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| Gartner Predicts Contract Life Cycle Management to Be a Major New Application Domain Market Worth $20 Billion by 2007 |
| By 2003, 60 percent of Global 2000 companies will invest heavily in contract life cycle management |
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STAMFORD, CONN., May 21, 2002 -- Gartner Inc., (NYSE: IT and ITB) said today that businesses will spend more than $20 billion a year on software and services for contract life cycle management by 2007. This upsurge in spending is in response to increasing pressure to manage costs and risks associated with business models that include multiple trading partners.
Despite the critical importance of contracts, the majority of businesses have little formal control over them, according to Gartner. "Businesses must begin to audit the risks they are exposed to through poor contract management," said Andy Kyte, vice president for business process research at Gartner. "Opportunities exist for immediate bottom-line cost savings that could be achieved through better visibility and management of contracts." In most cases, paper copies are in multiple departments within a business with no link between them to ensure that changes to the original contract are reflected in every copy. Aside from such intangible problems associated with poor contract management, there is a substantial and costly bottom-line problem occurring within businesses. "Although many contracts are intended to last for a certain period of time, there is usually a term that specifies that the contract will automatically extend if the buyer fails to notify the supplier," said Andy Kyte. "Many of these contracts allow for price uplifts in line with an agreed inflation index, meaning that suppliers are able to increase prices steadily without the appropriate level of review from the buying organization." Gartner advises executive management teams to ensure that contract-related management becomes part of their regular business continuity planning exercises. Gartner predicts that by 2003, 60 percent of Global 2000 companies will invest heavily in contract life cycle management. "The increased focus on contracts will not just be fueled by internal management interest," said Kyte. "Third parties will increasingly demand visibility of contracts as part of risk management or regulatory reviews. Auditors and key investors will want to be reassured that the executive management team has established comprehensive procedures to ensure appropriate attention is paid to contracts." About Gartner, Inc.
Gartner, Inc. is a research and advisory firm that helps more than 11,000 clients understand technology and drive business growth. Gartner's divisions are Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Conn. and has 4,300 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. The company achieved fiscal 2001 revenues of $952 million. For more information, visit www.gartner.com.
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Contact: Danielle Westling Gartner 203-316-6754 danielle.westling@gartner.com |
