Hasso Plattner Founders’ Award Finalist Profile: Contract With the Future

When you think of legal departments, do you think of rigid processes and bone-dry text? Think again. The intrapreneurs from Global Finance & Administration (GFA) at SAP are generating true value for customers.

Two years ago, the contract team in Global Legal at SAP faced a difficult decision: Should they continue to optimize their existing processes and tools, squeezing out the last few percentage points, or should they tackle the issues they had identified head-on and put everything under the microscope? The former choice was surely the simpler one: It would have allowed them to stay on familiar ground and take the beaten path to ensure that things worked as expected.

So what was it that encouraged the team to take the path less traveled, turning everything inside out and subjecting it to thorough scrutiny?

“We saw that each line of business had its own processes for archiving contracts,” says Kai Jacob, who is responsible for legal information management at SAP. “We quickly recognized that we needed a central store and a common understanding for staging contracts.”

Drafting contracts – whether for sales contracts, supplier contracts, or others – was a highly manual process that generated a major workload not only for the attorneys, but also for everyone else involved. And because the different contracts were often saved on different servers as well, the entire process was highly susceptible to errors.

The situation at other companies’ legal departments is similar – often combined with the mantra of having to do more with the same or fewer resources. Attorneys at the in-house departments realize that they have to rely on digitalization, and the advantages it offers, to combine their legal expertise with the necessary entrepreneurial flair.

New Way of Doing Things

To achieve this, however, the central organization requires full access and control over all legal texts, such as contracts and the corresponding metadata, templates, clauses, form letters, and guidelines – as well as the business information about expenditures and resource consumption. In short: The increased requirements often face a defragmented information landscape from the perspective of the legal department.

This gave sufficient motivation to SAP’s internal Global Contract Management Services (GCMS) team to not only find a solution for themselves, but also to seek additional value for SAP customers whose specialist departments face the same problems.

“With our limited resources, we could have tried to further optimize our existing product, the Contract Management Solution (CMS). Instead, we set our sights on a paradigm shift, by expanding our focus from contracts to legal content in general and seeking to enable both the management and creation of legal content. It was important for us to develop this solution in SAP’s core solution, SAP S/4HANA, because it was the only foundation that enabled a comprehensive, sustainable solution for our customers,” says Kai Jacob.

In the spirit of a startup, the intrapreneurs from Global Legal at SAP worked together closely with solution management and standard development. Instead of enhancing their existing CMS, they started completely from scratch. In this way, the GCMS Team managed to launch a standard SAP product in less than a year: SAP S/4HANA for Legal Content.

Numerous Improvements Achieved

The team developed a product that covers the entire life cycle of a contract, including drafting, review, and checks of contracts and the corresponding contract data. It should go without saying that a feature for electronic contract signing is included. But the solution can also do more: It selects suitable content from a library of templates and clauses to prepopulate contracts and other legal documents.

Jochen Scholten, head of the legal department at SAP, says: “We manage more than 750,000 contracts based on some 6,500 templates. At peak times, we generated some 10,000 contracts every day, nearly half of them completely automatically. Thanks to the changes that the GCMS team initiated, we have been able to simplify and improve the contract process significantly: we can achieve ‘healthier’ deals with less negotiation effort. As such, we have given the colleagues involved in the contract process greater flexibility to concentrate on strategic tasks.”

In Kai Jacob’s words: “In this project, we questioned the defined limits and ultimately discarded them. We have succeeded in developing a one-of-a-kind product for SAP that, as the sole solution on the market, is fully integrated in the company’s processes and SAP’s digital core, SAP S/4HANA.”

The Hasso Plattner Founders’ Award is the highest employee recognition at SAP, awarded annually by the CEO to an individual or a team.

Finalist Fast Facts

  • Submission title: Intrapreneurship: Going Beyond Boundaries
  • Board area: Global Finance & Administration (GFA)
  • Team: 14 employees from GFA
  • Achievement: Together with the P&I SAP S/4HANA Procure Team, the employees developed a standard product that also benefits SAP customers — in less than a year from kickoff to release-to-customer.
  • Impact: The contract management system (CMS) can help reduce SAP’s contracting time by 90%, saving the company millions of euros in operating costs each year. In addition to this added value, the standard SAP product SAP S/4HANA for legal content can also help customers to manage not only contracts, but also all kinds of legal content. It also offers additional functionality for contracting analytics and automatic legal content assembly.