers, drafting contracts, and monitoring and evaluating suppliers performance against the contracted terms. These relationships are all governed by contracts which are created and managed by processes that are primarily manual and ad-hoc. The inefficiencies around the contracting life-cycle limit an organization s ability to move its high-value purchases under more strategic, optimized and evolving contractual relationships. Without an end-to-end contracting solution, enterprises lack the necessary tools to implement the much larger saving opportunities that exist within highvalue procurement categories.

6 04 Managing contracts to increase revenue and profits Without an end-to-end contracting solution, enterprises lack the necessary tools to implement the much larger saving opportunities that exist within high-value procurement categories. Contract management automation solutions also present many tactical cost saving opportunities: distributed procurement departments and business units are at times unaware of aggregated corporate deals that have been negotiated. For an organization with $100 million in annual contract purchases, up to another $ million in off contract purchases can be expected. If even 25% of these off contract purchases are reined in (through better contract visibility and monitoring) procurement expenses can be reduced by as much as $2.5 million (assuming a 10% average contract discount). Focused attention on the following contracting issues can have a direct impact on procurement and discount expenses: Inefficient contract management resulting in excessive off contract spending and increased procurement costs. Limited contract standardization resulting in lengthier contract negotiation cycles. Lack of historical visibility and contract performance analysis, sub-optimizing pricing and other terms negotiated with suppliers. Inability to accurately police contract compliance resulting in a failure to maximize the contract relationship.

7 05 Managing contracts to increase revenue and profits The sell side opportunity One client increased their discount expense (and directly reduced revenue) by over 400% as a result of a single poorly negotiated contract with a major customer. Contracts directly impact enterprise revenue. The lack of control when negotiating contracts can mean significant loss of revenue based on sub-optimal contract terms (e.g. higher rebates than the company s standard) or overpayment of rebates (inefficient compliance management). Robust contract management processes and capabilities can minimize an organization s exposure to these unanticipated liabilities. In one example, a national account manager at a Fortune 1000 company negotiated a contract with a customer, which included a 60% discount. This discount was significantly higher than the 15 20% discount typically provided to other important customers. Due to a practically non-existent contracting process and a lack of formal approvals, the 60% deal was signed and implemented. It wasn t until the finance department noticed a significant increase in rebate expense on the product P&L, that the issue was tracked back to this contract. Over the three-year term of the contract, the rebate line for this product increased more than 400%; as a result, the organization lost over $100 million per year in revenue.

8 06 Managing contracts to increase revenue and profits The challenge management of contract Without good contract content visibility, companies can miss renewal deadlines and may not take advantage of rebate, refund, and warranty terms, or total spend leverage. Poor contract control can result in surprise liabilities and missed opportunities. In fact, by eliminating inaccuracies and contract noncompliance through automation, I-many s experience has shown contract management savings can equate to 2% of a company s total annual costs. Managing contracts becomes unwieldy as contracts proliferate. For example, a major pharmaceutical company could have over 500 sell side contracts (5,000 if individual hospital contracting is supported) and tens of thousands of procurement contracts active at any one time. The sell side contracts will span multiple customer types (Group Purchasing Organization (GPO), Pharmaceutical Benefits Manager (PBM), Institutional, Health Maintenance Organization (HMO)) and involve numerous discounts (rebates, chargebacks, fees) while buy side contracts cross over thousands of preferred vendors with different terms for each vendor.

