Overcoming the Agreement Trap: A billion-dollar blind spot for businesses

In today's data-driven world, businesses meticulously track every KPI, from website traffic to sales conversions. Yet, a surprisingly overlooked area in losing value is agreement management, writes Shaun McLagan, an executive at Docusign.

Inefficient and antiquated agreement processes lead businesses into what is called the ‘Agreement Trap’, costing businesses across APAC, including Australia, Singapore and Japan, a staggering AU$800 billion annually. Globally, this nearly AU$2.7 trillion globally, a figure set to balloon to AU$3.6 trillion by 2030 if left unchecked.

The Agreement Trap is when outdated systems and practices bury critical information within static documents. It’s like having a treasure chest of insights, but you don’t have the key to open it. This not only wastes time and resources but also jeopardises deal closures, pricing negotiations and revenue recognition. More than half of businesses globally face delays due to manual verification processes, highlighting the legacy systems’ shortfallings in our fast-paced digital economy.

In short, businesses are wasting time, losing productivity, and sacrificing revenue.

The pitfalls for professional services

The consequences reverberate significantly across the professional services industry.

As the Australian economy contracts, sales and finance teams are facing fierce pressures to maintain their targets and continue growing or at the very least, keep their head above water. Yet poor agreement management processes are unnecessarily bogging them down.

Sales teams miss out on an average of AU$2.3 million in revenue due to contracting inefficiencies. Finance departments defer 21% of revenue recognition, impacting forecasting and financial health.

Meanwhile, IT teams are racing to understand how to rapidly integrate AI tools into their existing business models – a process that demands careful consideration. Furthermore, research indicates that 60% of IT teams experience project delays due to unavailable software licences, a challenge separate from AI adoption itself. As new AI regulations and technology demand even more attention, IT teams must look to the areas where they can claw back precious time, such as smarter agreement management processes.

Looking to the other side of an organisation, legal and HR departments are grappling with the complexities of rapidly changing regulations. Much like their IT counterparts, these departments need to identify and address time-consuming inefficiencies to help address new regulatory measures like the right to disconnect laws.

Research from Docusign and Deloittereveals that agreement management delays are a major contributor to these issues, with 61% of legal professionals reporting strained relationships due to approval delays, and 69% of HR professionals experiencing burnout and attrition due to hiring delays caused by inefficient agreement processes. These inefficiencies don't just hinder growth – they erode it.

Overcoming the agreement trap

Technology undoubtedly plays a role in streamlining agreement processes. This is no longer a controversial topic – it is fact. Not adopting smarter agreement processes is the equivalent of trying to navigate a complex maze without a map, while your competitors effortlessly glide through with GPS guidance.

Right now, adopting smarter, AI-powered agreement solutions will give organisations a significant competitive advantage. In 3, 5, maybe even 10 years, it will be a prerequisite for any organisation, just as email is. Organisations can either adopt now and stay ahead, or watch themselves fall behind their peers.

An intelligent agreement management process can revolutionise a business’ efficiency by:

• Creating agreements in a way that is collaborative, automated, and integrated with all business processes and CRM systems.
• Committing to agreements faster by accelerating contract review cycles, enhancing productivity, and transforming agreement data into actionable insights.
• Managing agreements better by unveiling the information hidden within, unlocking value and reducing unnecessary risk.

This leads to: organisations increasing their revenues by closing business deals faster; bolstering their ranks with top-tier talent with streamlined contracting; and being able to focus their limited resources on more strategic growth opportunities.

The time for complacency is over. Australian business leaders must recognise the Agreement Trap as a strategic challenge and prioritise its resolution. By doing so, they can not only save billions in economic value but also position their organisations for greater agility, efficiency, productivity, and competitiveness in the digital age.

The future of business hinges on intelligent, efficient, and data-driven agreement management. Let's seize this opportunity now and transform the way we do business for the better.

About the author: Shaun McLagan is Group Vice President and General Manager for Asia Pacific and Japan at Docusign.