Contract Management in the Cloud for Small & Medium-Sized Businesses

For small and medium-sized businesses, the initial cost of implementing contract management software can be daunting. But the inability or unwillingness to invest in contract management software (CMS) can lead to a multitude of costly problems down the road.

According to a recent article in, “These days, detailed contracts outline every aspect of thousands of projects from concept to completion. Skipping any of the benchmarks or review periods within these contracts could lead to a lost opportunity to address what’s going wrong or collect money for poor provider performance.”

Fortunately, the emergence of cloud-based CMS is providing a cost-effective solution. With the cloud’s “utility” model, companies pay only for the services they use, removing the upfront investment barrier.

But there are critical issues that must be addressed before choosing the cloud option.

Security Must Be Adequate

Consider a hospital contract management system in which the contract management software is hosted on the cloud. If the information isn’t protected with the same level of security as with an in-house system, the tradeoff of efficiency for security will be unacceptable for legal, ethical, and customer-satisfaction reasons. In a healthcare contract management system, security is essential because of the sensitivity of the medical information.

And healthcare is certainly not the only industry in which security is paramount. Intellectual property is frequently the most valuable asset of a business. Any risk of that information getting into the wrong hands is a risk such a company won’t be willing to take, no matter how appealing cloud-based CMS is otherwise.

Information on the cloud can be protected with the right provider, but the protective measures must be explicit. Due diligence should be performed on any potential cloud provider, looking at issues such as disaster recovery. And companies shouldn’t just accept the standard provisions — instead they should make sure the security measures are acceptable for their specific business.

Ultimately, by providing stricter control of access, a cloud solution can actually bolster security, but only if a company addresses security concerns at the outset.

Buy-in Is Essential

Another area of concern is employee buy-in, particularly with IT departments, which may view the cloud as a threat to their jobs. The challenge is to get IT to accept the move to the cloud as an inevitability but also as an opportunity. IT will still have an important role to play in selecting the provider, ensuring smooth implementation, and monitoring ongoing effectiveness. In today’s fast-changing, ever-evolving technological world, it shouldn’t be hard to demonstrate that IT will be needed more than ever, even with the adoption of cloud solutions.

There also is likely to be some resistance among the executive team, making it necessary to thoroughly document the cost savings of the cloud. The upfront savings of not having to deploy a large in-house enterprise software system will be obvious, but questions about ongoing cost need to be answered. It’s helpful in this regard to remember that in-house systems require continual maintenance, support, and upgrading. A provider of cloud-based CMS can spread these costs over many companies, thereby reducing these costs for each individual customer.

The Cloud Is the Future

Off-premises software solutions are here to stay. At all levels, companies are realizing the benefits of transferring critical operations such as contract management systems to the cloud. As detailed by Bloomberg Businessweek, even the White House is getting on the cloud, projecting significant savings.

When considering how to best gain the numerous benefits of a contract management software, a cloud solution is an option that would be foolish to ignore, although it takes an awareness of potential pitfalls to ensure the move pays off.