Negotiation Brief: Contract Management Software

Categories : Procurement Stages | Negotiate | Develop Business Requirements | Identify Suppliers | Set Strategy Published on : Dec 21 2017

By: ProcurementIQ Analyst, Cindy Du

Strategic Questions for Choosing the Right Supplier

Contract management software is a business productivity software used to author, store, organize and analyze contracts efficiently. It enables buyers, including retailers, manufacturers and finance companies, to draft contracts, reduce revenue recognition delays, avoid contract penalties and structure better deals. During the past few years, businesses have increasingly adopted software solutions to boost productivity. As a result, the market for contract management software has also grown, generating an expected $1.5 billion in revenue in 2017, according to ProcurementIQ estimates.  

The shift away from physical documents and filing cabinets has pushed more organizations to use software solutions to keep their contracts in order. In turn, vendors have flocked to the market to meet this rising demand. New vendors can enter the market with relative ease, and typically incur low startup costs, which primarily consist of software licenses, computers and wages for software engineers. These low barriers to entry encourage new suppliers to enter the market, thereby driving market fragmentation. Market fragmentation often results in an abundance of suppliers, making it difficult for buyers to decide which vendor to purchase from. In 2017, ProcurementIQ estimates that there are about 400 contract management software providers in the market. Among these vendors, the top four account for less than 15.0% of total market share.

Contract Management Software Market Characteristics


Because a considerable number of vendors operate in this market, buyers may feel overwhelmed during their decision-making processes. In addition, most of the contract management software vendors sell is standardized, offering similar core features, such as secure storage, contract creation and modification, approval routing and electronic signatures. With the software features being relatively similar, buyers may find it difficult to differentiate between vendors and select a supplier, especially given the large number of providers in the contract management software market.


To help ease the selection process, ProcurementIQ has identified several key questions for buyers to ask during negotiations with vendors:





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