Procurement without a signed legal contract is fraught with risks and challenges. These risks include potential legal disputes, lack of compliance, and financial losses. Contracts play a crucial role in procurement as they define the obligations and expectations of all parties involved. Read this article to explore how ServiceNow Sourcing and Procurement Operations SPO connected Aavenir contract management solution provides easy-to-use contract authoring, review, search, & post-signature obligation management to mitigate risks, improve compliances, and reduce spend in sourcing and procurement operations.
Many companies assume that the legal team should have to handle everything related to procurement contracts. Usually, only 1.2% of procurement team members participate in contract management, placing a heavy burden on legal departments for contract-related tasks. This delays contract time-to-signature and friction between procurement and legal departments, ultimately reducing procurement efficiencies. If this is true for your company right now, you are most likely to experience very real impacts on source-to-pay processes., including:
- Slow Procurements: Manual contract management using spreadsheets or multiple emails back and forth can cause up to a 30% delay in the procurement cycle, increasing the likelihood of errors and decentralized storage, leading to an increased risk of misplacing critical contract documents.
- Rogue Purchasing: This occurs when sourcing and procurement departments leave legal out of the loop on agreements or without a comprehensive contract lifecycle management (CLM) software in place. It could mean unenforceable agreements, inability to perform under the contract, or any other risks in-house counsel or a CLM could alleviate.
- Lack of Consistency: In most companies, 57% of contract data collection and 79% of legal research in contract management is done manually by the legal department, which is resource-intensive and prone to errors. Contracts should be standardized whenever possible. This reduces risk across the company and creates consistency in your procurement strategies.
- Lack of Contract Visibility: The procurement team needs access to contracts and their essential metadata. The procurement team plays a vital role in ensuring agreements are followed and counterparties meet their obligations.
- Wrong Document Versions: Contract versioning is a significant problem for many companies. When a procurement team uses the wrong version of a contract, it could cause considerable legal risk. CLM software ensures every team is in the loop on the most up-to-date agreements.
Instead, procurement should play a critical part in contract risk management. This doesn’t mean you need lawyers in the procurement team, but rather that you will benefit from ServiceNow Sourcing and Procurement Operations SPO connected Aavenir Contract Lifecycle Management (CLM) software that manages this risk for each of your procurement needs. It lets the procurement team with self-service contract creation, AI-powered legal assistance in contract review and negotiations, automate workflows, document versioning, e-signature, smart contract search, and streamline post-signature contract obligation management, all while you run sourcing and procurement operations. By connecting ServiceNow sourcing and procurement operations SPO workflows with AI-powered contract and obligation management solutions into a unified SPO workspace, organizations can
- Efficient Procurements: The ServiceNow Sourcing and Procurement SPO workspace connected CLM solution results in a 10-15% reduction in procurement cycle time (by reducing time spent on contract creation, negotiation, tracking, and renewals) and a 20-30% improvement in supplier performance with real-time insights into supplier SLAs/KPIs.
- Risk Mitigation: Properly managed contracts within an ServiceNow Sourcing and Procurement SPO workspace help identify and manage potential risks associated with suppliers, reducing the likelihood of costly disruptions.
- Compliance: The ServiceNow Sourcing and Procurement SPO workspace tightly integrated with CLM solution enforces adherence to regulatory and internal policies, leading to 20-30% improvement in vendor compliances (such as ESG, Government regulations, organizational terms, and policies) which is crucial for avoiding legal issues and fines.
- Cost Control: A CLM-connected ServiceNow Sourcing and Procurement SPO workspace facilitates well-negotiated contracts that help manage pricing agreements and avoid unnecessary expenditure resulting in a 10-30% reduction in procurement costs.
- Vendor Relationship Management: Contract management within a unified ServiceNow Sourcing and Procurement SPO process establishes clear and fair expectations, fosters trust, and enhances long-term vendor relationships.
