Frankfurt-on-Main, 7 July 2010 – Contract management – the operational area responsible for organisational issues and processes related to contracts – is still insufficient at European companies. This was shown in a recent cross-industry survey conducted by management- and technology consultancy BearingPoint (www.bearingpointconsulting.com) among more than 100 European enterprises from 18 different countries. The consultancy has carried out the study every four years since 2002. According to the survey, only eight per cent of the companies questioned regard their contract management as best practice. The main reasons for the poor results are weaknesses in organisation and processes: only nine per cent of enterprises completely operate contract management centrally. Half of the companies have no key department at all for any contract management tasks. In addition, the companies see a need for considerable improvement in some of the most relevant contract-related processes, such as reporting and analysis options (70 per cent), IT tools for support (62 per cent), tracking of contract history and drafts (58 per cent) or monitoring of commitments and terms (57 per cent).

“Contracts are fundamental to all business operations and have an enormous impact on future activities and a company’s financial situation. Even though most companies know about the importance of adequate organisation, contract management is still not a priority. Contract matters are left to individual departments or employees located around the world – without any transparency in relation to existing contracts, rules or standard processes for future contracts”, says Steffen Tampe, Director at BearingPoint.

Investment in IT projects to finally fulfill objectives
It is not surprising that the level of satisfaction with contract management related tasks has even declined over the last four years: many companies had already planned improvements, which had to be postponed due to the financial crisis. Also, with IT budgets being dramatically reduced, IT-based solutions were put on hold that offer numerous advantages, such as the easy and fast retrieval of documents, full, structured, secure, central filing, as well as the complete availability of information. Accordingly, four years ago 15 per cent of enterprises that planned to or had already implemented an IT system to improve their contract management intended to provide more than 2.5 million euros for this purpose. This year, by contrast, none of the respondents plan to invest the maximum amount.

However, with the increasing awareness of risk issues, such as data inconsistencies, non-compliance with terms and conditions or content issues of contracts with potential risks, the respondents are still encouraged to improve their contract management. More than half of the enterprises (57 per cent) have already decided to implement information technology. About 70 per cent of those companies have invested or will invest up to 100,000 euros. A total of 17 per cent have already been able to improve their workflow by implementing a contract management and document system or contract databases.

“With enterprises becoming increasingly global, transparent and functionally diverse, it is essential to keep an overview of all the company’s activities and obligations with sustained and efficient contract management. Since management support is crucial for the operation, executives should have quick and convenient access to all contract information at any time. Therefore, broad situation analysis, change management and a wide and interconnected IT system for process support are vital for optimal contract management”, says Steffen Tampe.

How does your company perform? Benchmark your contract management and determine potential areas for improvement with the BearingPoint self-assessment tool at: http://www.bearingpointconsulting.com/contract_management

About BearingPoint:
BearingPoint is an independent management and technology consultancy. Owned and operated by its Partners throughout Europe, BearingPoint is offering its clients the best possible value in terms of tangible, measurable results by leveraging business and technology expertise. The company currently employs 3.250 people in 14 European countries and is serving commercial, financial and public services clients.

BearingPoint offers its clients a seamless cross-border approach, strong focus on results, an entrepreneurial culture, profound industry and functional knowledge as well as solutions customised to clients’ specific needs. The firm ranks high in client satisfaction, has long-standing relationships with reputable organisations and is seen as a trusted adviser. BearingPoint has European roots, but operates with a global reach. For more information, please visit: www.bearingpointconsulting.com

Press contact:
Wiebke Hinz
BearingPoint GmbH
Tel. 0049-69 13022-5991
Wiebke.Hinz@bearingpointconsulting.com