Effective Management of Procurement Contracts a Critical Aspect of Supply Management, Aberdeen Survey Finds; More Than 50% of 221 Companies Surveyed Are Using or Planning to Invest in Contract Lifecycle Management

Business Wire, April 5, 2006

BOSTON -- More enterprises are seeing the need for effective and efficient management of their supplier contracts, according to the results of a new AberdeenGroup benchmarking survey. In many cases, companies deal with thousands of contracts yet manage them through manual processes or disparate systems rather than an automated solution.

Aberdeen's new report, 'The Contract Management Benchmark: Procurement Contracts', which is based on the survey results, top-performing companies are realizing significant benefits and cost savings due largely to automating the processes involved in a contract's lifecycle, which include contract creation, activation/storage, compliance, and analysis. For example, purchases made on contract achieve on average savings of 22%. This means that for every dollar of goods purchased off-contract, companies can potentially lose 22 cents.

--Best in Class companies have transaction compliance rates of over 90% compared to the industry average of 65%

"The sheer complexity and volume of corporate contracts have increased dramatically in recent years, and the cause can be attributed to such factors as globalization, outsourcing, intense competition, and complicated and numerous partnerships," says Vishal Patel, research analyst at Aberdeen and author of the report. "Inefficient management of supplier contracts and unclear policies and procedures can have a significant impact on the enterprise."

The report found that more than 50% of survey respondents are using or planning to use contract management automation technology. Enterprises using such solutions have seen various benefits, including the following:

--Capturing of a higher percentage of discounts and rebates;

--Higher rates of compliance by suppliers to contracted prices and discounts; and

--A significantly lower number of full-time equivalents (FTEs).

Companies can use this report to determine what next steps are necessary to help improve their contract management performance. Aberdeen has also made some recommendations for laggards, industry norm companies as well as best in class companies.

To download a complimentary copy of The Contract Management Benchmark visit: http://www.aberdeen.com/link/source.asp?cid=2817&pid=PR040406

AberdeenGroup, Inc. provides fact-based research and insights focused on the global, technology-driven value chain. Aberdeen's benchmarking, market and solution assessments, sales acceleration programs, and conferences support Global 5000 value chain and technology executives and the solution providers who serve them.