For businesses working with more than a small handful of simple agreements, a dedicated contract system is an essential tool.
From drafting tools like templates and clause libraries to execution assistance like eSignatures and workflow automation, contract systems are designed to span the entire contract lifecycle, providing critical functionality that you’ll use to drive more efficient processes.
Of course, like most essential software tools, the contract software industry is crowded, and there are more than a few great options to choose from.
In this article, we’ll help you choose the right one for your needs by covering the following:
- What is the meaning of “contract system”?
- What are the key features of a modern, effective contract management system?
- What are some of the benefits of implementing a contract management system?
- How to choose the right contract system for your organization
- Top 6 contract systems
What is the meaning of “contract system”?
What is a contract system, anyway?
A contract system is a specialized software solution designed to manage all aspects of the contract lifecycle.
It acts as a central repository for contract storage, a drafting and template tool for authoring contracts, and an eSignature and redlining solution. In many cases, it also offers reporting and analytics to help you make improvements to legal ops processes.
In some organizations, a contract system may be conceptualized as a suite of integrated and connected tools.
For example, you might use one tool for capturing eSignatures and another for reporting duties, with all platforms tied together by way of digital integrations.
In the majority of cases, however, a contract system is a cohesive and singular platform. Most companies prefer the simplicity, ease of use, and cost-effectiveness of a unified contract lifecycle management solution.
What are the key features of a modern, effective contract management system?
Before you start looking into what kind of tools are available to support your contract management strategy, it's a good idea to become familiar with the most important features these solutions offer so you can prioritize effectively.
A contract repository is a central location where contracts are stored.
A good contract system not only stores contracts securely but makes it easy to search that database using keywords, filters, and sorting, so you can quickly find the document you need, when you need it.
Workflow automation is a must-have feature. It allows you to create custom automated processes to eliminate tedious, repetitive, manual work. For example, you might automate an approval workflow so that newly drafted contracts are routed directly to the relevant stakeholder for approval.
Even if you decide to implement a full-stack contract system with functionality to support the entire lifecycle, you’re going to have other software tools already in use that you’ll want to connect to your CLM. For instance, by connecting your sales CRM tool, your reps will be able to automatically pull over key customer data when drafting contracts.
Look for a contract system that integrates with the various tools you’re already using.
All contracts need to be signed in order to be considered effective, and today this primarily takes place digitally. A contract system with built-in eSignatures eliminates the need to purchase and integrate a third-party tool and provides a portal for parties to view, approve, and sign agreements.
Redlining is a process that takes place once the first draft of a contract is sent over to the signatories. It provides them with an opportunity to call out clauses or phrasing they’d like edited or removed.
By choosing a contract system with native redlining functionality, you’ll make this process faster and prevent the need for customers to print out and physically annotate documents.
A contract system that allows you to create and save templates is a no-brainer.
Many of the contracts you use share a lot of common language (sales agreements and employment contracts are two classic examples). It only makes sense that starting from a template—with language that is pre-approved by legal—makes for a faster contract authoring process.
“First, I worked on setting up contract templates and contracting guidelines that every lawyer in the team dealing with contracts must use and follow. Doing so, we were able to bring in a lot of order to the system.”
~ Bhavna Singh, GC & DPO, Subex Limited
Elevating Legal: Fostering Transparency and Accountability in Large Tech Enterprises
AI can play a number of roles in the contract management process, from initial drafting right through to contract analysis.
An AI-powered contract system helps you work faster, reduce human errors, and enhance compliance.
Reporting and insights
Many contract systems provide some form of reporting suite. The more advanced tools include AI-powered analytics, custom reporting dashboards, and strong data visualization.
Look for a tool with deep reporting capabilities. This will help you better understand performance and spot opportunities for process improvements.
Strong security protocols
Lastly, when selecting the right contract system for your organization, be sure to vet the company’s security protocols. Ask about how they maintain compliance with legislations and standards like GDPR (General Data Protection Regulation) and ISO 27001.
What are some of the benefits of implementing a contract management system?
More efficient legal ops processes
All of the features listed above, from automated workflows to deep reporting and analytics, help legal ops teams work faster and more effectively, improving ROI on legal spending.
Improved compliance and security
Automated workflows and templates reduce human error and drive compliance rates upward, while security protocols like IP data embedded in contract documents improve legal enforceability and protect internal data.
