20,000 to 40,000—that’s the number of contracts the average Fortune 1000 enterprise manages at any given time! Managing contracts on a large scale comes with unique challenges, from compliance risks and contract value leakages to cross-functional misalignments and privacy concerns.
Inefficient contract management in companies, according to WCC, is responsible for up to 9% loss in revenue every year. This begs for a more efficient, tech-led approach to enterprise contract management.
In this guide, we will explore all you need to know about enterprise contract management, including tools and tips to stay on track with contract management at any scale.
What is enterprise contract management?
Enterprise contract management is an approach to high-volume contract management where an organization's legal agreements from various departments and regional branches are consolidated within a single repository and managed from a single source.
Who should use enterprise contract management software?
Enterprise contract management software is crucial for companies that fall within any of these categories:
#1 Organizations managing a high volume of contracts
The larger the business, the higher the volume of contracts it manages. If you work in a medium or large-sized organization, you’ll find that managing contracts at high volumes can be chaotic.
There’s a plethora of repetitive processes at each stage of the contract lifecycle, and manual processes will barely keep up with the amount of work required for managing contracts at scale. You risk getting burned out, missing crucial errors, and losing finances and reputation.
Using enterprise contract management software drastically reduces such risks by automating these repetitive processes and establishing guardrails that leave no room for errors.
#2 Organizations in multiple regions
Most large organizations are spread across multiple locations. There are sales, procurement, and talent departments nested within each regional branch. Each department drafts contracts for its business operations using its own formats and terminologies. Managing them as a general counsel can be daunting.
At this level of operations, contracts can easily get siloed between departments and locations, making it difficult to standardize processes across the organization.
Organizations use enterprise contract management tools to connect all their business units and regional branches to one system, enabling a more holistic management approach.
With an enterprise contract management system, you can get a bird's eye view of all the contracts coming into the organization, foster more effective collaboration, and create an efficient strategy for closing contracts faster and winning more deals.
#3 Companies operating under stringent regulations
If your organization functions within highly-regulated industries like health, insurance, and manufacturing, then you already know the risks associated with violating an industry standard.
Enterprises need to ensure that every aspect of the contract management is airtight and on point, with error margins as tiny as possible to avoid penalties and reputational risks. But this is hard to accomplish with manual processes, considering the sheer volume of contracts these enterprise-level businesses manage at any given time.
With an enterprise contract management system, enterprises can avoid contract compliance risks using inbuilt guardrails and standardized workflows. That way, the company stays completely safe while pushing for new milestones.
How does an enterprise contract management system work?
An enterprise contract management system starts by pulling contracts siloed within business units across an organization's regional branches into one central repository in an organized, searchable format. This allows in-house counsels to get a good overview of how contract processes are being handled across the organization with just a few clicks.
Afterward, it empowers users to manage contracts more productively by offering a plethora of features like approval automation, templates, eSignature, and analytics, among others.
Additionally, enterprise contract management systems enable effective collaboration by integrating with business tools already used by teams in the organization. That way, data is exchanged more swiftly, and negotiation processes take less time.
Benefits of an enterprise contract management system
Enterprise contract management benefits organizations in many ways. Here are a few reasons that make them a must-have for your company.
#1 Centralized, searchable repositories
Centralization of contract documents is one of the most essential features of enterprise contract management systems. These systems pull contract files from all business units and store them in searchable formats.
A study by IDC revealed that employees spend about 1.6 hours of their workday searching for information. With enterprise contract management systems, information retrieval will take only minutes, giving you time to achieve more with your day.
#2 Templatization of high-volume contracts
Enterprise contract management systems allow you to create templates for all kinds of contracts (NDAs, SOWs, etc.), so you don't have to start from scratch whenever a new deal comes around.
Templates provided by the best platforms come with legal guardrails and standard approval routing. So, not only are you creating contracts twice as fast, but you're also doing so without fear of risky errors.
#3 Automated approval workflows
With the manual approach, organizations have to chase stakeholders around with reminders for approvals throughout the contract lifecycle. This is time-consuming and inefficient.
However, with enterprise contract management solutions, you can work with stakeholders to set up instant contract approval based on specific triggers like contract value, contract type, location, etc. This completely automates approval workflows, taking contracts from initiation to execution two times faster.
#4 Robust audit trails
Enterprise contract management solutions offer 360-degree visibility into the entire contracting process. Thus, you can see who's responsible for specific changes, which files are accessed, and how collaboration is going in general. This helps you keep the entire process transparent while identifying bottlenecks and optimizing for efficiency.
SpotDraft generates audit trails so that you can tamper-proof your entire contract process with a detailed script of what changed, when and who changed any part of it.
#5 Insights and analytics
With manual contract management, there’s hardly any way to track data from historical contracts. This makes it hard to optimize and get more efficient with future contracting processes.
But this is pretty easy with enterprise contract management tools as they come with analytics features out of the box. So, you can dive into contract data, identify bottlenecks, and spot contracts that bring the highest revenue, among others.
#6 Improved security
Poor security is a major concern for organizations storing contract documents in physical cabinets and basic digital storage systems. In 2019, a study by Varonis revealed that only 5% of folders in organizations are adequately protected.
Enterprise contract management systems are designed to eliminate security risks by establishing authentication protocols that protect contracts from loss, unauthorized access, and tampering.
Some of the major security features in enterprise contract management systems include Single Sign On (SSO), audit logs, extensible permissions and backups.
What to look for in an enterprise contract management software
With so many enterprise contract management solutions available today, you can easily get overwhelmed by a sea of choices. Remember that all solutions are not created equal, so it is important that you select one that meets vital criteria relevant to your organization.
