- Use data to ensure contracts are being complied with as well as maximizing their financial performance
- Reduce risk by identifying missing clauses needed to comply with a variety of regulations — especially important if your company does business in multiple countries
- Standardize contracts with templates and clause libraries, while also automating much of the contract authoring, approval, and execution processes
- Use cloud computing and storage to ensure that all team members are on the same page for contracts, keeping them constantly updated, no matter what device they use
Who Needs Enterprise Contract Management Software?
While you may be interested in enterprise contract management software, you may also have some reservations about moving to an automated system from a manual one. After all, you don’t want to add any more expenses to your organization than you have to.
Those reservations are entirely well-founded. Yet, due to the ever-increasing challenges for businesses, from governance concerns and risk and compliance requirements to more procurement complexities, licensing models, and diverse sales, there is a higher demand for this type of software. We’ve put together a list of the three types of organizations that could benefit from this software by helping them spend their time and money more wisely:
1. Medium to Large Organizations
For medium to large organizations, the number of contracts that have to be handled each day can be staggering. A manual system cannot keep up with the amount of review required to go over each one, wasting valuable human resources and opening up your company to costly mistakes. With an automated system, you can process contracts quickly and effectively.
A manual system also falls short when a member of your team is trying to locate a specific contract or find information. For instance, you may be drafting a contract and want to make sure you use standardized phrasing and language that you’ve used for similar contracts in the past. Finding this information would take much more time with a manual system. An automated system can provide you with advanced search tools as well as a robust clause and template library of approved contract language so you can find any information with ease.
2. Organizations With Multiple Divisions
If you have multiple divisions or offices, you know it can be a headache to get everyone on the same page. Clear communication is crucial to maintaining a successful business. Without an enterprise contract management system in place, contracts get siloed by department or geography, making it impossible to properly coordinate and rationalize contracting across the organization.
With enterprise contract management software, organizations can connect all of their divisions and offices with a single system, making for more holistic management. The software will allow the organization to see where there are discrepancies or redundancies in the system. Additionally, it will make it easier for collaboration while a contract is being drafted, which keeps everyone on the same page. Having a single source of truth for contract data helps maximize profits and shore up any inconsistencies in the pricing or terms you offer customers.
3. Industries With Stringent Compliance Standards
Enterprise contract management is increasingly vital for companies that operate in stringent regulatory environments. Even innocent mistakes or oversights can get a company in serious legal trouble. A company that relies on a manual contract system is setting itself up for failure as just one misfiled contract can cause compliance issues.
With enterprise contract management software, companies can avoid a compliance crisis. With the software, they can set up guardrails within the system so that no contract violates internal controls, as well as model business rules so that contracts are reviewed by the right stakeholders before execution. Additionally, you will want to use a software system that employs security measures to protect your clients’ sensitive documents, especially if you are in the medical or legal sector.
Benefits of Enterprise Contract Lifecycle Management
If your organization fits into any of the above categories, you’ll be happy to know that contract management software can help solve the difficulties your company might be currently experiencing. There are several benefits to this type of software that turn it from a nice accessory to a must-have.
1. Contract Creation and Approval
Enterprise contract management software comes with smart contract initiation features that integrate with your business applications to make no-touch contracting possible.
With a self-service contracting feature, your system can help you improve cycle times, increase revenue and reduce legal operating expenses. It achieves these outcomes by allowing users to generate contracts in self-service mode. In the platform, administrators can include templates, business rules, and clauses to govern users’ contract creation. With this material in place, users can easily and safely create their contracts without having to rely on administrative oversight. By placing this information in the user’s hands, you accelerate the contract creation process significantly.
On top of putting control into a user’s hands, it also can automatically initiate contract creation by connecting buy-side and sell-side processes to auto-build contracts. With defined business rules, the system can automate much of the contract creation process.
As you will often need to create contracts in bulk, enterprise contract management software has you covered. With the platform, contracting teams can mass upload contracts through an API or advanced Microsoft Excel Add-In. This utility is optimal for contracts that include offline transactions needing intake. For instance, a sourcing team could upload pricing sheets from possible vendors to reduce the time required to create sourcing contracts while also accurately reflecting prices offered during the RFx stage.
Along with helping to create contracts, the software can help streamline the approval process. With automated workflows expediting the review procedure, your contract approval process will be much more efficient. For example, you can scan every contract at your company to extract data about how well your company is performing in regard to the contract approval process. From that information, you can determine who to contact to finalize a contract’s approval.
2. Procurement and Supply
Due to the complexity of procurement in any business, you want to be prepared to meet any commercial or regulatory risks head-on. For example, many companies have found that higher operating costs hurt procurement outcomes. A contract management system will assist your procurement operations by helping you control spending. By being able to collect data on every commercial relationship your company has, contract management software lets executives monitor cash flowing in and out of the business at any level of the supply chain.