9 07 Managing contracts to increase revenue and profits The ability to deconstruct a contract into its component parts (for evaluation) is a necessity, yet a near impossible manual task. Each of these contracts is composed of clauses and terms, which can be highly individualized. Determining the effectiveness and profitability of contracts is contingent upon the evaluation of the clauses and terms for compliance both with company policies and downstream transactions. The ability to deconstruct a contract into its component parts (for evaluation) is a necessity, yet a near impossible manual task. Further, contract creation has historically involved a lengthy paper trail of draft proposals, negotiations, redrafts, final contracts, and amendments which eventually end up in a filing cabinet. In organizations without formal contract creation processes these documents will be non-standard and the ability to access them after a contract is completed is unlikely. Even with formal contracting processes, accessing previous versions of contracts, negotiations, addendums, etc. in a manual system is arduous at best. Contract negotiations are often conducted without exposure to or analysis of previous contractual agreements. Lack of accessible information and an inability to analyze historical data results in sub-optimal contract relationships. The benefits of formal contract creation capabilities are standardized contracts, improved contract visibility and analysis, a stronger negotiating position, and an ultimately better contract outcome. A large consumer products company interested in standardizing its contracts and streamlining the approval process recently purchased I-many s newest product, ContractSphere. The solution will automate contract creation and negotiation processes, storing the company s hundreds of thousands of purchasing contracts in a central repository for instantaneous global access. Key benefits the company expects from this effort include: Standardized contract creation using contract boilerplates and standard clauses. More effective collaboration through on-line negotiation and exchange of documents. Faster contract approval and signing with automated workflow. Global contract visibility for best practice sharing. Standardized contracts that include the most favorable terms, as defined by the company. Risk management through reporting across clauses and terms.

10 08 Managing contracts to increase revenue and profits Contract management defined Contract management refers to the processes governing the life cycle of trade agreements between business entities. Figure 01 How contract management impacts the trade agreements between businesses, phase 01. The life cycle has five sequential phases covering the many processes a company undertakes to manage its contractual relationships plan, create, transact, settle and evaluate. Contract process 01 Plan Contract strategy RFx/bid process Budgeting Automation opportunities Establish contracting goals and policies Build contract template, forms and clause library Build teams Create RFx Execute RFx Negotiate RFx Score bid responses/vendors Vendor award Forecast and manage trade/contract funds Assessment Analyses of prior year contract results shape future strategy. Divisional, global, and corporate best practices can be more easily evaluated, communicated and implemented. Company authorized contract templates and clauses are housed in a library. Use of the library ensures organizational contracting standards are met. On-line contract template, clause, and term training improves the contracting effectiveness of contract initiators at all skill levels. Support for the overall RFx process from bid creation to response scoring and vendor choice is the beginning of the contracting process. Team collaboration on both sides of the negotiation (buyer and seller) is supported. Multi-vendor RFx distribution and negotiation status tracking is available. Key actionable terms of the contractual agreements are captured along with full iteration history. Automation of the RFx process allows greater discipline in the negotiation, faster renegotiation cycles, and more profitable negotiations. With contractual liabilities (e.g. rebates due to be paid to customers) rising as a % of overall revenue, accurately forecasting and budgeting liabilities is critical to eliminate bottom line surprises. The same can be said of buy side contracts properly budgeting rebates/other discounts due in from vendors based upon volume and other performance criteria is critical to P&L accuracy.

11 09 Managing contracts to increase revenue and profits Current contracting methodologies still focus on hard copy documents, until e-contracting becomes the standard, organizations are faced with the dilemma of working with paper documents while still maintaining on-line access to key contract components. Figure 01 How contract management impacts the trade agreements between businesses, phase 02. Contract process 02 Create Assemble contracts Negotiation Contract approvals Storage Search and view Contract policy compliance Expiration compliance Automation opportunities Translate negotiation process into an executed contract Automate collaboration and workflow to draft, negotiate and version a contract Multi-party approval Contract signing Contract repository for tracking active, amended, and terminated contracts and all of their various attachments and schedules. Contract loading Store key contract components: clauses and actionable terms Multi-party search and view against contracts, clauses, and terms Validations of contract policies with contracts Notifications and alerts: contract expiration/other contract dates Assessment An automated contract creation tool provides a systematic approach to translate the results of the negotiation process into an executed contract. Contracts can be assembled from templates, clauses, existing contracts, or from scratch. Benefits of contract creation automation are more contract and business term standardization along with expedited negotiations. A contract creation tool facilitates contract collaboration between buyer and seller, red-lining/ versioning, comparison view of iterations and full history capture. Automated workflow technologies drive the document negotiation process to ensure negotiators of all levels and skill sets can achieve successful results. Workflow and document authoring tools can simplify clause and term selection ensuring required terms and conditions are included in the negotiation. Automated approver selection and routing expedites approval process. Current contracting methodologies focus on hard copy documents signed by business leadership. Until e-contracting ( ed documents, e-signatures, etc.) becomes the standard, organizations are faced with the dilemma of storing paper documents while still maintaining on-line access to key contract components. A contract repository (either as part of a contract creation tool or as a stand alone system) provides an on-line means of storing, viewing, and tracking active, amended, and terminated contracts. The repository improves access to both contract clauses and actionable terms. Through an on-line contract repository, organizations can access, query, and report against contract data (e.g. clauses, terms and conditions) and, by leveraging data warehousing technology, perform quantitative analysis between contract terms and actual performance. Contract repository access can be shared via client/server or web enabled applications allowing business partners to review and verify contract terms at any time. The capture of company standard templates and clauses allows a company to run validations before or after contract approval to ensure that each contract complies with pre-set business terms and legal policies. Non-compliant clauses are flagged for special approval. Non-compliance override capability is available along with full approval history. Another major issue encountered when working in a paper based environment is tracking contract expirations and re-negotiations. Automated contract storage and compliance monitoring eliminates these issues by providing notifications and alerts about the impending contract expiration with enough time to re-negotiate and ensure no break in coverage.

