Contract lifecycle management (CLM) software aims to automate and, therefore, simplify contract management processes. It was invented to centralize contract storage, improve compliance, and automate the creation, execution, and management of any contractual agreement type. By creating basic templates and unified language, as well as repeatable and consistent rules, all parties can save time and eliminate errors. In general, contract management software is designed to boost contract process efficiency and remove unnecessary bureaucratic expenses. Let’s examine CLM software peculiarities and benefits in more detail.
Contract management software is designed to boost contract process efficiency and remove unnecessary bureaucratic expenses.
CLM software provides:
- Detailed time management at each stage of contract management
- Automated workload allocation
- Documentation and records tracking for audit and compliance-related procedures
- Alignment of contract management rules and processes
- Transparent performance measurements
As a result, it boils up to the time and resources freed for more high-end, sophisticated tasks.
To better understand the contract signing process and how to improve it with automation, let’s dissect the contract management lifecycle into stages.
CLM and non-legal company units
CLM software integrates various contract-related tasks into a single platform. It means that your legal team can easily synchronize the processes with other business units. This greatly reduces the endless back-and-forth between departments.
With a centralized platform, other business units won’t adopt processes that don’t align with how the legal team manages contracts. You can focus on the agreement’s substance instead of arguing over procedures. You won’t have to spend too much time correcting documents or requesting further information.
CLM systems are critical now that hybrid work environments are the new normal. The cloud-based platform facilitates collaboration between on-site and remote staff. It fast-tracks approval processes and sends out automated notifications to ensure every company unit is doing its part.
Apparently, contract management is no longer just limited to the legal team. Some business teams even process more agreements than the legal department does. Here are some company units that can benefit from CLM systems.
CLM systems help speed up the rate by which the sales department furnishes service agreements, supply contracts, work contracts, and sales agreements. The software automatically fills out the documents with information from databases and sends them to relevant parties for approval and e-signing. Its dynamic templates can easily pull up clauses from its library.
With the software increasing the speed by which contracts are completed and deals are closed, your sales team can benefit from increased collaboration, business growth, and minimized revenue loss.
Oftentimes, the HR department does not send contracts to the legal department for review. They rely on templates to complete agreements that are usually exchanged between their team and the new hires. Equipped with dynamic templates and a clause library, CLM software can streamline the workflow for HR teams.
The HR department can also use the software to onboard new hires, pull up employee data, and analyze their performance. They can even tap the tool to control costs, keep payroll transparent, and manage risks.
CLM systems are particularly helpful for completing employment agreements, NDAs, contractor agreements and invoices, and various claims and orders.
Your colleagues from the marketing department are up to their neck in marketing strategies, campaigns, and events. Fortunately, they deal with standardized contracts that do not require legal review. All the same, they need to be certain they’re using templates that are compliant. CLM software can automate the processes while ensuring every agreement is valid.
A CLM system helps ensure the agreements are protecting the interests of the business and holding contractors accountable. It also keeps the marketing team informed of due dates and contract deliverables and notifies the team when it’s time to terminate contracts.
CLM software can greatly shorten the time it takes to complete advertising contracts, GDPR documents, NDAs, invoices, and service agreements with influencers, contractors, or agencies.
CLM systems highlight key contract information like amount and payment methods as metadata, which makes data easier to find, manage, and use. This then results in a faster approval process. The software also improves financial performance tracking by making contract values readily viewable. With most processes automated, the financial team can ensure compliance deadlines.
Those responsible for budgeting and financial forecasts will find value in a CLM system that’s integrated into the ERP.
CLM systems can be used to furnish invoices, loan documents, and merchant agreements. All the documents are stored in a single repository and can be easily grouped and classified to facilitate reports and analysis.
The procurement department can rely on CLM systems to speed up the completion of supply agreements, service agreements, and contract claims to logistics vendors. With the software automating processes, the team can count on faster procurement cycles, quicker approval flows, and minimized delays. They also benefit from greater visibility into deliverables and due dates.