With any procurement contract, you will not want to waste time with slow contract creation or approval. All of the benefits of contract authoring and approval mentioned previously apply here, significantly speeding up procurement.
Another popular feature of this type of system is supply chain tracking. With the system’s analytics, you can track a contract’s terms and conditions throughout its entire timeline. With that data, you can view any inefficiencies or areas of improvement in your supply chain, empowering you to make changes. A global view of your supply chain will help your contracts become more profitable and more beneficial to your company.
Any healthy supply chain needs tools that assist workflow and streamline purchasing without hurting quality. With a quality contract management system, you can achieve all of this through supplier validation automation, multilingual support for international supply chains, customizable variations in workflow and contract efficiency, and speed monitoring.
3. Maximizing Value
Enterprise contract management delivers value by accelerating, protecting, and optimizing the contract process.
With a contract management system, you can measure the success of your contracts with much more accuracy. As contracts move through their lifecycles, you’ll want to monitor them to make sure they perform to expectations. Management can use this analysis to make informed and timely decisions.
While reviewing your contracts, the system might help you see that a step in the contract workflow is consistently taking longer than it should. This knowledge could prompt you to investigate the issue and make adjustments that help accelerate the process.
The contract creation and approval features can significantly reduce the labor costs associated with processing and creating contracts, providing significant financial value to your business. As we explain in more detail in the next section, the software’s risk management features will also benefit your company by reducing the company’s exposure to financial and reputational risk.
Any delays to deals based on contract issues can cause you to lose business, hinder negotiations and increase your costs. With an automated system, you can ensure that your contracts are not the reason for the delay, as you will have easy-to-use contract authoring and editing at your disposal, as well as collaboration tools to bring in necessary stakeholders. All told enterprise contract management software can reduce the lead-to-contracting cycle time for your sales professionals by 60%. Your staff and potential customers will love the improved quality and reduced contract cycle time, leading to higher satisfaction and conversions.
A best-in-class contract management system will also help your technology professionals establish a cloud-based solution in weeks rather than months. The system’s secure cloud-based capabilities reduce support issues and lower the cost of training. Additionally, the cloud integrates into other enterprise systems including sourcing, ERP, procurement, and CRM. All of these features enable a much smoother and faster contract management process.
4. Mitigating Risk
Risk management is key to surviving in today’s business environment. Without an enterprise contract management system in place, companies open themselves up to a great deal of risk. An enterprise contract management system will help you standardize the process that contracts go through during their entire lifecycle to minimize risk. Instead of having to process the contract or pull from multiple applications manually, you place your contract in a single platform, making contract risk easy to measure and manage.
Contract software can provide you with alerts when a contract is set to expire, helping you avoid missing out on deadlines that could cost you money. For instance, you might need to provide a service by a specific date, but in a manual system, the deadline could be lost, causing you to miss out on revenue. Additionally, you don’t want a contract to expire unintentionally or renew automatically without your review. With the software alerting you, you’ll avoid renewing a contract that isn’t providing you value or letting a lucrative contract expire.
You can also improve your audit preparation with the software, saving you from any mistakes that could put your company in legal jeopardy or diverge from internal policy compliance. The centralized system should feature audit trails that allow you to view the history of the contract within seconds. With this sort of information readily available to you, you can track and document an accurate contract history. This documentation will help to establish a complete audit trail for internal compliance or governmental regulation.
Finding the Best Contract Management Software
Whatever contract management you choose, you’ll want to do your research to make sure that it meets the following criteria:
- Ease of use: Since you will be relying on this system to deliver you insights about your contracts quickly, you’ll want your team to be able to use it without any difficulties. A problematic system with a poor interface or convoluted processes will discourage employees from learning how to use it. Low adoption rates mean a company is not getting a return on its investment. Ensure that your employees can maximize the program’s value with an easy-to-use system.
- Collaborative: If a system doesn’t let you share contacts with colleagues or outside stakeholders, then you will not realize the full benefits of enterprise contract management software. As contracts often need to be changed and adjusted, you want everyone on the same page.
- Risk management: Any good contract software management system will help you to reduce the amount of risk associated with your contracts through intuitive modeling and intelligent alerts. Ensure the system you choose has the robust functionality needed to truly drive down contract risk.
- Configurability: Every business and user are different. You need software you can configure to fit your needs. If a potential platform can integrate into other systems, track contracts as they approach approval, manage a variety of risks, and give you insight into your contracts, you can be confident you are getting a flexible system.
- Security: To keep your company and the client’s best interests at heart, you’ll want to go with a system that will securely store contracts. Additionally, since so much work is done digitally, you’ll want a platform that can deliver contracts securely for clients to sign.
With all of the qualities listed above, the ICI platform can benefit your company and aid your employees. At any growing business that deals with contracts consistently, contract management software is no longer just a want, but a must-have.