What a best in class contract management solution looks like
Contracts are the lifeblood of any organization; they are key to getting business done. Organizations large and small have countless active contracts at any given time, with terms and obligations to monitor and risk to mitigate. With many businesses facing increased competitive pressure, an increasingly complex regulatory landscape, and strained profit margins, the stakes have never been higher for contracts in organizations.
According to a new report from Thomson Reuters, “Contract Management as it should be,” contract management is often underappreciated despite the importance that businesses place on their contracts. Some organizations have legacy contract management systems that are little more than ineffectively labelled filing cabinets — or their digital equivalent. Given the importance of contracts to your business, a contract management solution should empower you to automate creation and approval, identify and manage risk, and monitor obligations and compliance, all in one platform.
Of course, not all contract management systems are built the same. The following features indicate that you’re looking at a best-in-class solution.
Automated document assembly
Automating the contract generation process with templates and clause libraries improves the legal team’s responsiveness and reduces the time to value. Empowering individual business units with self-service contracts for standard, routine agreements, such as non-disclosure agreements and employment contracts, improves speed of service, increases accuracy and consistency of contract terms, and improves compliance. And the system won’t overlook the need for legal involvement on more complex agreements; you can customize workflows to escalate contracts to the legal team when certain conditions are met.
AI-powered contract analysis
Drafting, negotiating, and signing an agreement is just the first rung on the contract ladder — the agreement then needs to be managed throughout its lifecycle. A contract is packed full of key terms, obligations, and dates that can lead to increased risk for the business and potentially missed value if not managed correctly.
Contract management systems that contain document review and analysis tools that leverage artificial intelligence (AI) technology make the challenge of identifying provisions and managing contracts easier. You can finally move your agreements out of dusty filing cabinets, digitize them, and then set AI tools to work to extract and structure the provisions within — putting key contractual data at your fingertips to help deliver better business outcomes.
Process automation and workflow
The lifecycle of a contract will involve several stakeholders, particularly when it comes to approval and execution. Therefore, you should search out contract management systems that include automated workflow tools that enable you to build approval and signing protocols, as well as escalation procedures, directly into the contracting process.
Gone will be the days of emailing for approvals and chasing down signatures at the last minute. Workflow can eliminate these manual processes so that all the correct steps and approvals are met — speeding up contract execution and eliminating the risk that contracts are entered into without the right authority and approval.
Document management and search
At its heart, a contract management system needs to be a robust repository. Ask an in-house lawyer what their biggest contractual pain point is, and the answer will normally be the same: finding one when you need it. Your contract management system should provide secure storage of all your contracts in one place, with powerful search capability to help you find what you need, when you need it.
Better yet, look for contract management systems that track all document activity, access, downloads, and revisions in an audit trail, so you know who has worked on the document and when; with redline generation tools it’s also possible to see what changes have been made over the contract’s lifecycle.
Electronic signature integration
Integrating your contract management solution with electronic signature software streamlines both the contract approval and execution processes. Your solution should give you the option to configure custom approval workflows to ensure that every contract goes through the proper oversight procedures and obtains the proper consents to become effective.
Electronic signatures eliminate the time lags that can result when parties have to print, sign, and scan hard-copy versions by allowing reviewers to sign anywhere from any device; they also ensure that all signatures are captured in a single record, without the expense and delay caused by overnighting documents. Moreover, electronic documents can be encrypted, so they’re much more secure than paper.
Intuitive contract collaboration
Collaboration is essential to timely contract execution. After all, many internal and external stakeholders — including in-house counsel, outside counsel, interested business units, and counterparties — will want to share their thoughts and suggestions in comments, annotations, and tasks and redline changes before the document is finalized and ready for signature. But tracking all these changes and updates with multiple versions pinging back and forth across email quickly becomes tricky.
A contract management platform injects efficiency into the contracting process, fostering seamless collaboration through social tools and ensuring that the team is always working on the latest version of a document.
Contract portfolio reporting to track and visualize KPIs
With contract management systems, you can move away from static spreadsheets and begin evaluating every aspect of your contract portfolio. You’ll be able to gain complete visibility into contract status, monitor metrics and KPIs, and leverage AI and data visualization tools to create actionable insights that you can employ to manage risk and maximize value. You can also compile reports on various indicators, such as how many contracts are awaiting review or signature, how many contracts are active in each business unit, and much more.
To make your contracting workflow as seamless and effortless as possible, you need a hub that connects all your information, work, and technology. The key to a one-stop shop for contracts is system integration. Check to see whether the platforms you’re evaluating offer integrations with key software, including Microsoft Office, Office 365 applications, and G-Suite.
Confirm whether the platforms work well with other systems applicable to the contracting process such as customer relationship systems, document management platforms, artificial intelligence software, document comparison functionality, and electronic signature applications. The most robust platforms also offer custom connections to client-specific platforms through open APIs, SQL database connectors, and other tools.
Contracts are extremely commercially sensitive and confidential. Therefore, it’s critical that any contract management system you procure offers best-in-class data security.
First, make sure that your system is hosted in the most secure environment possible. Your checklist for security should include ISO/IEC 27001 certification, at a minimum. It would be even better if the system offered additional protections for specific types of risky data, such as that covered under the General Data Protection Regulation.
Ensure that your provider offers secure private hosting in the cloud. You’ll sleep better at night if your provider offers each client a dedicated instance of the application. Also ask whether your provider will store your data in a Tier-3 or higher data center that uses redundant and dual-powered servers, thereby allowing maintenance and cooling to take place without any disruption in operations.
At the application level, the provider should use two-factor authentication to control access and offer the ability to encrypt documents. Finally, ensure that the people enforcing your provider’s security are experienced, screened, and working 24/7/365 to protect your data.
Contract management systems with mobile apps allow users to access, review, edit, and sign contracts and status updates anywhere, at any time, from any device. In an increasingly mobile world, this ability is crucial to successful adoption.
A comprehensive solution
Contract management should be more than mere compartmentalization and storage. Rather, effective contract management is a comprehensive process that requires orchestrating dozens of moving parts to work together in concert. Each phase of contract management involves multiple steps and multiple parties. To encourage each part to move in harmony, you need an end-to-end hub — and an intelligent, collaborative one at that.
When all phases and stakeholders come together in a centralized contract management ecosystem, you have unprecedented control and visibility into all contracting activities, workflows, approvals, documents, and metrics — speeding up transactions and delivering greater value to the business while improving accuracy and lowering risk.
Download your copy of “Contract management as it should be.”