Notifications prompt the procurement department to revisit and re-negotiate contract terms and conditions. The team may end up spotting better deals and deciding to terminate subpar or unnecessary contracts.
The business development team needs CLM software to quickly close deals. Integration with third-party systems like ERPs and CRMs further speeds up the process. CLM software allows the easy transfer of data between documents. You’ll be able to quickly furnish supplementary documents.
Public-facing templates can be made available for the onboarding of new partners and clients. Multilingual documents allow your business to operate globally. The system can even be integrated with public registers.
The business development department handles contracts that can be standardized and do not require legal review. The list includes lease agreements, tender documents, NDAs, sublease agreements, and property transfer acts.
Privacy is the primary concern for the IT department. CLM software with security features like cloud deployment and SOC-2 certification can help ensure just that.
You need a CLM system that automates the management of security-related documents to the point of self-service. This allows you to collect filled and signed contracts without interacting with the other parties.
Improved collaboration on the platform, greater accessibility, faster client and supplier onboarding, granular access controls, and a secure contract repository all factor into a system that ensures efficiency without compromising privacy.
We’ve looked at the company units that can lean into CLM systems for greater efficiency. Now let’s consider the industries that use the software.
Various industries that can benefit from CLM software
No matter what industry you’re operating in, you stand to benefit from a CLM system.
The legal department is responsible and accountable for the overall contract lifecycle. With CLM software automating and standardizing the processes, the team works more efficiently and error-free. Lawyers can focus on strategic thinking and high-value tasks that require their expertise.
Healthcare organizations operate in a highly regulated industry, and any violations can lead to stiff penalties. CLM software helps ensure they strictly adhere to compliance requirements.
The finance team scrutinizes each agreement to determine its tax implications, forecast profits, and predict losses. They also work on billing, payroll, and assets monitoring. Financial experts must keep records to communicate the state of the company’s finances to stakeholders. Equipped with metadata, reporting, and record-keeping tools, CLM software can make their work more efficient and reliable.
HR and recruitment
With CLM software making the e-signing and delivery of legal documents fast and easy, HR personnel no longer have to spend too much time on this back-and-forth. They can also complete employment agreements and NDAs faster.
Pharmaceutical companies work on research and development projects dealing with sensitive data. They also distribute medication. Their operations are burdened with record-keeping and administrative tasks. Equipped with a secure repository of files, CLM software can help streamline their processes.
Manufacturing companies deal with multiple suppliers across industries and countries. They manage business relationships that have to be secured by ironclad agreements. CLM software ensures all the contracts are valid and legally binding, so manufacturing companies can rest assured that their suppliers and partners will keep their end of the bargain.
So, what exactly does a contract lifecycle look like? Let’s zero in on the stages of the process flow.
The Stages of Contract Lifecycle Management Process Flow
When it comes to adopting CLM software, it is important to understand how the contract lifecycle management process flows. CLM ensures the contract’s complicated journey is comprehended and compartmentalized and serves the organization’s best interests.
1. Contract request
It is the initial stage of contract lifecycle management. One party initiates or requests the contracting process and uses the information received to draft and author the contract documentation.
This stage is known as the ‘drafting stage,’? which defines all the agreement’s details and conditions.
Here, all parties are negotiating the document’s terms and conditions and thoroughly reviewing the contract.
Depending on the contract, it may need internal or external third-party legal approval or both. The approved version is passed to the specialist for a review.
The approved contract has to be signed by all parties, either manually or online.
6. Obligations management
At this stage, it’s time to start working and delivering the results promised in the contract. In other words, the parties have to fulfill the executed agreement. There are various practices to track contractual obligations, and usually, the organization decides what method serves them best.
7. Contract amendments
When it comes to this point, all respective parties go through a new round of drafting, negotiation, approvals, and so on. It’s natural for some conditions to change, especially during long-term contracts.
8. Audit and reporting
Companies should regularly report on the agreements’ execution and performance to all stakeholders. Often, companies must ensure specific contracts are aligned with industry requirements and government regulations.
