By Jason Lemkin
The number of paper contracts crossing the desk of AMAG Pharmaceuticals’ IT director had gotten out of hand. The piles of vendor agreements, purchase orders, and other documents in Nathan McBride’s inbox represented hours spent printing, completing, scanning, converting, and forwarding files that could be completed far more easily. Thus, McBride started investigating cloud-based contracts and electronic signature technology. By the time he was done, the company had implemented a Software-as-a-Service solution contributing to a 50% reduction in IT overhead without any staff reductions.
“My objective with cloud contracting was two-fold,” said McBride. “I wanted to enforce it as the standard in my department and also push adoption to other areas of the company such as legal and finance (essentially the departments that generated many of the documents that my team had to sign). I believe the concept of the data center is archaic in today’s companies. SaaS applications can ‘consumerize’ software, and that benefits everyone in the organization.”
AMAG Pharmaceuticals’ experience is not unique in its industry. Paper-based workflows introduce inefficiencies and flaws into firms that cannot afford waste or error. For AMAG, which develops a therapeutic iron compound to treat iron deficiency anemia, the paper itself was the problem. The company’s IT team felt that all business processes should work on the Web — period. As it turns out, moving contract work online solved the company’s original problem and introduced numerous other benefits, including:
decreasing contract close times from days or weeks to hours
gaining the ability to track and trace incomplete documents
automating the process of reminding signers to complete contracts on time
adopting a technology solution with no hardware investment and virtually no learning curve.
When companies adopt cloud-based contracting
The first thing enterprises generally want to know before moving contract work to the cloud is whether doing so introduces risk into their operations. The short answer is, “no.” Since the federal Electronic Signatures in Global and National Commerce Act (ESIGN) was signed in 2000, businesses have been able to close contracts electronically while remaining certain that such deals are as legally binding as those signed on paper. Furthermore, electronic documents introduce additional safety measures, since they provide for an easily accessible electronic trail parties can use to confirm transactions.
When firms can move contract work online, they gain efficiencies that support business growth and gain turnaround times that are 10 times faster than those of paper, and this benefits customers as well as drug manufacturers and suppliers. The features embedded within many e-signature services make it easier for parties to do business with companies that rely on cloud-based contracts. For example, automated reminders can forewarn signers of impending deadlines. Such solutions prompt signers to complete all critical fields of a contract, decreasing or eliminating the multiple cycles and inefficiencies that often exist in completing a traditional contract.
E-contracts also enable the collaborative, integrated nature of today’s deals. Unlike static paper documents, Web-based agreements allow all parties involved in a deal to negotiate within the contract itself and make edits without opening an application. The result is an on-the-go contract process without dependency on paper, faxing, or shipping of physical documents.
For busy companies, ink-and-paper agreements present a frustrating, expensive, time-consuming barrier to expansion. In an industry where time-to-market is critical for purposes of competition as well as public health, there is little room for outmoded processes. By replacing paper contracting, pharmaceutical companies eradicate inefficiencies and flaws, freeing their organizations to devote more resources toward core business goals.
Jason Lemkin is the vice president of Web services business at Adobe and the former CEO and co-founder of EchoSign. His operational experience spans the business development, sales, legal, human resource, and finance fields, and he is an acknowledged expert in the field of electronic signature and electronic contracting.