The Real-world Challenges of Vendor Contract Management Solution
Most enterprises are likely underpinned by a variety of transactional systems and multiple instances of ERP, equipped to handle a very narrow set of source-to-pay capabilities, like contract management, third-party risk management, vendor management, invoice scanning, payment processing, reporting spreadsheets, and many more. Enterprises end up with a variety of teams, using a variety of systems, doing siloed activities as part of an overall source-to-pay process, all requiring manual integration or workarounds. (for example, sourcing, contracting, and payment are performed by 3 different teams (procurement, legal, and finance) on at least 3 separate systems (SAP Vendor Management, Standalone CLM solution, Oracle Finance Solutions)) While they may individually work to achieve these transactions, the parts do not form a whole.
The Connected Solution: ServiceNow Sourcing and Procurement Operations SPO + Aavenir Contractflow
ServiceNow Source-to-Pay workflow automation solution works as a system of engagement that brings everyone together -- employees, procurement, suppliers, and all your IT systems. In association with packaged Source-to-Pay Workflows, thousands of customers are extending, building, and integrating transactional systems for critical to back-office operations and core ERP workflows (such as SAP ECC or S/4HANA instance) across all lines of business.
Aavenir Contract Lifecycle Management solution works as a system of transactions that empowers contract requestors, managers, administrators, and reviewers with an intuitive, easy-to-use contract authoring, review, storage, search, and end-to-end contract management experience. Legal teams can ensure standardization of clause libraries & pre-approved templates, centralized full-text searchable contract repository, view detailed audit trails, and achieve drastic efficiency gains using AI-powered automated terms/clause/obligations extractions, clause deviation identification, safer terms/clause recommendations, AI Assistance, obligation management, and much more.
Aavenir CLM offers out-of-box Low/No code integration to ServiceNow applications, enterprise systems, and data sources for enhanced collaboration and a holistic view of contracts across business departments.
ServiceNow Sourcing and Procurement Operations SPO Capabilities
ServiceNow Sourcing and Procurement Operations (SPO) connects the entire source-to-receipt process for more seamless purchasing and case management across business teams by leveraging ServiceNow’s unique workflow optimization and automation capabilities. With ServiceNow Sourcing and Procurement Operations (SPO), procurement departments can manage the complete procurement lifecycle with eCommerce-grade experience on a centralized system of action, providing end-to-end visibility into all processes and complementing current systems of record. Some of the key ServiceNow Source-to-Pay applications include:
- ServiceNow Shopping Hub: It enables an e-commerce like self-service procurement experience for all employees from pre-assigned employee credits. Employees can request a procurement team for the procurement of products and services, which are not available in the shopping hub catalog.
- ServiceNow Procurement Case Management: It allows the procurement team to create, track, analyze, and manage procurement requests such as supplier information collection, contract creation, invoice verification, and more. Case management also allows procurement teams to handle a wide variety of types of issues with suppliers such as banking issues raised by finance, cybersecurity issues raised by IT, or performance issues raised by employees, keeping everyone together to fix the problem.
- ServiceNow Employee Center: Enables access to S2P services for business teams and employees. For example, employees can request a procurement team to source products and services which are not available in the Shopping Hub catalog.
Enhanced ServiceNow Source-to-Pay capabilities with Connected Aavenir Contract Management
Built natively on ServiceNow, the Aavenir Contract Lifecycle Management solution easily integrates with ServiceNow Sourcing and Procurement Operations, allowing procurement teams to tap into the power of the AI-powered Connected Contract Management that helps mitigate risks, ensure adherence to compliances, control costs, and enhance vendor relationships in the procurement process.
ServiceNow Sourcing and Procurement Operations SPO Connected Aavenir Contract Management Software-Solution
Here are the potential use cases of this powerful integration:
Use Case #1: Connected Contract Requests and Legal Intake Management
Employees can easily navigate to the Aavenir Contract request page from any of their sourcing and procurement workspace applications where they can fill up a set of standard and configurable contract request forms designed in Aavenir Contractflow. From the creation of self-service template-based contracts (like non-disclosure agreements) to drafting custom contracts and 3rd party contract reviews, the legal and procurement team can manage any legal contract intake requests in Aavenir Contractflow - all within the same user login session of Sourcing and Procurement Applications on ServiceNow Platform. Pre-built contract request intake-to-signature workflows eliminate legacy processes of manual emails and follow-up requests between legal and procurement teams. This also frees up procurement and the legal team’s time to collect, review, and validate contract information with more detailed attention.