9. Renewal and/or termination of the agreement
This step is essential as it means a new stage of cooperation for all parties. A thoughtful and on-time contract renewal can benefit everyone, while ignoring the schedule can negatively affect lawsuits.
These are the basic CLM stages businesses should follow when executing an agreement. Some stages may take longer than others due to many human and technical factors. This process is simply a skeleton which is adapted to meet specific business needs.
What is the importance of contract lifecycle management in this lifecycle?
The Goals of CLM
Companies face numerous risks when working with vendors. In this respect, efficient contract lifecycle management systems can make a real difference in risk management. The contract signing process is quite lengthy and has many variables. Without an established approach in place, it’s easy to stumble upon problems. The goal of the CLM process is to address the following pain points:
Speed to market
Intense market competition forces companies to support innovation and deliver results on time. One of the best ways to operate efficiently is to secure contract authoring, negotiation, and execution processes. It will help establish new vendor relationships and shift your focus to customer experience when your business grows. All in all, the strategy will lead to increased income since you won’t be spending time and money on unnecessary bureaucratic tasks.
Contracts should reflect your company’s best interests. By organizing CLM processes, you are accounting for the up-to-date, relevant information from stakeholders and internally addressing appropriate subject matters at each stage.
Risk mitigation is pretty much the focus of all the pre-contract execution stages. The main goal of contract request, authoring, negotiation, and approval stages is to ensure all parties benefit from the agreement while eliminating potential losses.
Performance and compliance management
The thorough CLM process and step-by-step guidance of its execution are an investment into effective and productive vendor relationships. Addressing the regulatory compliance requirements within your contracts ensures vendor cooperation meets your standards.
A successful contract lifecycle management process will support continuity planning with your business partners. Balancing between renewal and termination language in your agreements, your company can obtain the flexibility required to hold vendors accountable while giving you a choice to renew or terminate agreements based on your current market situation.
The legal department is responsible for building an efficient CLM process that will influence your company’s overall operation quality. Fortunately, legal departments these days can omit the majority of monotonous tasks and eliminate many human mistakes with automation software. Let’s discuss how contract lifecycle management software can refine the CLM process.
Contract Lifecycle Management Systems Can Improve the CLM Process
CLM software ensures an effective and proactive contract lifecycle management process flow in the following areas:
A drafted template library can significantly accelerate contract turnaround. Also, it mitigates some risks by improving contract templates. Moreover, the smart template authoring simplifies the process for users. All because it pulls existing clauses into the document, offers text customization, tags metadata, and adds necessary exhibits and annexures. Before authorizing the ready-to-use template, it has to be approved by the legal department.
CLM software automatically compiles the necessary content according to associated contract criteria. The default data includes location, products, services, or pricing. Rules-based authoring helps better control contracting operations while improving the agreements’ scalability. Advanced CLM software often permits no-touch contract creation using the company’s CRM data and can build a contract based on a set of specific company’s rules. The self-service content creation model allows organizations to significantly reduce legal operation expenses. As a result, they can boost revenue by making more contracts in less time.
The CLM software workflow usually obtains built-in compliance with the contract lifecycle management process. For example, before sending the contract to the financial systems for execution, the software will send the document to an assigned legal employee for review. And it will comply with the step-by-step contract lifecycle process during each necessary update.
The contract approval process requires a thorough analysis of the associated data. The best contract lifecycle management software will facilitate the approval process, even when it comes to sequential and/or parallel approvals. The workflows in the system easily adjust to any negotiation updates in the contracts. Usually, users are in charge of manually updating the workflows to the newest requirements.
Modern CLM software usually features various integrations with online signature services like Adobe Sign. Such integrations help automate the signature process and ensure seamless document updates without human intervention. The software should also support a manual signing of the document, as some parties may be unfamiliar with online systems. This type of software is often equipped with a QR-code technology that helps validate the manually signed documents.
After its execution, contract administration can also be improved by CLM software. It provides analytics on contract performance cycle times, deviations, the company’s savings, potential risks, agreement expiry, and renewal possibilities. It offers valuable procurement and sales metrics data on contract revenue and expenses as well. The CLM software can also take care of tasks completion management ‘? identifying tasks, assigning them to various users, and tracking their completion.
