As Gartner says ‘No organization is immune from the complexities of modern contracts, or a fast pace business in the global economy.’ The past couple of decades have been all about the digitalization of various business functions. Companies have invested trillions of dollars to modernize their System of Records (SofR), System of Engagement (SofE) and System of Intelligence (SofI) and nurturing these systems resulted in the digital transformation that changed the way businesses function.
Geoffrey Moore, management consultant and author of ‘Crossing the Chasm’, in his session at Dreamforce’19 talks about the significance of these online enhancements and highlights the missing piece from the puzzle – ‘The System of Agreements’ ( SofA). Many B2C businesses – the first movers like Uber, Amazon, Airbnb, Expedia, Open Table – have made the best use of this online development by implementing an ‘asset-light’ business model. It cannot be adopted by various B2B and large scale enterprises due to the difference in end-user behavior. What Moore means is that there are three different types of users i.e., consumers, customers, and clients. All these three users seem identical but each of them plays a different role in the market.
- Consumer – It is an individual that makes the purchasing decision with his own money.
- Customer – Customer makes a considerate purchase after reviews and evaluation of various purchasing processes and probably buying a product with some attached service.
- Client – A client can only buy a service.
It is the best time to be a consumer in the present phase of digital enhancement. But the customers and clients are difficult to manage even though the product or the service availed by them is flawless. The economic transactions, especially with customers, have to be significantly tailored and negotiated and the impact of such complexities breaks the connection between the System of Record and System of Engagement. This is where the missing puzzle piece – System of Agreement fits perfectly!
What does the System of Agreement (SofA) help with?
SofR and SofE have proven to be successful in the past but a digital gap still exists due to the lack of intelligence and opportunity to improve. The complexities break the connection between SofR – where you store and process all the information – and SofE – where you interact, negotiate and discuss agreement terms with the customer or client.
What gets in the way are several legal and business agreements, that causes friction as they can’t be transactionalized. It requires expertise and time to read, analyze, and redline complex terms and conditions for negotiation. The current system in place for dealing with this issue is cumbersome and results in losing potential customers at the engagement stage and it sucks! And this is why Moore stresses the need for SofA.
“Over the years, companies have invested billions of dollars to digitally transform their Systems of Record and to create automated Systems of Engagement. But neither of those established platforms handles the complexities and legalities of agreement processes natively or easily. I believe that the System of Agreement platforms will fill this gap. It’s a new and long-overdue category.”
– Geoffrey Moore (The Rise of Modern Systems of Agreement)
SofA aims at automating the agreement process which is the core of doing business. Agreements are prevalent in any business and those who modernize now can reap substantial cost reductions and customer experience with a competitive advantage over slow movers. Digital transformation takes into account the lifecycle of an agreement –
i) Prepare, ii) Sign, iii) Act, and iv) Manage and helps businesses cherish the use of modernized systems –
- Your agreements are API-ed directly into SofR following activation and provision enabling it to move forward in the contract management process.
- Digital representation allows businesses to run analytics for agreements in real-time and weed out the unwanted clauses to highlight negotiable terms.
- It lets businesses enjoy the core benefit of the SofA.
Every business has a SofA but most are yet to be modernized. Now is the time to act upon it and not wait for your customer to comment that it’s hard doing business with you. Gone are the old days when the product was king. It the era of consumers, customers and clients. B2C market had early adopters who grabbed the opportunity at the right time and became market leaders with modernized systems. Now is the time for the B2B market to shine and work its way out of manual dependency and aim towards digitalized systems in the process flow and optimize the overall business processes.
Looking through the ‘Digital’ Glass!
In my view, agreements are complex legal and business documents that companies come across on a daily basis. Moore’s emphasis on SofA and its adoption by companies is the need of the hour. SofA is the future of agreements. Delayed turnaround time due to complexities in terms and conditions results in multiple discussions and negotiations and eventually companies losing out on big deals. But SofA enables the collection and automation of different parts that rely on manual processes and makes the automation work as a whole. I feel it’s time that B2B and large-scale companies leverage this system and make the most out of it.
Here is the video of Geoffery Moore’s session on – The Rise of Modern System of Agreements!