Greater insights and analytics
The best contract systems allow teams to dive deep into the performance of their current processes, uncovering some key insights:
- Number of active contacts
- Contract renewal rates
- Average contract cycle length
Faster sales cycles
When sales reps have access to pre-approved clause libraries, contract templates, and faster approval timeframes driven by automated workflows, they can get client agreements signed off faster, reducing overall sales cycle times.
Improved team collaboration
Contract management systems facilitate improved team collaboration through functionality like tagging and task assignments, allowing employees from across departments to communicate more effectively.
“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth. We have a whole intranet with resources and a legal services request form with 10 different questions so we get all the information upfront and don't have to go back to ask follow-up questions.”
~ Jonathan Franz, Head of Legal, Crunchbase
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Of course, more efficient processes, fewer human errors, and great collaboration ability all lead to a lower total legal expense and a greater ROI on legal spending.
How to choose the right contract system for your organization
Choosing the right contract system is a significant investment—it’s not one that should be made hastily.
“I suggest GCs involve stakeholders early and make a solid business case to implement a CLM tool in the system. Once you get the approval from the management, take some time to find the right CLM tool for your company.”
~ Igor Poroger, Director of Legal, EMEA, Vectra AI
How CLMs Empower Legal Teams in B2B SaaS Companies
As you narrow down your shortlist of potential solutions, ask and answer these questions:
- What are my non-negotiable features, and does this solution offer them?
- Does this system integrate with my existing software tools?
- What kind of customer support does the service provider offer?
- Does the total cost of the solution, including implementation and support, fit within our budget?
- Is there support for eSignatures?
- What kind of automation and AI functionality does the solution offer?
Top 6 contract systems
PandaDoc is a document management platform designed primarily around contract creation and storage. The platform also has support for other document types, such as invoices, proposals, and quotations.
PandaDoc has a number of helpful contract management features built-in:
- Contract workflow automation
- Native eSignatures
- Payments integrations
DocuSign is primarily an electronic signature platform with APIs for plugging the solution into other contracting tools. However, they also offer a contract lifecycle management platform with more robust features:
- Native integrations with CRM tools like Salesforce
- Pre-approved clause library
- Advanced search tools
- Reporting and analytics suites
- Contract workflow automation
LinkSquares is a contract management system with a heavy emphasis on the use of artificial intelligence to speed up workflows and improve legal ops processes.
Examples of AI-powered features include:
- Automatic contract review with AI-powered insights
- Smart digitization of physical documents
- Deep search functionality
GetAccept is a contracting system with a focus specifically on helping sales teams close deals with their customers. As such, they integrate with a range of CRMs such as Salesforce, Pipedrive, and HubSpot. Their document creation and management solutions go beyond contracts, too, providing support for proposals, sales content management, and CPQ (configure, price, quote).
One unique feature is the ability to add short videos to documents. Sales reps can use this, for example, to add context to specific clauses or walk through how to use eSignatures in GetAccept.
Ironclad, like DocuSign, offers two tools.
Their first, IronClad Clickwrap, facilitates easy one-click contracts for things like app user agreements. Their more robust tool is a contract lifecycle management platform—a better choice for a dedicated contract system.
Ironclad’s CLM includes several handy features:
- Automated workflows
- AI-powered contract review
- Negotiation and collaboration features
- A knowledge management repository
- Customizable reporting dashboards
SpotDraft (yours truly) is the contract management platform for teams of all sizes and budgets.
With powerful automation, a searchable contract repository, and insightful reporting and analytics, SpotDraft will help you streamline workflows and maximize efficiency.
But it's not all about working faster. Our CLM is fully compliant with GDPR and other data security requirements and incorporates components such as FIPS-140-certified encryption solutions to protect customer data.
Here are some of SpotDraft’s most impressive and useful features:
- Customizable contract templates
- Native eSignature capabilities (with support for Aadhaar eSign)
- Automatic signing of standard language contracts
- Microsoft Word editor
- Single-click contract acceptance
Learn more about how you, too, can leverage SpotDraft's end-to-end contract management platform to streamline your contract tracking, negotiation, and creation processes.
Your contract system is your most important investment
The contract system is the centerpiece of legal operations.
It's your document repository, reporting suite, and eSignature platform, among many other things. As such, it's likely the most important software investment you’ll make.
The last thing you want to do is fork out for a solution that doesn’t fit your needs. Avoid that mistake with our free guide: How to Buy a Contract Lifecycle Management (CLM) Platform that Actually Works for you.