12 10 Managing contracts to increase revenue and profits As contract terms become more complex, robust automated solutions are required to manage membership, eligibility, contract transactions, and ensure contract benefits are available only to the correct business partners. Figure 01 How contract management impacts the trade agreements between businesses, phase 03. Contract process 03 Transact Membership management Eligibility management Transaction compliance Incentive adjudication Performance tracking Automation opportunities Monitor and track parties to a contract Determine customer eligibility for contracts/pricing structures Verify that transactions comply with terms of contract Calculate rebates, chargebacks Monitor performance based upon commitment levels Assessment Automated membership management can take many forms, from maintaining membership lists to enabling on-line membership exchanges. In any implementation, automated membership management reduces time and resource requirements around maintaining the complex membership relationships across contracts. More robust exchange type solutions allow for collaborative membership management with business partners and ensure more accurate information for all participants in the value chain. Eligibility, the key to effective sell side contracting requires significant resource commitment when managed manually. Automated contract eligibility can provide robust, full-featured solutions that ensure contract benefits are available only to the correct business partners and their subsidiaries or members. Compliance tracking is essential to ensure that contractual receipts or payments are correctly calculated and that other terms in the contract (e.g. shipping, payment) are executed as per the contract. In a manual system, a compliance issue must be suspected (or a spot audit conducted) and manual research completed. In an automated environment rules can be pre-configured to alert relevant contract management (or other) staff to compliance violations allowing the business to focus on resolving compliance issues (and optimizing the contract). As contract terms become more complex and specific targeted incentives permeate contracts, robust automated solutions are required to successfully adjudicate contract claims and settle discrepancies between available internal and external data. Performance monitoring is the feedback loop for contract management. Effective performance monitoring allows an organization to make strategic decisions about product and contract strategies. These decisions drive the next iteration of the contract management process.

13 11 Managing contracts to increase revenue and profits Contract adjudication and analysis tools allow the organization to optimize contract transactions and access the business critical data stored in the contracting systems. Figure 01 How contract management impacts the trade agreements between businesses, phases 04 and 05. Contract process 04 Settle Deductions management Automation opportunities Track, monitor, and resolve disputes for invoice deductions Assessment Deductions can be a significant percentage of incoming revenue and many times can be a result of contractual misunderstandings. Significant efficiencies can be achieved through integrating contract management capabilities with collections, deduction, and return management. Returns management Collections management Payment reconciliation 05 Evaluate Contract reporting Contract analysis Manage and reconcile returned goods Track and monitor monies due between trading partners Ensure that terms of recognizing contract expense and revenue comply with established financial principles Generate standard and ad hoc reports Analyze contract and process performance Ensures more efficient claims processing. Expedites receivables collection. Improves accuracy of payments. Automated contract reporting provides the data required to manage contracts, process claims, and supports the customer relationship. Contract analysis tools allow the organization as a whole to access and optimize the business critical data stored in the contracting systems. This information can then be leveraged to drive product and brand strategies, future contracting strategies, portfolio planning, and business planning.

