How to Choose Contract Lifecycle Management (CLM) Software
Choosing a contract lifecycle management (CLM) system for your company is an opportunity that only comes along a few times in your career. For most contract management professionals, you quickly learn to make do with what you inherit in the company. If the company is serious about improving its contract management processes and embracing digital transformation, then the next logical question is how to choose a CLM software solution or platform.
Replacing manual processes, PDF scans, shared drives, spreadsheets, and paper documents with automated workflows, digital repositories, and other modern CLM capabilities should be an exciting prospect. Even if the company already has some form of a system in place, when you have the opportunity and buy-in to make a change with massive ROI potential, then you’ll have to investigate your options in detail.
If this is you, then we’ve consolidated some of the features and capabilities you should be looking for in your CLM solution. Let’s look at what exactly CLM is and cover the features you’ll want to look for before making a decision.
What is Contract Lifecycle Management Software?
CLM broadly refers to all of the phases associated with the life of a contract. This includes contract request and intake, creation and drafting, collaboration and negotiation, approval, signatures and execution, obligation and commitment tracking, reporting, and auditing, and finally amendments, addendums, and terminations. Some contract lifecycle management models in enterprises cover every supplier, service level agreement, customer, and employee in the company. A proper CLM solution works by automating many of the administrative overheads faced by contract managers every day.
The formal processes that guide a company’s buy-side and sell-side contracts make up the CLM model. Although every company may have a different approach, the discipline involved in managing these agreements remains essential. With a modern CLM tool, you can reduce the burden on your legal, procurement, and sales departments while improving collaboration and gaining valuable insights from your wealth of contract-related data.
How to Choose CLM Software for Your Company
Many CLM systems provide a wealth of beneficial capabilities when compared to traditional or manual contract management methods. You can set up automated alerts and reminders for obligations, build workflows to follow your business processes, generate reports, assemble agreements with clause libraries, and execute contracts, just to name a few key features. Regardless, you’ll want to identify your specific business challenges, use cases, and then evaluate and score platforms based on your ideal requirements.
Additionally, you’ll want to maximize your ROI on your new platform while also limiting disruption in the organization. It should also increase your efficiency without requiring a steep learning curve. The quicker you can switch to the new system, the better for its adoption in your organization. With the right solution and implementation, you can increase revenues, eliminate gaps in your processes, mitigate risks, and streamline all contract management tasks across the enterprise.
Here are four top considerations for your CLM solution.
1. Look for a Data-Centric, Not Document-Centric Centralized Repository for All Contracts and Documents
The first step is to consider the storage, accessibility, and organization of your contracts and related documents. A data-centric digital repository that is searchable, secure, and controlled will enable a faster transition to a truly digital contract management model. It will also give you the flexibility to search, report on, and organize contracts according to your specific needs.
Make sure you select a system that can be easily configured for your company’s existing taxonomy, making it easier for staff to shift to the new environment. CLM solutions that are “no-code” are ideal for this because you easily drag and drop fields, rename items, create new contract types, etc. with the click of your mouse. You also want the ability to limit access according to specific roles and credentials using role-based and feature-based security options.
2. Make Sure Your Existing CLM Processes Can be Automated and Integrated
Enterprise Legal, Sales, and Procurement departments have spent decades refining their processes. One of the realities of the new world is that Software as a Service (SaaS) enables you to rebuild almost any process using cloud technologies that integrate with other Line-of-Business (LOB) applications.
By mapping out your existing processes, you can identify what features will maximize your efficiencies and establish the right level of control at different gates. For this, you’ll want to ensure the CLM system supports easily configurable and automated workflows that follow your business processes. This will ensure consistency and compliance and build an extensive audit trail for every contract.
3. Compare CLM Value-Added Features against Future Plans
Although the previous two elements can help streamline and automate your processes, your contract management system should probably be able to do more for you. Look for features that:
- Support self-service contract requests and intake processes with stage and status tracking for all contracts and documents
- Enable the use of pre-approved language with support for clause and template libraries
- Automatically alert you about deadlines and key dates
- Give you automation capabilities using the aggregated data from historic contracts
- Leverage graphical dashboards and reports to help you visualize and track your contract data
Another important consideration is that your solution has a simple-to-implement REST API with bi-directional interfaces to other business systems such as ERP, CRM, BI, etc. This will give you greater oversight into the organization’s operations. With the ability to connect your contract lifecycle management solution to your other IT systems, CLM can become the single source of truth for your company’s strategy and planning.
4. Pay Close Attention to Collaboration and Negotiation Capabilities
Along with integration (to other business applications), the CLM you select should give your team the ability to collaborate from anywhere. For office employees, remote workers, or traveling resources, having access to tools that provide real-time communication and negotiations is a huge benefit of adopting the right enterprise CLM platform.
With some of today’s advanced CLM platforms, you can consolidate all your tasks and staff to efficiently redline, edit, comment, and review documents together to streamline the negotiation process. A detailed audit trail ensures you track every document’s evolution and have the necessary context when you need to investigate the history of any contract.
A Final Consideration – Compliance, Security, and Metrics
Finally, with all of the features above, there may still be a major concern you’ll need to address. Improved information security, especially in the legal and contract profession, should be a priority for every organization and department. Make sure you include a security assessment in your evaluation and identify any potential risks early.
Solutions should come with SOC 2 Type II compliance, HIPAA/FISMA compliance as necessary, data encryption, role-based access, integration to your Active Directory, and two-factor authentication (2FA) at a minimum. Restricting editing rights and using workflows to route approvals to the right resources can also help protect your data.
Establishing complete version control and allowing everyone to work together on the right document with advanced collaboration features can reduce the effort required for demonstrable compliance. Custom reporting, optical character recognition (OCR) for PDF scans, and document cross-referencing (or inter-relationships) are also important features to have.
Complete CLM Software with Contract Logix
A digital transformation initiative starts and fails with its platform’s capabilities. If you are looking for a superior CLM solution that gives you everything you need, scales easily, allows complete configuration, and enables central control, you should try out Contract Logix’s CLM software.
Every step in the contract management model fits perfectly into our CLM solution, while you can also extend your capabilities to cover other business-critical processes. Wherever the company is making or spending money, the contract department remains the central hub for business information and company or project health.
Contract Logix can support virtually any contracting model imaginable and integrate with your financial, HR, ERP, CRM, and wider IT environment, including other LOB applications. Whether you need a simple, effective CLM solution or want to connect your real-time company performance into your commercial processes, Contract Logix is the enterprise contract software and SaaS CLM platform you need.
Now that you know how to choose your CLM software, you can schedule a demo with Contract Logix today to see how our technology stacks up.