Have you ever wondered, what led to such a wide acceptance of Enterprise Contract Management Software? Probably half a decade, you wouldn't even have had heard of it. So how come that in less that 5 years, Enterprise Contracts Management has taken such a leash. Let me give you a quick recap on the how's.
In 2017, having analyzed the contract management processes of over 700 organizations, the International Association for Contract and Commercial Management (IACCM) found business expenditure on low risk-contracts had increased by 38% over the previous six years.
Similar monetary leakage was also observed in mid to high-complexity contracts. This was mostly attributed to broken:
1. Contract journeys
2. Inventorization, and
3. Resource allocation
All of this forced companies to reimagine the way they initiate, process, and document every stage of their contract, leading to the genesis of enterprise contract management software.
But What is an Enterprise Contract Management Software?
Simply put, an enterprise contract management system is a centralized solution that allows large businesses to manage, collaborate, report, and track their contracts on a single platform.
This means that it offers the following:
- A standardized format for organizations to enter and structure contract information.
- Tools to create/edit contracts contextually.
- A secure, centralized repository for businesses to store contracts, notes, and other important attachments.
- A reminder system that provides alerts for expiring contracts, upcoming payments, and other important contract events.
How Does It Differ From Other Contracting Tools?
The key distinction for enterprise contract management software is its ability to impact, improve, automate work across all stages of the contract lifecycle. This means introducing functional tweaks tailored to the processes within a larger organization, some of which are mentioned below.
Unlike small organizations, enterprises generally have multiple teams across locations. Each team will have a more organized and streamlined set of responsibilities that is contingent upon them.
For the sake of posterity and information security - it is necessary to restrict other unaffiliated teams from access to their data.
Control of a document is also dependent on your organization’s internal hierarchy. For example - a sales associate might only need to be given controls to edit the deal value, while only a manager might have the authority to change the delivery time or exit clause details.
Therefore, enterprise contract management software, while having a centralized library or resources, will also have the ability to limit control or access on a project-to-project, team, individual basis.
A typical enterprise would generate thousands of contracts per quarter across teams. Each of these contracts is required to be stored and accounted for in a centralized repository until they are needed again.
Having fragmented contract addresses spread across the organization makes it more difficult to procure documents when needed, leading to potential loss of money/information during a restructuring process.
Enterprise contract management software is tasked with maintaining a secure, centralized information repository that is accessible, easy to navigate, and fast.
Ability to Customize
While it is a good idea to standardize your templates, the ability to customize each template for specific teams is also important.
This is because enterprises have a lot of different teams, different vendors, methods of functioning, and possibly different customer categories. Having a standardized sales contract, for example, may not necessarily be effective for two separate customer profiles.
Enterprise contract management software needs to make templatizing or even contract editing faster and more methodical to - allow for customization, all while minimizing erratic edits.
When do you need an Enterprise Contract Management Software?
While the enterprise contract management software is truly for any organization dealing with challenging contract cycles, it comes into its own in complex workplaces.
This means organizations with multiple teams handling parts of the contracting process or dealing with diverse counterparties who are affected by the contracts they produce or are generally in a complex or highly litigious industry.
To evaluate if you really need an enterprise contract management tool, examine your current systems to see if you have -
Complex Contract Processes
There is a high chance of decentralized workflows and siloed storage of contracts in a large organization with multiple departments and hundreds of employees.
This diversity of practices associated with contract creation and management makes interdepartmental cooperation and information-sharing challenging.
An enterprise contract management software can help organizations overcome this problem by centralizing and standardizing all contract workflows on a single platform for better collaboration and visibility. Moreover, all legal documents will be stored at one location for improved accessibility.
A majority of contract-related tasks are redundant and manual, eating up significant amounts of the in-house legal team’s time.
These manual workflows are notorious for causing backlogs and creating delays, especially in a fast-paced business environment.
With the help of enterprise contract management software, an organization can automate these repetitive tasks, freeing up time to focus on more important activities. This way, it is possible to improve the quality of work, increasing the efficiency and productivity levels of the team.
With large volumes of contracts to process and manage, it becomes impossible to effectively track critical details such as contract value, expiry/renewal dates, obligations, etc.
A lack of a proper tracking system can result in the organization missing out on business opportunities and even suffer from revenue leakages due to contract roll-overs and renewals.
Enterprise contract management software arrives with in-built reporting tools that alert the departments with reminders and notifications to important contract events and information. This makes it easy for organizations to analyze their contracts and plan for negotiations better.
Contracts are flowing with confidential and critical information. In the wrong hands, they can wreak havoc for the organization, damaging their business and reputation.
Additionally, decentralized workflows make it impossible for departments to control who has access to the contracts and database.
This can be resolved with enterprise contract management software. These platforms use end-to-end encryption, guaranteeing the integrity of the documents relayed through the platform.
With other features such as audit trails and roles assignment, it becomes easier for organizations to control access and monitor user activity.
Which teams get impacted by Enterprise Contract Management tools?
End-to-end contract management platforms like SpotDraft help demystify contract ownership by placing the creating, editing, and storage process directly in the hands of the teams that need them.
