What is Contract Management?
Contract Management 101
Contract Management, or Contract Lifecycle Management (CLM), is the process by which an organization manages each phase of a contract’s life from drafting through expiration and every stage in between. Since the late 1990’s, organizations have been evolving their process from a manual and time intensive task to a more efficient process supported by software and digital repositories.
Source & Quote
Streamline the configure, price, quote process with customers, and the sourcing and RFX process with suppliers. These two processes are the flip-side of the buy and sell-side of most transactions.
Create & Approve
Increase deal throughput with automated drafting, and eliminate rogue contracting with approval workflows and audit trails
Negotiate & Sign
Accelerate the last mile of contracting with counterparty collaboration, change tracking, negotiation playbooks & clause libraries, and an efficient wet or digital signature process.
Integrate & Connect
Eliminate re-keying and improve data quality by connecting and sharing data between contracts and other enterprise systems
Organize & Collaborate
Strengthen teamwork and decision-making through a shared contracts repository, with golden documents, trusted meta data, and robust version and access controls
Extract & Comply
Improve compliance by extracting structured data to support obligation management, performance management and spend management.
Manage & Analyze
Optimize contract risk and value through renewal tracking, rights management, process analytics and risk analytics.
How does Contract Management benefit my company?
Having complete control and visibility into a company’s entire contract portfolio is key to reducing enterprise risk while increasing its revenue. By implementing a contract lifecycle management system, businesses are able to centrally store and capture what is in each of their contracts, whether it’s to manage sales contracts, vendor contracts, complex trading agreements to keep in compliance with new regulations, or eliminate human error with templates and full version control.
- Cost Reduction / Process Efficiency
- Risk Management
- Revenue Assurance
- 3rd Party and Vendor Compliance
- Rogue Contract Prevention
List of contract-related challenges facing the modern enterprise
Although contract management software has helped produce a more efficient process, companies still struggle to have an executive-level view of their contracts that answers important questions about revenue, risk and obligations.
- 360 degree view of all contracts – vendor, customer, partner, employee, finance & governance
- Consistent enterprise view of all contractual relationships and all contract risk
- Certainty of contract commitments – revenue, spend, rights, obligations & compliance
- Operationalize contract commitments – track, perform, comply, connect
- Certainty of contracting process – through control and auditability
- Acceleration of contracting process – by eliminating bottlenecks & cost
Enterprise Contract Management
Contract lifecycle management defines the process of contract conception through expiration. Leading organizations are looking beyond limited or stove piped implementations of CLM and discovering what is possible if their contracts are transformed from documents into usable contract data.
There is an emerging trend toward that is focused on the enterprise contract management and an enterprise-class platform that is designed to meet all the contract-related challenges facing the modern enterprise. An enterprise contract platform must meet the following requirements:
- One platform designed for everyone who cares about contracts, including procurement, sales operations, legal, risk & compliance, finance, HR, the executive team and the board
- One platform designed for modular implementation, delivering a fast path to success, and building to a complete vision of enterprise contract certainty
- One platform designed as the golden source for contract data and documents, with seamless integration to other enterprise systems
Enterprise contract management is all about institutionalizing the use of contracts from across all departments throughout the contract lifecycle. A good enterprise contract management platform stands on it’s own as the golden source of contract “truth.” In order to get the most efficiencies out of the system contracts must be transformed from documents into usable data that can be operationalized, analyzed, and integrated into all aspects of the business. The platform must also be able to get the right information to the right people at the right time allowing for easy access to contract data directly or via robust integration points.
A platform supports multiple integration points
Leading industries around the world are using a contract management system, like Exari, to create, store, track and analyze their entire contract portfolio and its data. These worldwide businesses are seeing major returns on investments, drastically increasing their turnaround time and ramping up productivity, as well as reducing their enterprise-wide risk. Along with many other users, our contract management adopted users below are seeing a major return on their investment.
- Top insurance companies complete document creation 75% faster
- Four of the top global insurance companies are increasing mid-market business growth
- Global transportation company eliminates over 175 hours of manual document assembly
- Global law firms are reducing document generation turnaround time and increasing profits
- Global investment banks are reducing document assembly turnaround time by 70%
A good Contract Management system should easily integrate with and share data with other enterprise platforms such CRM, HR and ERP systems. Pre-populating a questionnaire during the contract drafting and negotiation phase speeds up contract drafting and ensures that data from other source systems is used accurately. You should never rely on these systems to act as a fully-stacked contract management system, as it will not include the proper negotiation tools, complex data analysis and reporting, or total integration with other ERP systems you will need for managing the total lifecycle.