Here are some qualities to look out for:
#1 Ease of use
When it comes to contract automation, time to value is heavily dependent on how easy the solution is to learn and use. A steep learning curve means you’ll need to work harder than necessary before you begin to see results.
Ensure the tool has a good ease of use rating if you’re considering it.
You want a system that not only comes with good features but is also flexible enough to be customized to your organization's unique needs.
This is particularly important when dealing with high volumes of contracts in different categories. You need to ensure that the contract management solution allows you to create custom workflows for your various contracts without hassles.
#3 Customer support
Without adequate support, your experience with tech solutions will be unbearable. Things will not always go your way, so it is vital to ensure that you have a responsive support team to fall back on any time you need help.
#4 Automation features
A good enterprise contract management solution should come with a wide variety of features to cater to all your contracting needs. You need to ensure that the solution has all the functionalities you need for your entire contract management lifecycle.
This should include templates, automated workflows, eSignatures, analytics, etc.
#5 Integration with existing tools
Business units within your organization already use specific tools for their day-to-day operations.
You'll need a contract management tool that integrates seamlessly with these tools so they don't have to make the dreaded switch. The ability to integrate with these tools also makes the contract management solution a major confluence for data and a powerful collaboration system.
#6 Risk management
One of the main aims of a contract management solution is to help reduce contractual risks. Find out what measures each platform has in place to ensure that your contracts are compliant with industry and federal standards and that chances of risks are driven down to the bare minimum.
8 Best practices for implementing enterprise contract management
“As an in-house counsel, you have to be business-minded because you're part of the brain trust.”
—Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos
Transitioning your enterprise from the traditional contract management approach to an automated, tech-led system can be challenging. According to a panel by Legalweek, up to 60% of contract management implementations fail.
This is usually due to poor planning, misalignment, and wrong prioritization.
Thankfully, by following the best practices discussed below, you will be up and running in a short time.
#1 Get executive buy-in
Getting top-level support before adopting an enterprise contract management solution is important.
This entails communicating the importance of the adoption, the budget, expectations, and the timeline for implementation and training. Without support from the executives, there’s no chance you will succeed with the implementation.
#2 Establish SPOC
After getting approval from stakeholders, the next thing to do is establish a single point of contact for the entire program. This needs to be someone with proven expertise and experience. Doing this bridges the knowledge gap between your vendor and your organization.
This individual will help break processes down for internal teams and relay concerns and questions to the vendor on behalf of the organization.
#3 Invest in team training
Indeed, a contract management tool is only as good as its user. Without proper training, time to value will be painfully long, and using the platform to its maximum potential will be hard.
Team training ensures that everyone is moving at the right pace with the adoption. When everyone understands the ins and outs of the contract management solution and how to use it within their teams, the positive effect is felt throughout the organization.
#4 Set up contract workflows
Your contract workflow encompasses everything you need to do to move the contract from
request and approval to execution and renewal.
Setting up contract workflow establishes all the critical steps required throughout the contract lifecycle and highlights repetitive processes for automation.
SpotDraft enables you to automate your contract workflows by offering robust templates, automating approvals with custom triggers, and providing eSignature features. This helps you create fast-paced yet efficient workflows for your contracts.
Also read: A Step-by-Step Guide on Contract Workflow
Also read: 8 Top Contract Management Software Platforms
#5 Evaluate existing tech stack and figure out integration
A contract management system should make existing systems better, not replace them. You should discuss with your vendor about the tools your teams already use and plan ahead on how to integrate them efficiently.
SpotDraft is designed to work with the tools you’re already used to. This is done by providing integration points for popular software like CRMs, collaboration platforms, cloud storage providers, etc.
For custom integrations, you can leverage SpotDraft’s REST API to build integration points for your internal business tools or reach out to a member of the support team for assistance.
#6 Let your data guide you
“It is vital for a GC to position and exhibit the team’s work in terms of value or ROI. That usually comes down to numbers, charts, and graphs. You have to learn to speak their language.”
—Sterling Miller & Senior Counsel, Hilgers Graben PLLC
There’s a wealth of information hidden in every business data. That’s why it’s considered “the new oil.” Always dedicate time to dive into your contract management analytics. You will discover crucial insights like the average TAT for contracts, most profitable contracts, bottlenecks, and more.
By making data-driven decisions, you’ll continuously optimize your contract management experience, improving productivity and generating better results.
#7 Improve alignment
The legal department is often seen as an unnecessarily strict department by other business units because they “over-scrutinize” the content of every contract and delay the entire process.
But this is merely a misunderstanding because the general counsels are simply trying to keep the company out of trouble. A contract management system is naturally built to improve alignment between teams and avoid situations like this.
However, it is important to go further by establishing communications between stakeholders across contract-facing teams to discuss unique concerns and share ideas on improving collaboration.
“You have to start by listening. If you don't do that, you'll end up talking in the wrong direction and not managing risks that actually matter. So, listening upfront, in my opinion, is the best way to build a relationship with business and counsel internal stakeholders.”
—Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos
#8 Set targets for your most important metrics
What do you consider most important for your organization? This could be increasing the volume of contracts executed monthly, reducing the number of litigations, increasing renewal rates, etc.
Once you have established these priorities with your team, you can formulate strategies to achieve them.
Contract management at the enterprise level comes with unique challenges, considering the volume of contracts entering the pipeline at any given time. But by using an enterprise contract management system, coupled with the right implementation strategies, the entire contracting process becomes streamlined, minimizing risks and maximizing results.
SpotDraft makes contract management a cakewalk for enterprises by offering a combination of functionalities that help teams draft and execute winning contracts at speed and at scale.
Some of its most helpful features include renewal reminders, automated workflows and approvals, advanced eSignatures, templates, analytics, and more.
Want to get more visual information on how SpotDraft can ramp up your productivity with contract management, feel free to request a demo here.