Contract lifecycle management systems will notify users about significant milestones and contract expiry dates. It can also automate and simplify the renewal process if needed.
CLM software is designed to improve every step of the contract lifecycle management process flow. It will take a significant workload from your legal department, freeing them for more sophisticated tasks. If your lawyer must physically deliver contracts to vendors after every edit you make, imagine how much time and money you could save if the entire process were digital? Instead of drawing up a new vendor contract each time, your legal employee can create several universal drafts that can be customized as needed.
Even though the legal department benefits greatly from CLM software, old habits often die hard, and some employees might resist the change. Here are the general rules to determine ROI when adopting contract management software in your legal department.
Risks companies can mitigate with CLM software
Failure to stay on top of your contract management processes exposes your company to risks that can result in major crises.
Losing track of your contractual process, you can lose money. A missing contract date might result in lost business, and a rollover clause can keep a contract going beyond your intended duration.
Data breaches can bring major financial loss and reputational damage to your organization. By storing contracts in high-risk locations or transmitting them in unsafe ways, you could be exposing your company to security risks. The mere act of emailing documents increases your exposure.
Legal risks, associated with regulatory issues and disputes between parties, are imminent when you fail to meet your compliance requirements and contractual obligations. You could also find your company in hot water if you fail to use the right legal clauses and confidentiality disclosures.
Failure to keep up with your contractual obligations will not only bring you unhappy customers and disgruntled employees—it can also result in reputational damage that hurts your brand. Bad news spread ultra-fast in this digital world, so make sure you’re keeping up with your commitments.
CLM systems mitigate these risks by increasing your control over the contract lifecycle. You’ll be able to monitor all agreements, track changes, and ensure proper review and approval. CLMs also ensure you’re keeping up with regulatory updates, which means maximum compliance with contractual obligations.
With CLM software fast-tracking the contract lifecycle, you’ll be in a better position to catch opportunities and meet deadlines. Access to data-derived insights accelerates time-to-agreement, cutting the time your team spends on negotiating. And given that time is money, your investment in software will boost your revenue.
Outsourcing CLM processes vs. keeping them in-house
Not long ago, it was the norm for firms to outsource their time-consuming and resource-incentive contract management processes. But as the pressure to meet compliance standards and ensure data security increased, more and more enterprises have been building their in-house capabilities for managing contracts.
Let’s break down the pros and cons of outsourcing contract management vs. keeping the processes in-house.
Outsourcing CLM processes
Outsourcing is quite the rave these days, but will it work for your contract management processes?
- Outsourcing contract management to specialists allows you to leverage their operational efficiency. You’ll end up paying a fraction of the cost of an internal legal team.
- The outsourced team can adjust to your varying workloads, allowing you to scale as necessary.
- Outsourced specialists have the experience and expertise to ensure data accuracy.
- Project dependencies can make you feel like you are not fully in control of the process.
- You’ll have to put up with a lack of visibility.
- Scheduling and deadline management can be a problem if you’re dealing with an outsourced team handling other clients, too.
- Sharing confidential data with a third party poses security risks.
Managing contracts in-house
Will an in-house contract management team work for you? Here are the pros and cons to consider.
- With greater visibility of the CLM processes, your internal team will be in a position to spot potential profits and savings opportunities. They are loyal to your company, hence more likely to pore over details and find mistakes and weaknesses in agreements.
- Confidential data won’t be shared with a third party, so the risk of a data breach is lower.
- You can better control the schedule of your own team. You’ll be working with people focused only on your business.
- Depending on your workload at any given time, your team may shift between being overworked or underproductive.
- Your top-notch legal experts may be swamped with routine work.
Note that moving contract management in-house does not mean overburdening the legal team with grunt work. Armed with the right CLM software, lawyers can still have the bandwidth for work that requires their expertise and strategic thinking.
