Digital Contract Management Offers Huge Optimisation Potential
by Christoph Richter
posted on 11-08-2016
Although many companies dream of a paperless office, digitalisation has stalled when it comes to contracts. The technical and legal frameworks of electronic signatures have long been known. So why isn’t digital contract management’s potential being tapped? More than anything else, it is due to lack of know-how. This article attempts to shed some light on the possibilities.
Electronic conclusion and exchange of contract documents speed up procedures, increase employee productivity, and provide more reliable and secure processes. Nevertheless, most companies hesitate to adopt digitisation of contract matters despite IDC research showing that more than 90 percent of German companies recognise the benefits of digitising document-intensive processes.
The paperless office has become reality in the minds of German entrepreneurs. However, they are not handling the implementation process the right way. The advantages of software-based management of business documents are obvious. Digital processing of contracts simplifies communication with and between all parties involved and makes the entire process transparent and efficient—everything moves faster and becomes easier to understand.
Potential recognised, but implementation slow to follow
About 50 percent of all documents are still on paper. When you email a contract, you have a rather concrete idea of what will happen after you press “send”: receive email, download and save attachment, print, look over, sign, scan, save again, and email—and this is repeated with every recipient every time. The media break is complete and the dream of a paperless office is over.
There is, in fact, no need to stop the digital transformation in this part of everyday business life. The technical prerequisites have long been in place. Applications such as Adobe Sign support the entire process, from contract creation to archiving. Anyone in purchasing who is responsible for supplier agreements or in sales responsible for customer contracts is familiar with the complexity of contract processes and would regret the failure to utilise this technology’s potential.
Technical feasibility is no longer an issue
Many of the steps in the contract process can be automated through digitisation, speeding up the overall process and making it transparent and comprehensible. Even the exchange of a simple confidentiality agreement demonstrates how digitisation can reduce cost and time. Often, only authorised representatives, who are often traveling, may sign such agreements. In a typical manual workflow, this individual would have to print, check, sign, and scan the document. However, when checking in at the airport, for example, the representative has neither access to a printer and scanner nor time to print and scan. Another couple of days go by before the agreement is signed, and valuable time is lost.
A digital solution, on the other hand, takes the signer directly to the document’s required fields on his smartphone or tablet—from data to be entered to the electronic signature at the end of the agreement. Passwords protect against unauthorised access, and automatic reminders are generated if the document is taking too long to process. Nothing is printed or scanned; everything is handled electronically. A dashboard provides the document sender with progress reports and the location of the document.
Legal doubts remain, albeit unjustified
The issue of legal requirements for digital contract management remains. In the IDC study cited earlier, around half of the surveyed companies stated that legal requirements prevent faster implementation of digitisation. In Germany, for example, the legal situation is quite advantageous when it comes to contract framework terms. In the overwhelming majority of contracts, no formal legal requirements are provided for—even a handshake suffices to conclude one.
The electronic signature surpasses the quality of such contract conclusions any day; its simplest form is sufficient for most business purposes. This could be, for example, a scanned signature or a signature created with a finger or pen in the signature program. While there had been some grey areas of the law, the eIDAS regulation, which recently came into effect, creates important and much-needed framework conditions for digital signatures.
Uniform framework conditions across the whole of Europe thanks to eIDAS
With the eIDAS regulation, the European Union has created a reliable basis for operating with electronic signatures and seals, which are legally binding and can be used by companies, state authorities, and citizens alike. Following the effectiveness of the eIDAS regulation, Adobe created the Cloud Signature Consortium together with well-known companies from across Europe with the aim to establish open standards for digital signatures worldwide. The Consortium is moving forward and the last remaining open questions should be clarified soon.
Many companies simply don’t know how to manage and process contracts electronically. The benefits are obvious: documents can be filled in and signed on screen. Communication and dispatch routes can not only be automated thanks to technological support, but can also become fully transparent and comprehensible. Even archiving runs smoothly. From creating to filing a contract, it’s all digital, without media breaks and on the terminal of your choice.