14 12 Managing contracts to increase revenue and profits The opportunity management for contract With an enterprise contract management solution, companies can increase revenue, obtain better performance from vendors and customers, reduce costs, and improve collaboration across the supply chain. By optimizing contract management processes throughout the lifecycle of a contractual agreement, companies will realize, across the entire enterprise, the benefit of formalized business relationships on revenue, margin, cost, and customer satisfaction. A major group purchasing organization operating in the life sciences and food service industries selected I-many solutions to manage its vendor and partner contracts, a foundational and mission critical business process. The solution includes a central contract repository and the capability to manage, validate, allocate, and optimize payments from their manufacturers and payments to their member hospitals.

15 13 Managing contracts to increase revenue and profits Through our work with clients in the pharmaceutical, consumer goods, and other industries, we believe the potential impact on different areas of the business can be as follows: Area of impact Improvement Higher contract revenues 1-2% Compliance with policies and regulatory guidelines % Reduction in erroneous payments 75-90% Faster contract negotiation cycles 50% Increase in renewal revenue 30% Reduction in operating and processing costs 10-30% Reduced headcount or increased productivity 10-20% Figure 02 Improvements afforded by optimizing contract management. Source: Goldman Sachs Opportunity areas yielding the greatest improvements include: Improved deals through better contracts based on strong analysis and performance based incentives. Reducing the cost and time of negotiations. Standardizing contracts and contract language, in conformance to company policy. Visibility into contract clauses and actionable terms. Notifications and alerts against contract expiration and other terms. Compliance checking against individual contract clauses, contract transactions and aggregated performance criteria. Incentive calculation and payment. Dispute and settlement management. Reporting and analysis of contract effectiveness. Increased revenue Renew and negotiate contracts faster Administer and resolve deductions proactively Collect cash proactively (reduce Days Sales Outstanding, (DSO)) Collaborate more effectively with trading partners Increase capability to customize contracts Improved visibility into relationships Provide support for negotiation and renegotiation decisions Increase compliance with contract terms Monitor and administer contracts proactively Enhance visibility into customer interaction/business operation problems Reduced operating expenses Reduce non-compliant and erroneous transactions (invalid/incorrect pricing/ delivery terms; duplicate/incorrect rebates, chargebacks, and administration fees; invalid/incorrect deductions) Reduce trading partner disputes Avoid contract violations Reduce headcount Figure 03 Benefits companies will see when using contract management tools to improve processes.

16 14 Managing contracts to increase revenue and profits Contract management is an enterprise responsibility Integrated solutions which deliver contracting capabilities seamlessly across the organization are the key to ensuring all organizational entities involved in the contract relationship have access to the required contract terms, conditions, and language to support effective decision making. Because agreements are used to control every part of the trading relationship between buyers, sellers, and intermediaries, contracts have an impact on many company departments. On the buy side, procurement, finance, operations, and legal departments are involved. On the sell side: sales, marketing, finance, legal, operations, customer service, sales operations, and contract administration may be engaged. Integrated contract management capabilities provide companies with centralized visibility, management, and control of all contracts and contract processes within their organizations. Contract management solutions improve: collaboration, communication, storage, visibility, compliance, reporting, and analysis for all functional departments throughout the lifecycle of a contract. This helps to streamline processes and improve productivity. A lifecycle focus driven by robust end-to-end (integrated) contracting solutions is required to address the challenges and reap the full benefits of this complex environment.

17 15 Managing contracts to increase revenue and profits Gaps in enterprise systems Enterprise resource planning (ERP) and customer relationship management (CRM) systems fall short of providing the tools required for contract optimization. With implementations of core enterprise systems well in hand, companies are now capable of tackling automation of the more proprietary and competitive practices which characterize contract management. The core enterprise systems focus primarily on the components of contracting that touch their primary audience. For CRM, these touch points include forays into customer preference and contract development, for ERP product and pricing attributes are the primary focus. However, critical contracting disciplines are left out of the enterprise system mix including collaborative document creation, a central contract repository, eligibility management, contract and transaction compliance, and rebates and chargebacks.

