Assessing Your Company’s Need for Contract Lifecycle Management

Understanding Contract Lifecycle Management

Contract management software, often referred to as Contract Lifecycle Management (CLM), is designed to handle the entire lifecycle of contracts. Before deciding if a CLM solution is suitable for your business, it’s essential to grasp what CLM software does and the benefits it offers.

Contracts in any organization go through multiple stages and touchpoints, from creation and review to negotiation and approval. Traditional methods involve significant administrative tasks and complex workflows that create bottlenecks, limiting your capacity for growth and straining key buyer/vendor relationships. A CLM solution enhances productivity, reduces risk, and drives revenue at every step of the contract management process through:

• Centralized, searchable repositories: This ensures all contracts are stored in one place, making retrieval and management easier.
• Flexible, configurable workflows: Tailored workflows streamline processes and eliminate unnecessary steps.
• Templated document generation: Standardized templates reduce errors and ensure consistency.
• Workflow automation: Automating repetitive tasks frees up time for more strategic activities.
• Clause libraries: Pre-approved clauses speed up contract creation and ensure compliance.
• Digital audit trails and comprehensive visibility: Enhanced tracking and transparency reduce risk and improve accountability.
• Increased security: Protect sensitive information with advanced security features.

Organizations that enhance their existing procedures with an integrated CLM solution typically see a substantial ROI, driven by reduced risk exposure, a decrease in human errors, and significantly shortened contract completion times.

Assessing the Need for Enterprise Contract Management Software

While many associate contract management with administrative efficiency, it also directly impacts profitability. Managing contracts manually can be resource-intensive, with inefficient processes not only wasting resources but also exposing your organization to unnecessary risks. 

Here are five critical questions to help gauge whether contract management software is right for your business:

1. How complex is your current contract management process?

Contracts typically pass through various departments such as sales, legal, and finance, involving multiple stakeholders. Even straightforward documents like NDAs can require multiple revisions and approvals. The more complex your document management process, the greater the benefits from enterprise contract management software that can orchestrate intelligent workflows and automate manual tasks. As your organization grows, a scalable contract management solution ensures seamless expansion and efficiency.

2. What metrics are you using to evaluate your current procedures?

Before assessing your organization’s contract management needs, it’s essential to identify pain points in your current process. Key metrics to consider include:

• Cycle time of an average contract: The duration from contract initiation to completion.
• Number of stakeholders involved: More participants increase the risk of human error and delays.
• Negotiation time: Lengthy negotiations can stall business processes.
• Contract retrieval time: Difficulty in locating contracts and information related to contracts can waste valuable time.
• Compliance and security evaluations: Ensuring contract language meets regulatory standards.

3. What level of compliance does your organization need?

Industries with stringent regulations, such as healthcare and finance, require meticulous document management to ensure compliance. CLM software simplifies compliance by maintaining up-to-date contract language and ensuring adherence to regulatory standards. As regulations evolve, so does the need for efficient contract management. 

4. Do you have an intelligent, searchable contract repository?

Finding and analyzing existing documents is a common challenge. As organizational complexity increases, locating contracts becomes more difficult and time-consuming. Many businesses still rely on paper files and unsearchable PDFs, which do not offer the quick access or search functionality needed in our ever-increasingly digital environment.

An intelligent, searchable contract repository drastically reduces the time spent locating documents, enhancing overall efficiency. DocuSign’s AI-integrated CLM solutions provide searchable repositories, clause libraries, and automated risk assessment tools, allowing organizations to find the right document in seconds.

5. How do you manage contract tracking and visibility?

Relying on email to route contracts creates significant visibility issues. Once a contract leaves your hands, it becomes invisible, complicating status updates and document tracking. An automated CLM solution provides a 360-degree view of the contract lifecycle, enabling open communication and accountability across departments. This visibility speeds up contract completion times, identifies workflow complications, and manages client expectations more effectively.

Preparing for CLM

Comprehensive preparation for CLM implementations balances new tool adoption with ongoing contract management iteration. Implementing a CLM system often requires key project resources to juggle their project deliverables while continuing their regular contract management duties. Effective change management, user training, and driving user adoption are all critical components of a well-thought-out Contract Readiness strategy, which is essential for long-term success. 

Conclusion

Assessing whether your organization is ready for a Contract Lifecycle Management (CLM) solution involves evaluating several critical factors. The complexity of your current contract management process is a key determinant; the more intricate your workflows, the more you stand to gain from a CLM system that automates and streamlines tasks. Metrics such as contract cycle time, stakeholder involvement, negotiation duration, and retrieval efficiency provide insights into your existing inefficiencies and areas for improvement.

Compliance requirements also play a significant role. Industries with stringent regulations benefit immensely from CLM software that ensures adherence to evolving standards and reduces compliance risks. Additionally, having an intelligent, searchable contract repository significantly enhances document retrieval and management, addressing one of the most common challenges faced by businesses today.

Finally, effective contract tracking and visibility are crucial for maintaining accountability and transparency throughout the contract lifecycle. A CLM solution provides a comprehensive view, facilitating better communication and faster contract completion.

By addressing these factors, your organization can determine its readiness for a CLM system, ultimately leading to improved efficiency, reduced risks, and enhanced profitability. Marshfield Consulting stands ready to assist in this implementation, guiding your business towards more effective and intelligent contract management practices.

We would welcome the opportunity to discuss your company’s readiness for CLM. Contact us today.