The world of contract management is a wide and ever-growing one, with new discoveries and innovations happening (seemingly) daily as more and more companies adopt CLM solutions and as CLM providers to adapt to different needs and advancements in technology. At SaaSam, no single CLM implementation is ever the same – everything is tailored to our clients’ needs using Agiloft’s complex and infinitely customisable platform.
Before we talk about tailoring and tweaking individual aspects of a system to suit unique business needs, we want to pull back a little bit and introduce you to a broader understanding of CLM. In this two-part article we want to equip you with the answers to two key questions: “What is Contract Lifecycle Management?” and “Who can use Contract Lifecycle Management?”.
The more you understand about the software and what it can do, the better equipped you will be to ask and answer questions yourself about whether you need it, what it can do for your business, and what you would like Agiloft CLM to achieve for you.
If you would like to dip your toes into the CLM waters now (convinced, perhaps, by this preamble) then please do not hesitate to e-mail us at email@example.com and we will happily set up an MS Teams call with you to discuss your CLM needs!
What is Contract Lifecycle Management?
Contract Management Software Systems offer a unified platform for creating, editing, tracking, and renewing contracts across their entire lifecycle. A CMS brings many functions into one tool to provide myriad benefits like a centralized contract repository for information so your staff can find what they need easily; templates and other automations to cut down on manual repetitive tasks; and analytic reporting capabilities that help you analyse and optimize future contracts.
Most companies place a lot of emphasis on contracts in the formulation of an agreement, but have a tendency to forget them once they’ve been signed. However, the lifecycle of a contract goes far beyond its signing. The contract should serve as a compass throughout the agreement. It should be continuously consulted to ensure each party is living up to the expectations of the agreement.
But as a contract changes hands from one department to the next throughout the contract lifecycle, a lot of critical aspects of the contract process can get lost in translation. Mismanaged contracts can cost your business up to 9% in annual revenue.
Contract management systems help keep the contract accessible and relevant at all times, keeping the agreement on track every step of the way. This is a point that we find ourselves continuously emphasising: contract management is a long-term solution with long-term benefits. The technology that powers Agiloft – that can power your contracts – does not stay still; you benefit from update after update, improvement upon improvement to the efficiency and ability of your software to handle your needs over time. SaaSam we will be with you every step of the way, making sure that you are supported long after the initial go-live, and helping you navigate every new update and new opportunity so that you do not feel left behind in a constantly evolving environment.
But before we talk more about how to manage a contract’s lifecycle, let’s take a step back even further and talk a little bit about the lifecycle of contracts themselves.
The Contract Lifecycle
Contract management begins with the composition of a formal contract (the Pre-Award phase), continues through the signing of the contract (the Award phase), and lasts through the end date of the agreement (the Post-Award phase). It begins all over again with the Renewal phase.
The Pre-Award phase starts with your search for a vendor, partner, or potential employee. Their prices and capabilities will shape your project and significantly inform your contract. Once you understand your options, you’ll create the first draft of your contract.
When you start negotiating the terms of your contract with your vendor, you’ve entered the Award phase. During this phase, you’ll formulate the timelines, terms, pricing, deliverables, termination requirements and more. Finally, when all parties have agreed and signed the contract, the Award phase is complete.
The Post-Award phase starts when the contract is signed and lasts through the end date of the agreement. This is the time period in which the work is done. If the scope of the work changes and the contract needs to be modified, that all happens during the Post-Award phase.
Finally, the Renewal phase initiates a new term of the agreement. At this point, both parties of the agreement will renew their contract and keep the same conditions or negotiate new conditions. This step is vital to honing the contract for the benefit of all involved, yet, thanks to auto-renewals, many businesses let this phase pass by unnoticed.
Each part of the contract lifecycle is manual, tedious, and difficult to keep track of. A contract management solution can help streamline each leg of the process.
During the Pre-Award phase, a contract management solutions can cut the time it takes to draft your contract. By creating templates of contract clauses, you frequently use, like service level agreements and NDAs, you won’t have to write or check these sections manually. You can even automate many aspects of contract creation by linking certain clauses to certain workflows and objectives. It also streamlines collaboration across departments in your organization who give input on your contract.
During the Award phase, a contract management system simplifies versioning so all parties can access and make changes and comments to the same cloud-based document, rather than sending multiple files back and forth. This ensures everyone’s input is heard and helps arrive at an agreeable contract faster. With e signatures, contracts don’t have to be mailed to be finalized.
During the Post-Award phase, a contract management solution uses your contract as the backbone of your project management process. Your system can monitor the actionable milestones of your contract and notify the right people when approvals are needed or when a renewal date approaches. With system-wide alerts, you’ll stay a step ahead of key dates and obligations. By putting you in the best position to fulfill your end of the agreement, you’ll preserve your business’ reputation and keep your project on track toward success.
During the Renewal phase, contract management software will help you prepare to enter a refreshed agreement. Automated alerts and reminders keep you apprised of upcoming end dates. Version tracking and audit trails show you how the contract has changed from renewal to renewal. In-depth analytics around value and risk help you evaluate a renewal’s potential.
At their core, contracts serve as a formalized handshake between two parties, providing transparency, accountability, and room for the project to shift, if necessary.
Do I Need A CLM Solution?
Every business is unique, but many companies reach a breaking point where managing contracts through Word documents and PDFs or other rudimentary tools becomes detrimental to your business’s bottom line and stymies your work rate. Many companies start to feel the pressure when their contract management load reaches around 20 contracts per month.
Many companies hire a contract specialist or contract manager, whose sole job is to manage and maintain contracts. While hiring a contract specialist offloads much of the contract management burden, it doesn’t treat the root of the problem: contract lifecycle management processes are often manual, meticulous, and prone to human error. As your business grows, you’ll eventually need to hire an additional contract manager, and an additional one after that, until eventually you’ll need to hire someone to manage the contract managers. The more contracts you accumulate, the more information there will be to sift through, and the slower your contract practices will become to revise.
Success shouldn’t be cumbersome.
The best contract management software systems allow your business to scale without creating the need to hire more staff. These platforms are built with features specifically designed to bring clarity, convenience, and integrity to your contracts. Some businesses manage literally thousands of contracts with a small team using a contract management platform.
If you feel like you would like to explore what a CLM solution could look like for you, please contact us via e-mail at: firstname.lastname@example.org. Part 2 will deal with who in the business can (and should) be considering using a CLM solution to their contract problems, so look forwards to that next week!
Original article by Jeffrey Miesbauer (https://www.agiloft.com/blog/what-is-contract-management/), additional words by C. Redpath.