This means a contract journey can be managed from start to finish by any of your teams instead of being dependent on legal. Here’s how:
Enterprise Contract Management for Sales
At the heart of any organization’s revenue growth, the Sales team is usually measured on the velocity and volume of their deal-making, often operating in tight deadlines. The work of contract management software here is to untangle sales contracts and support conversions.
Here’s how a typical sales contract lifecycle might look like:
The problem with this is, not only does it take longer to execute a contract and correspondingly close a deal, but there is also less visibility on the operations of two different teams involved in generating the same contract.
- Slower contract and deal turnaround time
- Multiple external dependencies
- Contract reviews are confusing and move slowly
- Lack of structure makes it impossible to collect approvals quickly from multiple stakeholders
- Automated contract-triggers: Contracts are auto-initiated whenever a customer’s deal stage changes in the sales management or CRM tool.
- Pre-approved Templates: Legal-approved templates help Sales create contracts with minimal dependence on others and generate compliant contracts every time.
- Dynamic Reviews: AI-led analysis of errors in - grammar, clause uniformity, track changes, and more. This helps significantly cut down revision times.
- Targeted Workflows: Pre-assigned workflows depending on contract details. Once created, a contract automatically finds its way to the approving authority depending on the key details.
- eSignatures: Instant digital signatures to negate paper-based processes
Enterprise Contract Management for Finance & Procurement
As the authority on a company’s monetary transactions, the procurement and finance teams are weighed down by data invisibility.
Contracts are a great source of information for finance, but only if contract data is seamlessly and quickly extracted and presented when necessary.
Here are a few examples of the details a Finance executive can expect to find with contract management software:
- Contract data is not available at one location as it is siloed across devices, users, and departments.
- The absence of a database makes it impossible for procurement & finance teams to analyze contracts to uncover trends and insights that can potentially help reduce costs and promise other benefits.
- Impossible to track and measure vendor performance that can be crucial to saving costs and mitigating risks.
- Teams find it tedious to instantly pull up critical information such as vendor information, values, dates, etc.
- Centralized Storage: An Enterprise Contract Management Software stores all contracts and related documents at one location, creating a single source of truth for the entire organization.
Additionally, the data is stored in a standardized format, making it possible for procurement and finance teams and other teams to search and sort specific contract information using different filters easily.
- Contract Reporting: The tool also helps procurement and finance teams organize contract information into an actionable format, enabling better insights and effective negotiations with vendors.
- Automation: Enterprise Contract Management Software helps automate workflows, helping procurement and finance teams to improve efficiency, save time, and reduce costs.
Enterprise Contract Management for In-House Legal
The in-house legal team overlooks the contracting workflows, ensures compliance with the different regulations, and resolves litigation. This means maintaining a granular view of all contract details, evaluating risk, and offering better counsel, among other things.
Enterprise contract management tools can provide just the right assistance to make the in-house lawyer’s work easier.
Here are some of the contract management features SpotDraft provides:
- Lawyers have a tough time creating contracts as they have to ensure the approved legal and non-legal terms are utilized, contractual obligations are sound, compliance with target jurisdiction, etc.
- Redlining and revision are integral to the contractual process. Erroneous track changes and lack of version controls increase the workload for the legal team and extend workflow delays impacting all stakeholders.
- The legal team has to rely on traditional communication tools such as email to collaborate on contracts with other teams and stakeholders.
- Contracts are not stored at one location, making it difficult for legal teams to review documents at a moment’s notice.
A built-in word processor allows lawyers to create and edit contracts directly on the platform. Additionally, with AI-driven error-checking, a lawyer can instantly identify contradicting definitions or obligations, saving a lot of time and speeding up the contract workflow.
Redlining becomes easier and transparent as the legal team can view all changes made by different users on a single version of the contract.
Communicating revisions and requesting suggestions becomes easier with target commenting on the contract document, allowing the lawyer to tag and notify the intended team member or stakeholder directly.
All contracts and related documents are stored on a common repository that supports uploads and downloads in different file formats, including .docx, .pdf, .xls, and more.
Search & Tag
By assigning tags and structuring contract metadata, it becomes easier for the legal team to search and reference contracts quickly.
Enterprise Contract Management Solutions for Human Resource Teams
The Human Resources team is key to developing and transforming the culture of an organization. An effective HR team can promise better recruitment and retention of talent and improve employee morale and performance.
- Employment contracts contain a variety of critical and personal information about the employee. Improper storage of these contracts can result in various risks to the individual and the organization.
- During the onboarding and offboarding processes, the HR team has to manually create, distribute, and execute a large number of contracts simultaneously. This activity can be daunting and open to human errors. Additionally, HR activities involve long paper trails that can take days or even weeks to resolve for the individual and the organization.
- Labor codes and workplace policies are always evolving. HR teams need to be alert and proactive in order to accommodate new changes and keep up with the different compliances.
For bulk contract requirements, such as ESOPs, recruitment, etc., the HR team can use the campaigns feature to automate contract creation and management.
It becomes easier for HR teams to update new compliances and reflect the change across different employment contracts with a single click.
Enterprise Contract Management Software helps the HR teams and other departments in the organization to go 100% paperless by allowing them to organize and execute contracts digitally.
Contract data is stored securely using encryption, and teams can assign roles and access levels to different members, thereby guaranteeing security and limiting risk.