Gone are the times when firms had to wait two to three years to fully establish a streamlined internal contract management team. You don’t even have to increase your headcount to shift your CLM in-house. Your legal team can rely on CLM tools to automate the processes and relieve you of time-consuming routine work.
Do I need a CLM system?
Regardless of size and industry, businesses are built on contracts. It is especially true if you’re navigating diverse relationships with partners, clients, and vendors. Even if you aren’t managing complex agreements, your legal team may still handle contract management processes that keep them bogged down in routine tasks.
You know you have much to gain from a CLM system, but does this mean you should go ahead and adopt the technology? How do you avoid becoming a cautionary tale of failed digital transformation?
To adopt CLM software successfully, you must take the time to determine your organization’s readiness to embrace the technology. You can start by assessing your CLM maturity. This CLM health survey will also help.
Contract lifecycle management market 2022-2027
The global market size for CLM software amounted to $1.70 billion in 2021 and is expected to reach $3.30 billion by 2027. We’re looking at a compound annual growth rate of 11.4% during 2022-2027. The demand is particularly high in the manufacturing, healthcare, public, and financial service sectors.
The global CLM software market can be further segmented into retail and e-commerce, pharmaceutical, manufacturing, electrical and electronics, automotive and banking, financial services, and insurance (BFSI), with manufacturing dominating the market.
Instead of weakening the industry, the COVID-19 pandemic only bolstered the demand for CLM systems facilitating alliances between firms. Rapid globalization has made a collaborative approach particularly crucial, so it’s no surprise that cloud-based software versions have overtopped the demand for the on-premise ones.
Now let’s discuss the nitty-gritty of the software available on the market.
Artificial Intelligence in contract lifecycle management
The CLM market’s incredible growth has bolstered the advancement of contract management technology. Firms can no longer settle with a first-generation CLM. To become a powerhouse of operation excellence, you’ll have to go for a contract management solution that leverages artificial intelligence.
AI-based CLM software enables smart contract authoring using machine learning (ML) algorithms to identify patterns and learn from past contracts. Legal teams no longer have to manually extract terms and clauses from contracts. AI-enabled CLM systems employ natural language processing (NLP), optical character recognition, and text analytics to digitize legacy contracts and transform them into workable documents.
Firms can now extract information from contracts quickly and auto-tag the documents with their respective company names, deadlines, and renewal alerts. They can also rely on AI-enabled solutions to parse through documents, identify sub-optimal terms, and suggest alternative clauses that mitigate risks and safeguard their interests. Advanced analytics provide actionable insights that let organizations gain optimal value from their negotiations.
Types of CLM software
You can classify CLM software into four types:
On-premise CLM software
On-premise deployment lets you install the contract management software on your company’s computer servers. It means you get to manage the updates, security, and maintenance of the CLM system without involving a third party. A major tradeoff is that you’ll have to invest heavily in database software, hard drive space, and additional power.
Cloud-based CLM software
Hosted by a third-party company, cloud-based CLM software lets you enjoy all the tools you need without having to actively manage any server. It spares you the hefty expenses on hardware and licenses. With all data available on the cloud, your team can enjoy easy access to the tools and documents anytime, anywhere.
Enterprise CLM software
Enterprise CLM software automates the contract management processes across the organization, from sales and procurement to legal and human resources. It allows you to seamlessly manage all of the company’s commitments on a single platform.
Integrated contract management software
Some companies integrate CLM modules into their existing enterprise resource planning (ERP) software. Contract management is folded right into the system they use to manage day-to-day business processes like project management, accounting, and supply chain operations.
CLM and associated software
CLM systems work alongside software designed to make business processes much more efficient.
Enterprise resource planning (ERP)
ERP software integrates all processes needed to run a company— sales, procurement, human resources, accounting, marketing, legal, and human resources—into a single system. It functions as a central database, provides real-time reporting, and facilitates communication between business units.
One way an ERP eases business processes is by integrating a contract management module into the system. The software can easily populate contract templates with information from its database.
