Improving Contract Management Organization Structure

Digital transformation is accelerating. Data is the key to success, no matter what your industry or business segment. Data-driven organizations can make more informed and more rapid decisions that help them run their operations more efficiently and effectively.

Some of the most valuable and sensitive data in your organization is in the contracts you manage. Contracts contain essential information about customers, suppliers, employees, and more – including key financial information. 

Are you taking the best advantage – and best care – of this valuable contract information? It’s all about how you manage your contracts and choosing the right contract management organization structure.

Key Takeaways

  • A document-centric or data-centric approach can manage digital contracts.
  • A document-centric structure is similar to a folder structure for organization
  • A data-centric structure provides easier access to specific information and enables detailed reporting and analysis
  • Full-featured CLM software solutions should be built on the data-centric contract management organization structure 

Why a Traditional Contract Management Organization Structure Doesn’t Work Anymore

Historically, contracts weren’t managed so much as they were stored – physically, in large file cabinets. This approach did not enable companies to get much use out of their contracts; contracts were difficult to retrieve and almost impossible to analyze. 

To improve on this situation, organizations began to digitize their contracts. Some scanned their contracts into PDF-format files. Others created new contracts from scratch in Microsoft Word or a similar document format. Some organizations attempted to digitize all their historical contracts while others simply initiated all new contracts in digital format.

While maintaining contracts digitally is a considerable improvement in storage efficiency and security, it doesn’t necessarily improve the contract lifecycle process or the ability to retrieve and analyze data across multiple contracts. That’s because basic digitization is a document-centric process, not a data-centric one. 

Comparing Document-Centric vs. Data-Centric Structures

When dealing with digital documents of any kind, there are two primary data organization structures available – document-centric and data-centric. Both involve turning traditional paper contracts into digital computer files, but only the data-centric model provides a complete set of benefits.

The Document-Centric Contract Management Organization Structure

The document-centric approach to contract management is the handling of digitized contracts as document files organized by folders such as contract type or vendor or customer. It’s similar to how other computer files are handled, with each contract as a separate file stored in a folder structure. 

While the document-centric approach provides more efficient storage and security than physically storing paper contracts or leaving them scattered throughout your organization, it offers little advantage in access and analysis. Because the contents of each contract are contained in a folder organizational structure, there is little to no flexibility in how you can search, report, and analyze your contractual data. For example, what if you want to view all contracts by contract type but they are organized in folders by vendor? Or, what if you want to search all your contracts by a specific clause or term? You can’t do this with a document-centric model. (In one study of document-centric organizations, 60% of employees said they spent hours or days finding and retrieving important information.) 

The Data-Centric Contract Management Organization Structure 

A data-centric contract management organization structure focuses on the data within each contract. Contracts are stored not as singular files but as records in a database. Key information contained within each document is contained in individual fields within each contract record. Because important content isn’t buried within a larger file or folder, you can easily search, report, and analyze your data however you need. For example, you can view your contracts and related-documents by any relationship such as organization, contact, contract type, value, term, date, specific legal language, etc.

As you become familiar with this data-centric approach, you’ll realize that your entire organization can benefit from adopting a data-driven culture. 

Useful Suggestions for Improving Your Contract Management Organization Structure

When choosing the right contract management organization structure for your business,  keep the following suggestions in mind. 

1. Centralize Your Contracts and Supporting Documents in a Repository

Many organizations have contracts scattered throughout the business on different shared and hard drives or even filing cabinets. This is a big obstacle to digital transformation, so getting all your contracts and related documents organized in a single cloud-based and digital destination is key.  This centralization of your contracts is a great first step to becoming truly data-driven with your contract management efforts. 

2. Move to a Data-Driven Organization Structure

As noted, the best contract management strategy is built around the data in your contracts, not the contracts themselves. A document-centric model is simply too limited to be of much use. Moving to a data-driven model opens up a world of possibilities in terms of how you can use the contract data you amass – including revamping your entire contract management process. With a data-driven approach like Contract Logix’s contract management software, you can harness the wealth of data in your contracts to deliver your business actionable insights. You can very easily search, report on, and analyze all your contracts, language, and other information as well as benchmark and track KPIs to improve performance.

3. Properly Secure All Your Contract Data

Contracts contain very sensitive and valuable information about your business and its relationship with other businesses and individuals. If your contracts are stored in shared folders or other document-centric ways, it’s very difficult to secure and regulate access to them. With data-driven contract management, you apply robust security capabilities such as role-based and feature-based permissions so that only the appropriate people have access to the appropriate information. You can also implement other security checkpoints such as multi-factor authentication (MFA) and single sign-on (SSO) to further secure your contracts. Finally, some solutions like Contract Logix meet strict security compliance requirements like SOC 2 Type II, HIPAA, and FISMA. 

4. Employ a Full-Featured CLM Solution

Another option to consider is moving to a full-featured CLM solution. CLM platforms, such as that offered by Contract Logix, automated the entire contract management process, from contract request and authoring to negotiation, execution, obligation management, and reporting. Contract Logix’s CLM platform utilizes a data-centric contract data model so you can get the full benefit from all the data in the contracts you create.

The steps involved in contract lifecycle management.

One More Suggestion: Choose Contract Logix for Your CLM Solution

At Contract Logix, we believe that the data-centric contract management organization structure is the only approach. Our CLM platform is built on data-centric contract management and helps you streamline and automate your contract process and gain full insight into the data you collect. You will draft better contracts, remove friction from negotiations, close business faster, and eliminate the risk of missed obligations.

Contact Contract Logix today to learn more about the data-centric contract management organization structure. 

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