Top 3 reasons firms implement a Contract Management system
Bottlenecks are harming your revenue. Too often do we see bottlenecks in the legal department that severely impact sales to close deals and bring in revenue quickly. Not being properly equipped to handle the flow of contracts and the document generation process will ruin major achievements in the future. Stop re-inventing the wheel for every contract that needs to be assembled, and eliminate risk of manual human error, rogue contracting, and slow contract creation times.
You can’t manage what you can’t see. Imagine you face a financial crisis, a lawsuit, or any other major negative event. How do you understand what your obligations are or what you are liable for? Being able to properly manage every single contract in your business and make informed decisions during a crisis starts with complete visibility into each of it data points, with one secure repository.
Regulations are risky. Trading complex agreements can be tricky, especially with ever changing regulations, forcing you to re-evaluate and update existing agreements. You need instant, fingertip access at all times, in order to understand, track, manage and report on any risk you might be face. Not keeping in compliance could be extremely costly for your firm, or even cost you your job.
Who should care about Contract Management Software?
Contracts are the mainframe for every business and every department- everyone simply has them. For complete certainty over all contracts within your business, everyone in your organization should be on board with implementing a contract management system.
Sales, Procurement and End Users
Templates, workflows and approvals will help decrease the risk of contracts being created or tampered with outside of the legal department. It will also allow end users and system administrators to send and receive back agreements even faster. One centralized repository with easy navigation, search, storing and reporting functionalities will eliminate any bottlenecks in on-boarding new employees or clients seamlessly.
General Counsel and Corporate Legal
Having poor or no contract management in place will cause a pileup of deals, leading to delays in the sale cycle and affecting your revenue stream.The ol’ cut and paste in MS Word method is long outdated and carries huge contractual risk.
GC’s who don’t have a proper contract management system in place struggle with accessing and tracking contractual agreements. Without quick access to the data they need may cause them to miss an important contractual obligations, a payment term, or any other piece of vital information they need to keep close track of.
For any technological challenges, we all typically turn to the IT department. However, the right Contract Management system will be intuitive enough for any user to adopt fully, freeing up time for IT professionals.
Risk & Compliance Officers
It’s no surprise that CRO’s and CCO’s are always on the go, so when they need answers, they need them fast and accurate. They are constantly analyzing and reporting on risk, the cost of managing those risks and ways they can reduce it. A few major issues CRO’s and CCO’s are facing today are complying with current and new standards, anti-corruption from signing with third-parties, data privacy and revenue leakage. All of these challenges can be solved with the right contract management software, with full visibility to analyze and report on data, risk scoring for all agreements, and Integration with vendor risk and/or collateral systems.
C-Suite and Board of Directors
Often, businesses are not aware of the hidden risks that lie within their contracts, where the advantage of full visibility can help them decrease it. Have you ever been ill-prepared for a major crisis, such as a compliance breach? With unprecedented visibility you can better prepare by being able to monitor and manage your contract compliance and risk strategies through an effective contract management solution. This will help you to move towards a healthier business.
Contract Management is a Journey.
From the document generation and drafting stages, to the negotiation and approval stages, Contract Lifecycle Management is a constant, never ending process. There IS a better way to manage all of your contracts, and it starts with moving forward from manual creation and file cabinet storage.
Organize: Start off by gathering all of your contract in one secure, central and repository. This will allow you to easily report on metadata and key contract terms.
Operationalize: Track milestones, obligations and easily mitigate high business risk across all contract types with instant contract analysis.
Automate: Eliminate the need for legal and automate the creation of complex documents yourself with the help of smart templates. This will decrease negotiation time and allow for seamless contract execution.
Optimize: Easily manage risk, compliance, revenue, spend and relationships of each and every contract and counterparty.
Here are just a few steps to help you get started on ‘best practices’ for contract management and document generation within your organization:
- Review the ways in which contracts are tracked on a company wide basis, and the policies and procedures in place to use that data to hedge against and mitigate risks
- Review the status of contracts, including any risk concentrations and interrelationships, as well as the likelihood of occurrence and potential risk
- Design contract risk management policies and procedures that are coordinated and function as directed
- Implement these strategies in a timely manner
- Send a message to management that comprehensive contract management is an integral component of the firm’s strategy and business operations