Gartner: Demand For Contract Visibility To Spur Market Growth

Compiled ByJill Jusko Companies should expect growing demand for contract visibility, which will fuel a software and services market worth $20 billion by 2007, says Gartner Inc. The demand, explains the Stamford, Conn., research and advisory firm, will be fueled both by internal management interests and third parties that require it as part of risk management or regulatory reviews. "Auditors and key investors will want to be reassured that the executive management team has established comprehensive procedures to ensure appropriate attention is paid to contracts," says Andy Kyte, Gartner vice president for business process research. As a result, businesses will spend more than $20 billion a year on software and services for contract life-cycle management by 2007, Kyte predicts. Despite how critically important contracts are, a majority of businesses have little formal control over them, he says. In many cases paper copies are in multiple departments within a company with no formal process to ensure that changes to the original contract are reflected in every copy. "Opportunities exist for immediate bottom-line costs savings that could be achieved through better contract visibility and management of contracts," he says. For example, many contracts contain terms that automatically extend the length if the buyer fails to notify the supplier. "Many of these contracts allow for price uplifts in line with an agreed inflation index, meaning that suppliers are able to increase prices steadily without the appropriate level of review from the buying organization."