Cloud-Based Contract Management Software: Is It Safe?
If you currently use or considering switching to cloud-based contract management software, you probably have some security concerns. Is it safe to store your contract data in the cloud—or should you continue to store your contracts locally where you can maintain total hands-on control?
The reality is that using a cloud-based contract management platform is safer than storing your contracts on-premises. If that sounds counterintuitive to you, it’s time to read up on how cloud-based contract management works—and what it can do for your organization.
- Cloud-based contract management software stores all completed and work-in-progress contracts in the cloud
- Even though cyber threats are on the rise, cloud-based contract management software is safer than storing contracts on-premises
- Cloud providers such as Microsoft Azure that host contract management software can afford to provide more robust cybersecurity than can most individual firms
- Cloud-based contract management software includes additional data security features, including encryption, role-based and feature-based permissions, single sign-on, multi-factor authentication, data separation, and disaster recovery
How Does Cloud-Based Contract Management Software Work?
Cloud-based contract management software works like any contract lifecycle management (CLM) solution but hosts all your contract data in the cloud. It automates the entire contract lifecycle from a centralized contract repository, thus allowing access from any authorized user connected to the internet.
Consider how a cloud-based solution functions with each stage of the contract lifecycle:
- When a user requests a contract, the software creates one from a library of preapproved clauses and templates stored in the cloud-based library. Intake for the new contract is also stored in the cloud.
- The draft contract is stored in the cloud and shared with appropriate team members.
- Authorized employees from different departments access the draft contract in the cloud for markup and redlining.
- Authorized individuals perform a final contract review in the cloud and grant approvals.
- Contract negotiation with third-parties can be done concurrently, in real-time using the software’s cloud-based collaboration tools
- The cloud-based contract is circulated to necessary individuals for e-signatures and execution.
- Cloud-based CLM software monitors the contract and sends alerts about upcoming obligations.
- All cloud-based contracts are made available for reporting and analysis.
- CLM software monitors all cloud-based contracts for upcoming renewal and expiration dates.
Key to this entire process is the cloud-based contract repository. Centralizing all contracts in the cloud eliminates departmental silos, and contracts become more standardized and compliant. Centralized contracts are also easier to secure than contracts scattered throughout an organization and easier to search and retrieve.
Why Cloud-Based Contract Management Software Is Safe
Given the high incidence of ransomware and other cyberattacks, moving your contracts and related data to the cloud might seem risky. Any type of digital file, contracts included, is certainly at risk of being breached or attacked online.
Understanding Cyber Risks
The cyber threats to all types of businesses and organizations are real. According to CyberEdge’s 2021 Cyberthreat Defense Report, 86% of all organizations experienced at least one successful cyberattack in 2021. SonicWall’s 2022 Cyber Threat Report notes that ransomware attacks more than doubled from 2020 to 2021. Given the valuable data in your contracts, it’s only natural to expect malicious actors to target any online contract data.
Risks Are Lower in the Cloud
These cyberattacks target not just cloud-based systems but all systems connected to the internet. Data is no less safe in the cloud than on your organization’s servers. In fact, contract data is safer in the cloud because most cloud providers like Microsoft Azure provide enhanced cybersecurity to guard against ransomware and other cyberattacks.
Consider these common cloud security measures:
- Cloud data is automatically backed up so you can easily restore it in the event of a breach, attack, or disaster
- Cloud data is encrypted, so thieves can’t read it even if they gain access
- Cloud providers use continually-updated industrial-grade anti-malware tools to guard against viruses and other malware
- Cloud providers staff their security operations centers (SoCS) 24/7/365 for complete coverage
- Cloud providers’ cybersecurity methods comply completely with all government and industry security and privacy standards and regulations
One of the primary reasons cloud data is more secure than on-premises data is scale. Cybersecurity is expensive, and even the largest organizations find that implementing the necessary security measures is often cost-prohibitive. Cloud providers, however, can employ more robust and more expensive cybersecurity measures because they can spread the cost over multiple clients. A big cloud provider can afford better security than an individual company.
The following video from IBM discusses some of the basics of cloud security and how to protect your data in the cloud.
SOURCE: IBM via YouTube
How Contract Logix Reduces Cybersecurity Risks
In addition to the lower risk inherent with cloud-based data storage, most providers of contract management software include their own built-in security measures. For example, Contract Logix’s CLM solution offers the following protections against data breaches and attacks:
- Contract data is encrypted both at rest in the cloud and in transit to and from the cloud
- Encryption keys are protected via Azure key vault management
- Data from different clients are kept separate (not co-mingled) for greater security
- Access is limited via role-based and feature-based permissions and detailed user authentication
- Users must use strong passwords—and change them regularly and in accordance with their IT security policies
- Data retention, archival, and restoration follows industry-leading practices for access and security
In addition, Contract Logix offers robust disaster recovery, so if a hacker or natural event takes down a data center, clients continue to have secure access to all their contract data.
Other Ways to Reduce the Risk
Of course, your team members need to practice all standard security best practices when accessing contracts—both in the cloud and on your internal systems. These best practices include:
- Avoiding less-secure public Wi-Fi networks
- Employing strong passwords and multi-factor authentication (MFA)
- Securing their computers with anti-malware software and other cybersecurity tools
Other Benefits of Cloud-Based Contract Management Software
In addition to increased security, cloud-based contract management software offers several other significant benefits to your organization. These benefits include:
- Centralizes all contracts and related assets, eliminating data silos
- Enables contract access for remote users
- Improves collaboration for all stakeholders
- Speeds up and automates the entire contract workflow
- Reduces manual labor
- Minimizes human errors
- Standardizes contract language
- Ensures all clauses and terms meet preapproved requirements
- Ensures compliance with all industry and governmental regulations
- Creates a detailed audit trail
- Provides automated alerts for upcoming obligations
- Ensures contracts are handled correctly as renewal/termination dates approach
- Enables easy searching and retrieval of contracts and contract data
- Enables detailed reporting and analysis
- Mitigates contract risk
- Reduces costs
These benefits might justify moving to a cloud-based contract management solution. With the added security provided by a cloud-based solution, there is no reason for your organization not to embrace cloud-based contract management software.
Turn to Contract Logix for Safe Cloud-Based Contract Management
When you want to ensure the highest level of security for your contract data, turn to the experts at Contract Logix. Our cloud-based CLM Platform not only automates contract workflow but also provides robust contract security throughout the entire contract lifecycle, from inception to archiving. You’ll keep your contract data secure and realize other benefits, including robust reporting, improved accuracy, and lower costs.
Contact Contract Logix today to learn more about cloud-based contract management security.