Contract lifecycle management (CLM) software plays a vital role in an organization's productivity. Efficient contract management can improve profitability by generating the equivalent of 9% of annual turnover, according to a recent study by the International Association for Contract & Commercial Management (IACCM), an independent international association for commercial and contractual management.
Contract life cycle management (CLM) systems can simplify and automate contract creation, negotiation, execution and storage. They are an intelligent alternative to the tedious hand tools formerly used for these tasks, which lacked visibility as to potential blockages and unnecessary repetitive steps.
That said, it is important to understand its functionality so that you can choose a solution that is suitable for your organization.
Today there is a new CLM technology, with easier and more economical solutions to integrate within an organization. To avoid the pitfalls and benefit from the advantages of a modern CLM solution, it is important to look for certain functionalities adapted to the needs and the size of your organization.
Here's what to look for in a CLM contract lifecycle management solution:
A flexible and configurable workflow
By standardizing the creation and review of contracts into configurable and flexible workflows, an organization can reduce errors and the time spent on manual processes. For example, some solutions offer drag-and-drop tools that help non-technical users to design and automate even the most complex contractual processes between multiple contributors, reviewers and approvers.
An organization can also reduce confusion and human error by choosing a contract management system that offers the possibility of using pre-approved contract templates. Administrators can easily create, configure and adapt these models for everyday documents, such as confidentiality agreements or specifications.
In addition, a truly flexible and comprehensive contractual workflow must include some sort of library of legal clauses containing pre-approved legal language. During the negotiation, CLM users such as salespeople can find and insert alternative clauses for common negotiation points (for example, a less favourable, but still acceptable, compensation clause). In these fairly frequent situations, instead of calling on the legal team, salespeople or their managers can use the clause library to save everyone time while ensuring compliance.
A central repository of contracts with search functionality
Contract life cycle management systems aim to create a central repository that facilitates the search for a specific contract. So look for a CLM solution that goes beyond the simple storage/search combination to include organization and search by metadata, such as tags, date of signing and generation, type of contract and other key attributes. This simple additional functionality can make the search for a contract faster and more precise.
Easy integration into existing systems
The ability to integrate with the rest of an organization's existing applications and services can determine the real value of a contract lifecycle management system. The contractual process is often only one step in a larger operational process. A typical business process, for example, involves customer relationship management (CRM), quote configuration tools (CPQ), and electronic signature tools. With integrated contract management software, a salesperson can use customer information from a CRM system and retrieve product and price data in a CPQ system to create a contract quickly and accurately.
An integrated contract management system can also create enterprise-wide connectivity. For example, when a CLM solution is integrated into an organization's CRM system, legal teams can review contracts via the CLM system, without needing to access CRM. The same goes for the sales teams, who formerly had to send signed contracts by email to other departments for review and processing. When CLM and CRM solutions are integrated, signatures, contract data and approvals are automatically routed to other systems and the people whose action is needed.
The Right Applications to Meet Your Organization's Contract Management Needs
To choose the right contract management system, an organization must first examine its internal workflows. Look for the option that will best integrate with your business systems and best resolve ongoing issues. If your employees aren't particularly tech-savvy, choose less technical and more intuitive contract management software. If your organization has faced security issues during its evolution or if it is subject to regulations such as HIPAA or SOC 2, choose a contract management system that automates these processes to facilitate compliance.
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