Are You Keeping Pace with the Evolution of Contract Management?
Much like the businesses they support, contracts and contract management continue to evolve and become more sophisticated. (For example, we have—for the most part—stopped signing contracts in blood.)
The maturation of your contract management process is critical if you want to maintain compliance and manage risk. So, if you’re wondering whether your contract management process is keeping pace, read on to see where your process fits in the evolution of contract management.
Phase 1: Manually managing at a steady crawl
When you’re first starting out, you might manage your contracts in spreadsheets or create contracts from Microsoft Word templates. (This is not because Microsoft offers the most up-to-date documents, but simply because the templates are already available.)
Though oversights and errors come with this manual approach to contract management, there are a few benefits of managing things manually in the beginning:
- No training is required: Your team can use familiar tools they already have access to
- Manual processes support manageable growth: Manual is an easy way to manage a small amount of contracts
- No investment needed: If you’re using tools you have, you don’t need to secure budget or buy-in
Despite the benefits of familiar processes, there are a number of risks involved when a manual system is in place:
- Deficient security: Data can easily get lost, or become corrupted, misused or even stolen
- Lacking search functionality: It can be tough to locate the exact documents needed
Phase 2: Keeping up with the homegrown hero
As you grow, manual processes no longer cut it. At this point, you might decide to add in a document management tool like Microsoft SharePoint and hack together your own system.
Even though your fragmented system still breaks down at times, you enjoy the upgrade benefits because:
- Low investment: Allocating a large budget to improve processes is unnecessary
- Increased contract complexity: A formalized system, however fragmented, enables you to work with an increased amount of contract types with a marginally increased level of complexity
As this homegrown system is stretched to keep pace with company growth, its limitations are exposed, revealing:
- Additional costs: You may have to return to the vendor and pay for necessary additional features and functionality
- Gaps in security and dependability: Security remains an issue and access to documents is dependent upon service availability
Phase 3: Sprinting beyond with an automated system
Ultimately, the name of the contract management game is scalability. If a system is incapable of keeping up with company growth then it isn’t a viable solution. This is where the power of enterprise CLM is unbeatable.
Companies using advanced contract management systems make the investment because they know the importance of scalability. Additionally, they identify the following features as major benefits:
- Obligations management: Losing even a single contract is not acceptable and alerts ensure this doesn’t happen
- Reporting and analytics: Visibility into contract performance enables strategic decision making
Enterprise CLM is an investment and as with any big investment there are risks. To minimize the risk, thoroughly vet:
- Vendor capabilities: Your solution must be able to handle any and all levels of complexity or the company stumbles
- Solution selection: Make sure you choose a solution that meets a variety of cross-functional needs
- Plan for implementation: There are plenty of resources to help you avoid common pitfalls in your phased approach to CLM
Want more on Contract Management Software? Browse additional articles and reviews on best contract creation tools and contract management software with Business-Software.com’s CLM resource page. Also check out the free Top 10 Contract Management report which compares pricing, features and more to select the best CLM solution for your business.