4 Common Reasons for Contract Management Software
By David Parks, Director of Product Marketing, Contract Logix
When talking to prospects, we hear a lot of different reasons why they are considering contract management software. After all, everyone’s contract management use case is a little different but at the end of the day there is a business problem they are trying to solve. Maybe an important deadline was missed, or some form of non-compliance occurred. Maybe they need a modern way to organize their agreements as part of a broader digital transformation initiative. Or, perhaps they simply want to streamline and automate their contract management processes.
This article looks at 4 of the more common reasons for contract management software we hear from prospects. Not only are they common, they tend to span most industries, company sizes, geographies, and job functions. They also align well with some of the benefits that customers tell us they get from using CLM software. If you are interested in some more specific examples by job function or vertical you can find a wealth of information about those in our whitepapers and case studies/use cases.
Download An Introduction to Contract Management Software to learn more about the technology and benefits.
1. Need for a Better Way to Store and Access Contracts and Related Information
Many legal, procurement, finance, and sales departments still store contracts on hard drives, shared folders, and even filing cabinets. In addition, a lot of prospects we talk to use spreadsheets to manage and track their agreements. They realize these manual approaches to contract management make it very difficult to find documents or even sort or filter agreements by different relationships such as organizations, contracts, contacts, etc. In addition, if they want to search for information such as what agreements use a certain clause or what’s the total value of their buy-side contracts or how many agreements include a certain product, they can’t, at least not without a lot of manual intervention.
All those problems go away with contract management software. It provides a secure, centralized, and cloud-based repository to store your contracts and related data and documents. It’s one of the key reasons for contract management software because it’s the first step to an organizations’ digital transformation initiatives. It digitizes and stores all your contract data so that it can be accessed, managed, sorted, filtered, and searched for any way you want.
2. Want Greater Visibility into Contract Management Processes
Another one of the common reasons for contract management software that we hear from prospects is they don’t know or have difficulty answering where buy-side or sell-side agreements are in their process. They also don’t have an accurate or easy way to track contract-related metrics such as the value of agreements, how many are in the works, how long it takes to execute a certain type, how many contract requests were made in a month, etc.
With intelligent contract management software, it’s easy to tell the stage and status or every agreement. You get complete visibility into your contract management process to easily answer questions, track KPIs, and identify areas of improvement. In addition, the software provides dashboards and custom reporting capabilities to provide accurate contract-related metrics and a way to easily view and share those metrics.
3. Under Pressure to Increase Security of Contracts and Contractual Information
Buy-side and sell-side contracts contain some very sensitive and important information about your business and business relationships. Many prospects we speak to are concerned about the security of this information, especially given the increasing number of data breaches and regulations governing data privacy. Whether it’s protecting contract-related from unauthorized internal access, external threats, or other natural events, contract management security is one of the common reasons for contract management software because it’s nearly impossible to achieve via traditional shared folder and spreadsheet-based approaches.
Our Express and Premium products provide robust contract security measures. For starters, you can manage who has access to different types of information using role-based security and setting appropriate permission levels. In addition, all contract data is securely stored in the Microsoft Azure cloud where it’s encrypted, password-protected, and can be retained, archived, and restored. Check out this article for more detail on achieving a high-level of contract management security.
4. Must Reduce Risk Associated with Contracts
Contracts contain risks. They key is knowing what those risks are, where they exist, and how to mitigate the probability and consequence of them. It’s not uncommon for a prospect to tell us that one of their main reasons for considering contract management software is the fact that they missed a key date such as an autorenewal that they did not intend to renew. In a lot of cases, the cost of that autorenewal is higher than multiple years of a contract software license. Another one of the big risk-related reasons for contract management software involves compliance. Some key use cases for compliance include the need to enforce the use of preapproved legal language, maintain an audit trail, ensure business processes are followed, and track obligations.
Contract management software does an excellent job at helping organizations mitigate risk and increase compliance. Features such as clause and template libraries reduce the risk of contracts including old language and terms. Automated alerts, reminders, and notifications can eliminate missed renewal dates and obligations and keep projects on schedule. Workflows make sure the right people are involved in the contract creation, review, and approval process. And since everything occurs in and is managed by the software, a complete record of activities is maintained for audit purposes.
The use cases and reasons for contract management software can vary greatly from one person or organization to another. A healthcare provider’s contracts are different than those of an architectural firm. Likewise, a CFO has a different role in the contract process than a General Counsel. However, the four reasons outlined in this article tend to be applicable to most applications. Contract management software from Contract Logix not only solves these business challenges, but it’s also easily tailored and configured to the needs of different roles, departments, and companies.