Comparing Document-Centric and Data-Centric Contract Management
Contracts contain a tremendous wealth of important data about your organization and the organizations you do business with. That’s why the effective management of contract data is so important to your success.
When it comes to contract management, there are two main approaches to managing contract data – document-centric and data-centric. Which contract data management model is best for your organization? While you might think that a document-centric approach makes sense when dealing with contracts and supporting documents, the reality is that a data-centric approach provides the most effective, efficient, and flexible access to the information you need.
- There are two main approaches to contract data management – document-centric and data-centric
- Document-centric contract management follows a folder-based structure and makes it difficult to retrieve, report on, and analyze your contractual information
- Data-centric contract management lets you search for, report on, analyze, and compare all data included in your contracts and supporting documents
- Modern and digital approaches to contract lifecycle management should employ a data-centric approach
Understanding the Two Types of Contract Data Management
There are important differences between the document-centric and data-centric models for contract data management. The document-centric model focuses on the contracts themselves, using a folder structure similar to that used to organize information on shared or hard drives or other devices. The data-centric model, on the other hand, uses a relational structure that’s based on information contained within each document, much like the way a relational database is comprised of individual records and fields.
These differences are not trivial. Depending on which contract data management model you choose, you may be limiting your ability to easily find the information you need about your contracts and contract management processes.
Document-Centric Contract Management
Not surprisingly, contract data management is an important business process. An individual or department requests a contract, contract terms are negotiated, the contract is vetted and signed by appropriate stakeholders, then the contract is filed away for future reference and obligation management. And, it’s not just about the contract, there are often many supporting documents like COIs, SOWs, BAAs, etc. that flow through the entire organization.
Document-centric contract management takes a document-driven approach to contract management. Documents (contracts) are created, key information in each document is tagged, and optional metadata is added to each document as it is stored. Each document is then stored in a folder and can be searched and retrieved by contract name or tag.
Because each individual contract follows its own unique construction, the resulting irregular structure makes it difficult to retrieve or analyze the contents of each document. There is no easy way to compare one contract’s data with that of another, or to search for specific data or clauses, unless that information has been added as metadata.
For example, what if you have organized your contracts in a folder structure by vendor or customer? However, you want to report and analyze all your agreements by contract type? Since you haven’t organized them that way, this will be very challenging and time-consuming to do. With document-centric approaches to contract lifecycle management, it’s very difficult to harness the value of contract data.
Data-Centric Contract Management
A data-centric approach to contract management is much more versatile and powerful. In this data model, contracts are structured around key data elements, instead of the data conforming to the structure of individual contracts.
This data-driven approach enables more detailed searching. Since the database is built around key data fields, it is now easy to search for all contracts that contain a specific clause, or view all contracts by vendor or contract length. This, in turn, enables more sophisticated analysis; reports can be generated and comparisons run by any key data field or any language in the contract, providing more detailed insights than possible before.
Of course, to fully realize the benefits of data-centric contract management, your organization needs to adopt a data-driven culture.
Comparing the Two Contract Data Management Approaches
The two contract data management models function completely differently and enable different levels of functionality.
Document-centric contract management operates on a single static plane. Its sole purpose is to manage documents, not to manage or analyze data. While you can tag specific elements within each document or its metadata, searching is limited solely to those tags. True capability is limited.
Data-centric contract management has a dynamic structure, typically developed from the ground up. It results in multiple planes of relationships that let you slice and dice the information contained in an almost limitless number of ways. You are not constrained to searching or sorting by a few predetermined tags – instead, you can search and analyze your content however you want.
Why Data-Centric Contract Management is the Right Choice for Your Organization
Advanced contract lifecycle management (CLM) platforms, such as those offered by Contract Logix, utilize a data-centric data model. It’s the difference between working with a simple single-page spreadsheet vs. a robust relational database. Yes, the document-centric approach may sound easier and more familiar, but at the end of the day, you can do a whole lot more with a sophisticated data-centric approach.
By centralizing and properly structuring all of your contract data, all the information contained in your contracts is now available whenever and however you want. You can search for and extract specific information, sort and filter it however you want, create reports, analyze it, and more. You can view the data you want by any relationship – contract type, vendor, customer, department, value, expiration date, you name it. You have total access to and control over any data included in any contract in your archive.
When you adopt a data-centric model for your contract management, you will realize the following benefits:
- Advanced search capability
- Sophisticated reporting
- Real-time information via interactive dashboards
- Automatic alerts for key contract dates and deliverables
- Ability to track and reconcile contract line items
- Secure access limited to authorized parties only
- Benchmark and track contract-related KPIs
Let Contract Logix Help You Harness the Power of Your Contract Data
At Contract Logix, we believe that the data-centric model is the right choice for every organization. Our CLM platform employs a data-centric approach that helps you gain the most insight from your contract management process. Our data-first approach helps you harness and leverage your contract data in an accurate, automated, and highly effective manner. Talk with one of our CLM experts to see how easy it is to employ data-driven contract management in your organization.
Contact Contract Logix today to learn more about data-centric contract lifecycle management.