Use Case #2: AI-powered Contract Drafting with Microsoft Word Plugin
Aavenir Contractflow will enable quick self-service AI-powered contract authoring of standard contracts (such as NDAs - non-disclosure agreements) leveraging Aavenir’s pre-approved contract templates, terms, and clause libraries, AI-powered recommendations, and legal playbooks. The procurement or legal team can draft custom contracts and review 3rd party contracts using their own Microsoft Word tool with Aavenir Contractflow plugins to ease complex contract drafting processes using AI-powered recommendations. Aavenir Contractflow can automate the generation of standard clauses, templates, and even entire contracts using generative AI technologies based on historical patterns, legal playbooks, and predefined rules & criteria.
Use Case #3: AI-powered Contract Review and Negotiation
The Procurement team can directly leverage Aavenir Contractflow AI to review and analyze contracts for inconsistencies, compliance issues, and potential risks. AI can automatically identify any deviations from standard terms, historical contract data, or regulatory compliance policies for effective contract reviews and negotiations.
Built on ServiceNow by leveraging the Aavenir team’s 25+ years of experience in delivering CLM solutions for enterprises across the different industry verticals, Aavenir Contractflow comes with pre-built fully configurable contact management workflows that reduce time and efforts to route contracts for review, track contract amendments, and manage document versions for all contract types. Aavenir’s AI engine and Microsoft Word Plugin ease contract redlining, document versioning & comparison, and reduce the time-to-approvals. Aavenir provides pre-built integration with industry-recognized and secure e-signature solutions like DocuSign, Adobe Sign, and more.
Use Case #5: Quick Role-based Access to Centralized Contract Repository with AI-powered Contract Search from SPO workspace
Aavenir stores and maintains all enterprise contracts in a centralized secure contract repository built on the ServiceNow Platform. The CLM repository also manages document versioning and complete audit logs.
The smart contract repository allows the import of legacy or third-party contract documents using AI-powered trained Optical Character Recognition (OCR) turning unstructured data files into searchable records. Aavenir smart import will automatically detect 1000+ contract properties, like contract value, counterparties, dates, terms, payment milestones, discounts, termination periods, and many more. Aavenir’s AI-powered advanced semantic contract search understands the context and intent of the search query, enabling the procurement team to find contracts with specific clauses terms, or obligations more efficiently.
Use Case #6: Post-signature Contract Renewals Monitoring and Obligations Management
Aavenir Contractflow provides value well beyond contract e-signature to support AI-driven extraction of contract obligations (including contractual terms & clauses, SLAs, and mutually agreed-upon commitments) and obligation fulfillment workflows that can be assigned to the right owner and ServiceNow applications. Aavenir Obligationflow dashboard helps the procurement and legal team to view and track obligation compliance status directly from the SPO workspace and automatically trigger/ assign workflows from the SPO workspace to fulfill the contractual obligations.
Why organizations integrate Aavenir Contract Lifecycle Management with ServiceNow Sourcing and Procurement Operations SPO?
- Built on ServiceNow Platform: Implemented natively on ServiceNow, Aavenir uses the same tables as of the ServiceNow Platform. Hence, Aavenir Contractflow can easily talk with ServiceNow SPO applications with low-code/no-code integrations delivering a single version of truth.
- Connected Experience: Aavenir in conjunction with data enrichment from connected solutions such as ServiceNow Source-To-Pay, GRC, TPRM, ITBM, and LSD will provide in-depth insights for fast and easy decision-making.
- Smarter AI Capabilities: Aavenir integrated with ServiceNow SPO and other enterprise-wide applications will provide smarter purpose-built Generative AI, natural language processing, and machine learning capabilities for efficient contract management, which will become a game changer for procurement, legal, and IT teams.
- Ease of IT Administration: Aavenir and ServiceNow SPO applications portfolio offers the same IT administration experience making it easy for the IT team to manage upgrades, security patches, user administration, backups, and more for Aavenir Contractflow.
- Easy and Secure Installation: Aavenir Contractflow is available on the ServiceNow App Store after being verified and certified for adherence to ServiceNow’s security and privacy policies. This makes Aavenir Contractflow far more secure and reliable CLM than other standalone or legacy CLM applications connected with ServiceNow SPO using costly and complex integrations.