Customer relationship management (CRM)
CRM software compiles customer data and points of contact, providing sales professionals with the information they need to foster meaningful and fruitful relationships with their clients. It lets them track, forecast, and manage sales leads and opportunities.
Linking your CLM system with CRM applications can shorten the sales cycles — the integrated experience allows sales representatives to request contracts without having to key in customer data or get bogged down in back-and-forth exchanges with contract managers.
Project management software equips project managers and stakeholders with tools that make project planning, resource allocation, and scheduling much more effective. It makes complex processes manageable and empowers PMs to steer projects from start to finish.
Integrating contract management with project controls allows stakeholders to easily evaluate contract performance, track cost overruns and unmet deadlines, collect and analyze contract bids, and award contracts.
An alternative to paper billing, electronic billing (e-billing) allows companies and individuals to send and pay bills electronically via web portals or emails, in machine-readable data formats. Integrating this capability into your CLM system, you will control your vendors and manage your obligations better.
E-discovery involves digital investigation, or search for evidence in electronic files, such as instant messages, email correspondence, digital images, online documents, social profiles, and website content.
Digital investigations usually involve a large amount of data, making file storage and exchanges particularly challenging. CLM systems provide a repository that guarantees secure data storage and ease of collaboration.
With teams and stakeholders spread out over multiple locations, signing contracts with pen and paper has become outdated and largely inefficient. CLM systems include e-signature features that allow users to sign documents anywhere with Internet access. Organizations can now execute agreements faster.
E-signatures leave audit trails that allow you to track, monitor, and check if the signed documents are valid. They also assist with the renewal of contracts. You can rely on the CLM system’s automated features to initiate the renewal process and collect signatures.
Top 8 Features to Look for in a Contract Management Solution
Here are the basics you should opt for when looking for a CLM solution.
Workflows ensure all contract lifecycle management steps are being followed and enable you to track each agreement throughout the pre- and post-execution phase.
The contract lifecycle management service should have centralized storage for all documents to avoid any data mix-up, such as creating multiple versions of the same document or confusing the contract lifecycle stages.
Look for systems that allow customizable security roles. It’s much safer to build security around your organizational structure and restrict users based on their responsibility for certain contracts.
Dynamic template editor
As we’ve mentioned, creating templates is very important for risk mitigation as it collects valuable universal data, which helps eliminate all major mistakes.
The highly-functional contract life cycle management systems must streamline the negotiation and review process. When it comes to the system’s features, it should offer extensive tracking and sharing capabilities, automated communication and collaboration features like comments and chatting, as well as the ability to share documents within and outside the system.
Once your documents are stored in one cloud database, make sure you can find the documents you need easily. You should also consider systems that offer document scanning and indexing, besides the basic search by the document’s name.
Analytics and reporting
By automating the contract signing process, you receive better sourcing of valuable data, which is crucial for business decisions. CLM’s analytics and reporting features can be your best advisor when deciding whether to extend or terminate a certain partnership.
Notifications help you get instant updates on processes. Since you’re adopting the contract management software to make the contract signing process faster and more efficient, be sure you’re always on top of what’s going on with your partnerships.
These are simply the basics. We believe every organization has its specific needs to consider when adopting contract management software. That’s why, at AXDRAFT, we customize the software based on each organization’s needs.
How to Measure the ROI of Contract Management Software?
To evaluate the potential Return on Investment (ROI) of contract management for a company, you should look into:
CLM software allows organizations to cut expenses by providing data that helps ensure suppliers comply with the agreements.
Contract lifecycle management systems help prevent errors and avoid legal mistakes by offering templates and allowing them to unify data.
CLM’s reports can help achieve more effective negotiations. By gathering existing data and analyzing it, the legal department can make wiser decisions when it comes to agreement termination or renewal.
Contract management software can enhance productivity by automating processes, thoroughly gathering and analyzing data, and decreasing the time needed to create contracts.
To receive maximum benefit from your CLM software, you should calculate potential savings in each area and establish an ROI number based on the outcome of such an analysis. Once the contract management software is implemented, the system will provide the required data to continuously monitor your ROI.