18 16 Managing contracts to increase revenue and profits Figure 04 Contract management coverage CRM coverage: Forecasting Order generation Contract generation Customer preference Not adequately addressed: Contract negotiation Contract repository Eligibility/membership management Contact pricing Compliance Charge-back & rebate management Deductions & collections management Contract, customer & product profitability Financial reconcilitation: FASB, SEC, AICPA* ERP coverage: Product master, customer master, price lists Links invoices to contracts Rudimentary fixed accounts Organizes general maintenance Source: Doculabs, 2001 * FASB: Financial Accounting Standards Board SEC: Securities and Exchange Commission AICPA: American Institute of Certified Public Accountants ERP and CRM systems are limited in their ability to configure, administer, and process complex contracts. Research indicates that solutions from today s ERP and CRM vendors handle just 20-25% 1 of a company s overall contract management requirements. An enterprise wide contract management solution manages processes not currently supported by ERP and CRM solutions while supporting both ERP and CRM systems as part of an integrated e-business platform. 1 Source: Goldman Sachs Supply chain and supplier relationship systems are also beginning to enter the contracting space by delivering contracting functionality on the periphery of their existing systems. However, the focus is again on minor components of the contracting lifecycle. In order to truly benefit from the evolution of contracting capabilities, the organization must embrace contracting as the center of the enterprise. Enterprise systems do not currently address the full lifecycle of contract management but target solutions around the order, customer, or supplier without focusing on contracting capabilities across these stakeholders. Since many contract terms (e.g. rebates, chargebacks, warranties, expiration dates) occur separate and apart from order transactions, these solutions do not address the true needs of the enterprise. With solutions that support the contracting lifecycle (best of breed contract management solutions), a company s contracted spend or revenue base can be optimized from supplier to customer, resulting in increased revenues and reduced cost.

19 17 Managing contracts to increase revenue and profits Case studies across the contract management lifecycle Below are some examples of the types of problems that lead companies to address the challenges of automating contract management. Each case study demonstrates a problem and the key contracting software solution. More uniform contracts, streamlined legal approvals A large consumer products company incurs substantial legal costs for approval and authorization of its contracts. The company wants to reduce legal expenses, yet requires greater contract uniformity and quality. Contract automation eliminates the need for heavy up-front legal review of individual contracts, while improving compliance with the company s contract strategy. Using contract management software, lawyers and managers can create and store standardized contract templates, clauses, and language in a clause library. The legal approval process is streamlined, as contract initiators construct agreements from approved templates. Notification to the legal department for a more detailed contract review occurs only if a non-standard clause is inserted or a standard clause is modified. Better visibility and control for thousands of contracts A major financial services firm manages over 25,000 contracts on an ongoing basis. The company needs a solution to simplify contract development, eliminate excess

20 18 Managing contracts to increase revenue and profits Contract automation eliminates the need for heavy up-front legal review of individual contracts. paperwork and allow authorized personnel to readily access contract information, including contract parties, terms, conditions, and expiration dates. Contract automation products solve these problems with on-line bidding (RFx), negotiation, contract document assembly, and contract storage in a centralized contract repository. The repository not only captures the final version of the contract, but also breaks it down into its component clauses and actionable terms. Employees across the enterprise can search, view, and act upon contracts (or any clause or term therein) at any time and from any place. Automatic notifications, validations, and compliance checks add even greater value by ensuring that a company optimizes contractual terms and commitments. More efficient contract processing increases revenue A large, international pharmaceutical manufacturer noticed that profits were growing at a slower rate than revenues. The problem was tracked back to wholesaler chargeback processing the company s internal system could not weed out duplicate submissions among the 120,000 claims it receives monthly from a single wholesaler. Contract management software solves this problem by automating the claims validation process. Using contract management software, the company can quickly identify duplicate claims and validate proof-of-sale data against contract terms, including eligibility and contract effective dates. Companies can save literally millions of dollars through chargeback processing and validations, which eliminate doubledips and erroneous payments. More control with transaction compliance Another area of significant revenue loss is non-compliance to contract terms. A contract between two trading partners requires that product pricing include freight. Special orders requiring overnight delivery are needed on a regular basis. The manufacturer complies, incurs increased shipping expense, and yet continues to charge the customer the contract price. Many companies have no way of tracking lost revenue due to increased shipping costs. Financial exposure multiplies when compliance of additional contract terms is not enforced. By using contract management software to track compliance of key contract terms against actual transactions (throughout the entire term of contract), more intelligent and profitable agreements can be renegotiated.

