A recent Executive CFO roundtable, hosted by Unison, highlighted an emerging trend among Chief Financial Officers to realize the impact of technology on successful operations. One study by Deliotte found that 92% of CFOs see opportunities in embedding technologies and automation into their organizations’ operations. In particular, CFOs at major government contractors are seeing that modernized contract technology plays a key role in improving overall business performance.
Contracts management has historically been the last process to get a system update. Yet, the contracts department plays an essential role in finance, business development, and compliance. A modern contracts system and best practices can improve ROI across the entire organization and help the CFO meet their business goals.
The Roundtable discussion unveiled three top-of-mind priorities for CFOs and key advantages of modernized contracts technology that contribute to achieving them:
- Cost optimization
- Data-driven decision making
- Reduced risk
Cost Optimization:
CFOs are concerned about all aspects of business performance and may be unaware of the cost of data calls and the impact that unreliable contract data may be having on the organization.
Contract professionals often juggle many different responsibilities that require focus and attention to details. However, Contract Administrators can spend more than 50% of their time on data calls. When systems are siloed and data is stored in many disparate locations, answering even simple questions accurately can be unduly difficult and time consuming.
When contracts management is integrated with other systems across the company – including financial systems and business intelligence – the connection creates greater accuracy in financial measurements. One simple but very impactful result is avoiding inaccurate invoicing and payments due to disparate data among systems. Recent remote and hybrid work has highlighted the importance of integration in overcoming obstacles and meeting financial goals. When evaluating cost optimization, a tech stack audit can aid in identifying which of your technologies being connected could improve your business processes.
Data-driven Decision-making:
Decision making is always improved by better data going into the decision. Using a contracts management system that allows verification of data to ensure reporting and/or filing accuracies and that integrates easily with an ERP and other financial systems ensures complete, consistent data to base decisions on. In one costly example, better data helps identify optimum opportunities and avoid abandoned M&A activity due to the inability to find data, inaccurate data, or the extensive time it takes to retrieve data.
Decisions can also be made more quickly when relevant data is easily accessible to business stakeholders – or when reports and dashboards can be easily automated based on the importance of a specific business department. For example, being able to pull past performance data quickly and completely to make bid decisions.
Reduced Risk:
Mitigating risks and ensuring compliance are important goals across an organization. In federal contracting, reduced risk often begins in the contracting department. The business relies on audit accuracy and data to avoid disallowance of costs and unwanted ripple effects across your organization. Reducing risks can also be beneficial to cost optimization, for example, the ability to automate accurate vendor quotes and the ability to grant access to DCAA/DCMA to your system for auditing.
Increasing your confidence in data reported internally and to external stakeholders and government agencies can greatly reduce risks. When you evaluate your technology, ensure you are confident that your business systems are secure and compliant with regulations. Beyond audit requirements, tracking clauses and terms help prevent negative impacts on performance and payment. Overall, risks are reduced when an audit repository is available to support files in closeout, invoicing, T&M audit and to avoid cost disallowance.
If you are looking to modernize your contract management system, be mindful of these key factors to achieve ideal financial benefits across your organization:
- Look for vendors that “speak your language” (Are majority of your contracts federal or commercial?)
- Look for solutions that have a cradle to grave capability for the bulk of your transactions
- Look for solutions that are not dependent on the need for other software
- Recognize the benefits of a COTS solution (You will often get upgrades with capabilities you didn’t have to pay for but may benefit from)
- Ask about the process for migrating and maintaining active contract data, beyond a one-time integration plan
- Create and be aware of your timeline for a solid change management plan for all users of the system
- Ask the vendor for assistance with ROI and Cost Savings
Just as modernization of technology systems is integral to successful operations, the process of choosing a system that is right for your organization is equally critical.
Click here to learn about a contract system built for GovCon organizations