It’s important to know that ROI will highly depend on the CLM tool’s functionality. Let’s explore the essential features contract management software should have.
CLM and customer experience management
More and more companies are integrating contract management into their customer relationship management systems. After all, the CRM’s primary objective is to make it convenient for clients to do business with the company — and CLM systems are designed to do just that.
Сontract management software spares customers of tedious exchanges and the need to manually alter, sign, or fax documents. This velocity creates a positive brand image and shows that the company cares about its clients and partners. The added convenience can be a deciding factor for clients considering other competitors.
With contract management integrated into your CRM system, you can automatically track and identify existing opportunities. CLM software helps foster continuous innovation across the company, setting new industry standards for the entire industry.
More than that, the degree of process digitization serves as a proof that the business is growing: the future innovation and scalability is vital for the company. After all, companies in the poor position do not innovate.
Overall, CLM software promotes an inclusive mindset both across the company and its clients and partners, keeping your business on the frontier of innovation.
How to transform CLM from software to partner
Don’t just work with a software vendor—connect with a partner. It all starts with choosing the right software provider. Steer clear of CLM vendors who offer plug-and-play solutions. You’ll know you’re dealing with a partner if the software provider goes out of its way to create a mission-critical solution or to adjust its product to make it better suited to your scenario.
A partner always takes time to figure out your unique needs and works with you even after the purchase to ensure success. They’re ready to accommodate and address your growing needs. You can count on them to treat your processes and workflows with as much care and dedication as they do their own.
Software partners will be there every step of the way to make sure the system is helping your firm thrive. They provide excellent after-sales service and customer support. They also ceaselessly work on innovations to future-proof your system. It helps to do your homework before purchasing a solution. Don’t just check the software features—dig deep into the company’s culture to see if they’re a fit for you.
Moreover, software partners are geared to survive the test of time. It’s not uncommon for software companies to fail, leaving customers with a defunct system. Make sure you work with a well-established provider who can maintain a lasting partnership. Transitioning to a new system is costly and time-consuming, so make sure you get this right.
CLM case studies
Want a glimpse of how CLM software works in the real world? Let’s consider two examples.
A leading online shopping platform for fashion and lifestyle products, Modna Kasta relies on CLM software to lighten its load in managing the services agreements and supplier contracts. The managers only have to answer simple questions, and the CLM system gets the gears rolling by automatically assigning an appropriate approval flow to the document. It cuts the time it takes for a contract to go from creation to signing.
A leading full-service law firm with 20 years of experience under its belt, EPAP handles foreign employee documentation for its clients. CLM software speeds up the transfer of data between documents, so the firm can finalize an entire document package in a matter of minutes. Their process is now 85% faster, which amounts to $68,850 worth of value gained every year.
So, how can your company make the most out of a CLM system? Let’s explore the best practices.
CLM best practices
Contracts lay the foundation for your business relationships, so make sure you’re managing them effectively. Here are some guidelines to help you out.
Organize your contracts in a central repository
Storing files in multiple locations, folders, and spreadsheets makes it hard to access, track, and secure your data. Keeping all your contracts in a repository allows you to stay organized. You can pull up a particular document in an instant, search for specific clauses and terms, and view the agreements by category. More importantly, you can track who’s accessing the files and prevent data leakages.
Set automated alerts
Missing deadlines and failure to keep up with contractual obligations can cost you dearly. Imagine getting locked into another year of obligations because you missed out on the agreement’s termination schedule. Setting automated alerts can help you avoid situations like this. A CLM system sets notifications for contract milestones and sends them to the responsible persons.
Prepare a library of approved clauses and templates
Legal teams tend to spend more time drafting contracts than necessary when they are unsure of the clauses they’re using. You can make your team more productive and contract-compliant by compiling legal-approved clauses and templates. It will also standardize formats, reducing the need for manual corrections and time-consuming back-and-forths.
Stay on top of version control
It’s hard to track changes in a document when multiple people are editing it. There’s a risk of tasks duplicating, too. CLM systems track changes and ensure everyone’s working on the latest version. No user will be making updates that someone else has already done. Version control guarantees that you release a contract in its final form and with 100% accurate data.
