The Impact of Unmanaged Contracts on Business Efficiency and Revenue Growth

Unmanaged Contracts: A Hidden Drain on Business Value



In a recent study, Workday, Inc. unveiled findings that highlight the troubling prevalence of unmanaged contracts within companies. The Contract Intelligence Index Report, published on July 9, 2025, emphasizes the vital role contracts play in fostering business growth and the detrimental effects of unclear ownership and management practices. According to the report, a staggering 76% of employees are unaware of who holds ultimate responsibility for contracts in their organization. This confusion hampers revenue realization and exposes companies to significant legal risks.

Importance of Clear Contract Ownership


Documents that govern relationships and obligations are crucial for understanding revenue flows. Without clear ownership, the potential value inherent in contracts remains unexplored. The findings indicate that many employees are uncertain whether it is the vendor relationship manager, the legal team, or the procurement department who is responsible, leading to confusion and operational inefficiencies.

Jerry Ting, Vice President at Workday, remarked, "Contracts are packed with critical business information that's often buried across hundreds of pages. With the rise of AI agents, we can finally turn contracts into living, intelligent assets."

Key Insights from the Report


1. Financial Losses from Untapped Revenue


One of the most significant revelations from the report is the lost revenue potential stemming from the lack of visibility into customer renewals and upsell opportunities. Approximately 50% of legal and 49% of enterprise employees expressed that they’ve encountered financial losses due to unintended auto-renewals of contracts. Notably, the sales and marketing departments reported experiencing the brunt of these losses, with 60% indicating such negative experiences. This highlights the dire need for organizations to enhance their contract management processes, ensuring that all potential revenue opportunities are maximized.

2. Legal Risks from Blind Spots


Effective legal oversight is critical in avoiding pitfalls associated with contracts. The report unveiled concerning statistics, specifically that while 85% of legal professionals claim to be involved in contract approvals, only 67% of other employees concur. The disparity suggests that some employees might inadvertently bypass the legal process, potentially exposing organizations to substantial legal risks. Mismanaged contracts could lead to overlooked regulatory requirements and enforceability issues, all of which can destabilize a company.

3. Fragmented Data and Insufficient Insights


The report also drew attention to the organizational chaos resulting from fragmented contract data. Contracts are often stored in multiple locations including shared drives (70% for legal and 50% for non-legal teams), CRM systems, individual desktops, emails, and even physical records. This scattered information often slows down operations and prevents departments from sharing valuable insights derived from contracts, diminishing the overall effectiveness of contract management from a strategic standpoint.

4. Slow Processes Impeding Innovation


Timeliness in contract approvals and resolutions is a cornerstone of operational efficiency. However, the findings pointed to a troubling trend with 41% of surveyed employees, including legal professionals, feeling that contract processes are too slow. Delays in contract management can stifle innovation and productivity across various departments such as R&D and engineering, highlighting an urgent need for companies to streamline their contract life cycle.

Strategic Moves Towards Contract Intelligence


To combat these challenges, the report advocates for companies to transition from merely administering contracts to embracing strategic contract intelligence. By leveraging AI technologies, businesses can transform static contracts into dynamic assets that enable valuable insights and informed decision-making. Furthermore, integrating comprehensive contract management tools can provide organizations with enhanced visibility over contracts, facilitating not only compliance but also unlocking revenue opportunities.

As companies continue to face the complexities of contract management, understanding and implementing these insights can undeniably steer them towards a path of greater efficiency and elevated profitability. For more information, businesses are encouraged to access the full report and explore how innovative tools like Workday's Contract Intelligence can pave the way for improved operational management and strategic clarity in their contract dealings.

Conclusion


Ultimately, this report serves as a wake-up call for organizations that may be undervaluing the strategic importance of contracts in their operations. As regulatory landscapes and market dynamics evolve, so too must the methods by which businesses manage their contractual obligations. Ignoring these fundamental aspects could lead to irreversible damage financially and operationally. Therefore, investing in a robust contract intelligence framework is not just advisable—it is essential for sustainable business success.

Topics Business Technology)

【About Using Articles】

You can freely use the title and article content by linking to the page where the article is posted.
※ Images cannot be used.

【About Links】

Links are free to use.