21 19 Managing contracts to increase revenue and profits An area of significant revenue loss is non-compliance to contract terms. Automated management of the 3 Ds deductions, disputes, discrepancies A Midwest retail manufacturer/ distributor has three separate operating divisions sharing the same ERP system. Like most manufacturers selling through the retail channel, each division spends significant time handling invoice disputes, damaged goods claims, returns, pricing errors and other discrepancies. Most of the invoices in question are for contracted business and frequently customers just short pay (deduct) from the invoice rather than wait for reimbursement. Manually processed invoice deductions can take up to 120 days to resolve; with 30,000 deductions a month, resolving these deductions, disputes, and discrepancies is draining staff time and accelerating outstanding receivables. Automated deductions management identifies deduction related problems and alerts users to discrepancies. The software guides users through a step-by-step resolution process, maintains complete deduction history, and provides more than 50 detailed deduction reports. Automated solutions can integrate to most A/R systems, reduce open deductions by more than 50%, improve customer service, expedite cash flow, and reduce write-offs. Faster cash collection reduced Days Sales Outstanding (DSO) An international staffing company, with over 530 offices in 27 countries, found the collections process they were utilizing cost more than what they were collecting. The business model involves supplying a client company temporary labor, paying wages to the temporary employees, billing the client company for the wages, and collecting payment. Discrepancies are common: some clients dispute wages, some pay late, and some not at all. The company is looking for an efficient system to track and resolve these collections issues. Automated collections management allows the software user to create a standard workflow to manage the series of actions required to recover debt from clients. Tools are included which assist in collection issue identification. The software allows companies to implement new collections techniques to strengthen trading partner relationships, improve collection efficiency, and reduce receivables.

22 20 Managing contracts to increase revenue and profits Conclusion The savings opportunities from integrated contract management processes and capabilities are compelling. Based on our client work in this area, we believe integrated contract management capabilities can deliver a 3 5% reduction in procurement expenses; reduce manual work efforts related to contract negotiation and management by 50 75%; and increase net revenue through the avoidance of tens to hundreds of millions of dollars in increased contract liabilities. Processes that are re-engineered to match business objectives, supported with organizational training, and implemented through integrated contract management solutions can differentiate an organization from its competitors and have a direct impact on the bottom line. As contracts grow in quantity and complexity, companies need to invest in enterprise contract management solutions that span the lifecycle of the contract. 1 In February 2001, Goldman Sachs published an equity research report on B2B software which provides significant insight into the contract management space and available offerings. By automating contracting processes, organizations can realize significant cost savings, increase revenues, and improve customer service while fully leveraging relationship buying and selling opportunities. For maximum impact, the contracting solution should take an end-to-end perspective on contract management and seamlessly automate processes like: negotiation, creation, visibility, compliance, incentive calculation, settlement, and evaluation. Integrated contract management capabilities have the additional benefit of centralizing the contract relationship while allowing key departments to participate more efficiently and effectively in the contracting processes for which they are accountable. Business leaders responsible for customer or supplier relationships should look to solutions that place the contract at the center of these relationships as strategic opportunities. Companies have saved millions of dollars in more accurate/timely incentive payments, accelerated deduction resolution, and improved receivables collection by implementing these capabilities. There are few software vendors that provide integrated solutions which can support the full contract management lifecycle processes reviewed in this document. For this reason, Accenture has partnered with I-many whose innovative solutions for contract management offer a holistic approach to realizing these benefits. There are many contract intensive industries that can benefit significantly by addressing contracting issues through innovative technology enabled contract management solutions like those offered by I-many. 1

23 Contacts: Accenture James W. Gearhart T +1 (917) Christopher J. Zant T +1 (267) I-many, Inc. Cathy Schlosberg T +1 (610) John Watkins T +1 (203) Authors: Accenture Christopher J. Zant I-many, Inc. Cathy Schlosberg For additional information, please contact Accenture: In the Americas: The Wanamaker Building 100 Penn Square East Philadelphia, PA 19107, USA T +1 (267) F +1 (267) In Europe/Middle East/Africa/India: 60 Queen Victoria Street London EC4N 4TW, UK T +44 (20) F +44 (20) In Asia/Pacific: Nihon Seimei Akasaka Daini Building Akasaka, Minato-ku Tokyo 107, Japan T +81 (3) F +81 (3) On the Internet:

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