Create well-defined and documented workflows
Prepare clearly defined workflows that mirror your business rules and processes. You can then minimize manual tasks and automate the workflows for smooth contract processes. Your legal team won’t have to spend too much time monitoring and facilitating all the stages of the contract lifecycle. You’ll free up the team’s bandwidth for more meaningful work while preventing tasks and minute details from falling through the cracks.
Simplify and standardize the contract request process
Manually requesting contracts and capturing information might result in errors and unnecessary delays. By digitizing the contract request process, you can standardize data collection and make it easy for people to gather all the necessary details. The legal team won’t have to swamp people with emails or make repeated phone calls.
Fast-track the approval process
Approval is often one of the slowest parts of the contract lifecycle. You can speed it up by automating email notifications and enabling e-signatures in your CLM system. Set the software to send alerts when the contract is ready for approval. Make sure your software encrypts data so the stakeholders can access documents from anywhere in the world without worrying about security breaches.
You can also fast-track the process by setting up automated workflows that replicate your business processes and automatically prompt relevant people to action with the right trigger. You won’t have to chase your colleagues or business partners for results.
A fully adjustable scenario that accounts for multiple variables within a single workflow can greatly improve the efficiency of your system.
Boost security with granular access controls
Make sure everyone in your organization has access only to files and contract processes relevant to their role. For greater security, your CLM system should allow you to limit access to highly confidential documents. Setting feature-based and role-based permissions will help you avoid security breaches and careless errors. For instance, a “read-only” user access prevents people from making unintended edits on contracts.
Measure success and improve performance with real-time insights
CLM systems provide analytics and reports through a user-friendly dashboard. Use the data to track your team’s productivity and pinpoint areas to improve. The reports provide actionable insights that you can use to make better decisions and take your team’s performance to the next level. Track your KPIs, establish benchmarks, and set goals for future improvements.
Keep an audit trail
You need audit trails to comply with regulatory standards like PCI and HIPAA. When copies of files and documents are stored in different locations, it is difficult to catalog past activities and transactions. A centralized repository provides the automated features you need to create full and reliable audit trails. You’ll be able to extract complete contract history data with just a few clicks.
After reviewing the general concept revealing what is contract lifecycle management software and its benefits, we have narrowed down a list of questions to ask when choosing the one:
- Does the system offer cloud storage?
- Can you customize contract data based on user needs?
- Does the system provide accurate notifications technology?
- Can you search for the document based on the information in the document? Can you search for the documents by name?
- Does the system provide extensive analytics and reporting systems?
- Can the provider customize the CLM system according to your needs and specific requests?
Are there other questions you have regarding contract management automation? We will be glad to help you!
Assess your current processes first. The chances are that your legal team spends more time managing contracts than doing high-value tasks. Your sales reps may have missed out on opportunities or stalled some business deals. Perhaps, your company was fined after failing to comply with its contractual obligations.
The right CLM solution will help you see opportunities, close deals faster, avoid legal liabilities, and minimize risks. The savings in time and money and the revenue you’ll gain will more than make up for the software investment.
A contract lifecycle management system streamlines and automates contract processes, allowing legal and business teams to proactively and effectively manage all stages of the lifecycle—from initiation, authoring, and negotiation to approval, execution, and renewal or termination.
Both an administrative and strategic tool, a CLM system will help your company fully enjoy the benefits of every contract. Analytics and reporting features will improve your legal team’s overall performance.
Regulatory bodies, business partners, vendors, and customers expect organizations to meet their contractual obligations. Failure to do so can result in reputational damage and legal liability. CLM helps you stay organized from beginning to end, complying with all regulations and obligations.
Contracts set the foundation for your relationships with suppliers and service providers. To have your procurement lifecycle run smoothly, you need to manage your contract processes properly. The right CLM software can help reduce supplier costs, forecast expenses, terminate unfavorable deals, improve external relationships, speed up negotiations, and execute agreements efficiently.