Effective and proactive contract lifecycle management is achieved through the use of contract management software. CLM software can lead to significant improvements in cost savings and efficiency. Understanding and automating CLM can also limit an organization’s exposure to risk by reducing missed obligations and increasing compliance with legal requirements.
Critical Steps in the Contract Lifecycle Management (CLM) Process
While each of these steps is vital in the contract management process, some steps have traditionally gotten more attention than others. For example, for years, software devoted to managing contract templates in an organization has been available.
More recently, with the rise of tools like artificial intelligence and machine learning, post-execution contract management has gained more attention as a way to accelerate, protect and optimize businesses.
Let’s look more closely at each step of the contract management process and how contract management software can improve the process.
Simplifying an organization’s template library can greatly improve contract risk management and accelerate contract turnaround with template selection rules and the Icertis contract management platform’s comprehensive template lifecycle management capabilities. The smart template authoring contract management process allows designated business users to pull library clauses into the contract document, enter custom text, tag metadata in the document, and tag other data such as exhibits and annexures. Rules ensure that any new templates go through an approval process before becoming available for creation.
Extensive rules engines offered by CLM software enable the dynamic creation of contracts from templates and clauses. Contract content is assembled automatically using any criteria associated with the contract, such as region, products, services, or price terms. Rules-based contract authoring capabilities significantly improve the scalability and agility of contracting operations while also enforcing appropriate process controls.
Advanced contract lifecycle management software even enables no-touch contract creation within line-of-business systems like CRM, sourcing, and procurement—taking input and auto-build contracts based on defined business rules. Bulk data upload and contract creation are even possible with best-of-breed solutions. By empowering business users to create contracts in self-service mode, organizations can achieve faster time to revenue, improve cycle times and significantly reduce legal operating expenses during the contracting process.
Contracts should help a company achieve its commercial objectives, not hinder them. Through intelligent, automated contract review, companies can achieve the full potential of negotiated contracts through better enforcement of commercial terms. The contract lifecycle management process captures commercial terms of products and services, prices, discounts, rebates, and incentives in a structured form, integrates that data with enterprise systems, and helps enforce terms. Workflows ensure a review process to assess compliance before posting to financial systems for settlement.
Effective contract approval begins with leveraging all the data associated with a contract using rule-based workflow definitions. Best-of-breed CLM platforms automatically assemble workflows and orchestrate the approval process, with support for sequential and parallel approvals. Workflows are changed dynamically based on negotiation updates to ensure governance. Business users can easily manage the intuitive rules, definitions, and updates, and they can also intervene manually to influence a workflow with ad hoc steps.
Contract execution has become highly digitized and mobile. Recently, an NFL quarterback executed a $10 million contract from his phone while sitting in a fast-food parking lot! CLM solutions should feature out-of-box integrations with electronic signature platforms like Adobe Sign. These secure integrations help orchestrate the signature process based on user-defined workflows while seamlessly updating the contract document and data back to the central repository after execution. Manual-signature workflows should also be supported, using QR codes to validate incoming signed documents.
As noted above, post-execution contract administration has long been beyond the purview of digital solutions. This is because the contract language is difficult for computers to parse, leaving it to human managers to carry out contract actions.
However, this is no longer the case. Today contract lifecycle management software users can gain valuable performance insights on all areas of contracts from legal, finance, sales, and procurement. Contract lifecycle management software includes a full-featured analytics module that enables insights into data such as cycle times, deviations, savings, risks, expiry, contract renewal statistics, and procurement and sales metrics on contract revenue and spending.
Contract managers can also achieve better compliance for contract commitments by identifying, capturing, assigning, and tracking the completion of tasks assigned to business owners—even with commitments involving third-party paper and complex commitments, such as those with multiple owners or across regions or business units. Users can easily create commitments in the web interface or Microsoft Word, and commitments can also be auto-created and assigned to owners using rules.
Lastly, users can identify and manage risk post-execution. A configurable risk model helps track risks across different categories, such as financial, contractual, performance, and third parties. Users can look up and leverage internal data, as well as external data, from sources such as D&B and Thomson Reuters to determine risk scores, ensure proactive risk monitoring, and increase visibility for stakeholders.
Contract lifecycle management software provides proactive alerts and notifications for significant milestones, including contract expiry or contract renewal. A configurable dashboard provides insights into what the business impact of expiry or renewal will be, so contract owners are not caught off guard.
The Benefits of CLM Solutions Are Clear
The right CLM solution connects the contract process to order fulfillment and billing, eliminating errors, reducing risk, and ensuring that revenue can be forecasted more accurately. Empowered with information, you can treat contracts like what they are: Assets, providing deep insights and competitive advantages all along the contract supply chain.
About Icertis Contract Intelligence
The Icertis Contract Intelligence (ICI) platform is the leading contract management solution in the cloud. ICI’s easy-to-use, intelligent, enterprise-wide contract management software transforms the foundation of commerce by turning contracts into valuable corporate assets.
Icertis’ “outstanding” platform was given the highest score of all current offerings by Forrester in its 2021 Wave report. Spend Matters cited Icertis as “the undisputed leader” in contract management. Global 100 clients, including Airbus, Daimler, Johnson & Johnson, and Microsoft have all chosen Icertis as their contract management solutions. To learn more about what is contract lifecycle management, please schedule a contract management software demo today.