2009 has been an ‘annus horribilis’ for many, with the deepest recession and toughest trading conditions in living memory, that nobody had accurately predicted; but a new survey published by the IACCM (International Association for Contract and Commercial Management) indicates that market conditions are beginning to stabilise.
More than half of the top contract negotiators and managers who were polled by the IACCM expected economic conditions to improve in the next six months.
The research shows that 50% of the respondents noted that they were still experiencing significant pressure to reduce or renegotiate prices on existing agreements, with the same proportion of contract professionals entering in to new contract negotiations.
However, the IACCM research indicates that much of this new activity is due to buyers entering in to negotiations with vendors to switch incumbent suppliers in an attempt to reduce and streamline procurement spend.
The big casualty of the economic recession seems to have been corporate ethics – with 34% of the survey respondents suggesting that ethical standards in contract negotiation had fallen since the beginning of the recession. The main ethical issues at stake here are:
- customers who unilaterally extend payment terms
- unreasonable pressure to cut prices on existing agreements, and
- overselling by salespeople to win business
Many companies are now looking ahead to what 2010 will bring and best-in-class organisations are already positioning themselves to take advantage of new opportunities to streamline their contracting processes as trading conditions improve. This will lead to a flurry of activity to improve and streamline contracting processes with tools, like Contract Management solutions, that help to automate and manage contract commitments and obligations more effectively.
If you are planning your 2010 budgets right now, don’t forget to include a contract management software project in to your strategic plans.
The IACCM research was conducted in September 2009 and surveyed 13,000 business negotiators and contract management professionals from 2,000 companies worldwide.