The use of Contract Lifecycle Management (CLM) has become increasingly popular among organizations of all sizes, as it supports consistent, efficient management of the entire contract lifecycle – from contract creation through expiration/termination.
It streamlines the contracting process, providing a centralized platform for contract creation, execution, and storage. But as importantly, it supports more effective and transparent contract management, helping you manage contract compliance, performance and spend.
If you’re company is considering purchasing contract management software, you’ll want to read this blog as I break down:
- what it is,
- benefits of using contract lifecycle management software,
- 7 key features to look for in any CLM solution, and
- where artificial intelligence fits into CLM.
Let’s get started.
What is Contract Lifecycle Management Software?
At its core, Contract Lifecycle Management software provides a central repository for your organization’s contracts and related documents, which provides transparency to everyone responsible for managing contracts, and makes it quick and easy to access information.
CLM software automates and streamlines various contract-related activities, such as authoring, negotiation, signature, and storage. The automation saves you time, reduces errors and improves the accuracy of contract data.
CLM software also supports more effective contract management after the contract has been executed. You can track contract renewal dates, service level agreements, vendor performance and other details that provide visibility into the contractual relationship and support better accountability throughout the contract management process.
What are the Benefits of Using Contract Lifecycle Management Software?
Contract Lifecycle Management software provides a variety of benefits such as:
Better Visibility and Control
CLM software provides a centralized platform for contract data and document storage, making it easy to find information about your contracts and retrieve documents such as master service agreements, statements of work, change orders and addenda. Users don’t have to sort through emails and shared folders trying to find the information they are looking for – it’s all in one, central place.
More Efficient Contract Management Processes
With the implementation of CLM software, a variety of tasks that are typically performed manually can be automated. When tasks are automated, you improve efficiency, reduce errors, and increase compliance, saving time and reducing costs for everyone involved in contract management.
Improved Collaboration and Workflow Management
CLM software allows multiple users to access and work on contracts concurrently, making it easier for teams to collaborate and ensure that contracts are completed efficiently. Workflow management can also help to ensure that contracts are reviewed and approved in a timely manner, and that the right people are notified when a contract is due for renewal.
Increased Compliance and Reduced Risk
Lastly, contract management software helps to support compliance with company policies and legal requirements. You can establish contracting standards, require the use of certain templates and enforce review and approval controls. The software also provides a secure platform for contract storage, reducing the risk of data breaches and unauthorized access to sensitive contract information.
7 Key Features You Want in Contract Lifecycle Management Software
There are a wide-variety of CLM software solutions in the marketplace, each offering various features and functionality you can choose from. Finding the right solution for your company requires that you clearly define your functional and technical requirements before you venture out into the market to find a solution.
With that said, there are certain core features you want to look for in any contract management software you choose. My team here at Vendor Centric has worked with a number of leading CLM solutions in the marketplace – here are seven key features we find really important.
- Contract Clauses and Templates
One of the most important benefits of CLM software is the ability to create contracts quickly and efficiently. The solution you choose should provide the ability to maintain a library of standard contractual clauses and templates, quickly select the right template to use and then begin the contract development process from within the software platform. This will save you time and ensure that all contracts are standardized and compliant with your company’s policies.
- Contract Collaboration and Workflow Management
Collaboration and workflow management is another important feature. It allows multiple users to access and work on contracts concurrently, making it easier for teams to collaborate and ensure that contracts are completed efficiently. Workflow management can also help to ensure that contracts are reviewed and approved in a timely manner, and that the right people are notified when a contract is due for renewal.
- Digital Contract Signing
With remote and hybrid work now a part of daily life, getting a contract signed with pen and paper just isn’t practical. Your CLM software should enable you to sign contracts electronically. This enforces controls regarding contract signing authority, and eliminates multiple steps from the process when a contract needs to be printed, signed, scanned and emailed to the next signer.
Modern solutions typically approach this in one of two ways. They either have electronic signature functionality native in their own solution, or integrate with a third-party solution like Docusign or Adobe. Either approach can work well, though you will likely need to purchase additional licenses if you integrate with a third-party solution.
- Contract Storage and Retrieval
A simple but important benefit of contract lifecycle management software is the ability to store all contracts in a centralized location. This makes it easy for contract managers to retrieve contracts when they need them. It also ensures that all contracts are securely stored and backed up. Modern solutions have robust search and filtering capabilities so contract managers can quickly find the contracts they need regardless of whether you have 100 or 100,000 contracts.
- Contract Analytics and Reporting
Another key feature of contract lifecycle management software is the ability to generate reports and analytics on your contracts. This information is invaluable in helping manage contracts more effectively. For example, contract managers may want to see how many contracts are due for renewal, how many contracts are overdue, and how many contracts are up for renewal in the next 30 days.
The best solutions have a library of pre-built reports you can immediately begin using, along with the ability to create custom reports specific to your business or industry. Most systems also provide ‘push reporting’, which allows you to have the reports automatically distributed to contract managers on a weekly, monthly or custom cadence. This is a great feature to help proactively manage renewals.
Integrations are critical when it comes to contract lifecycle management software. The software should integrate seamlessly with other business tools such as CRM, procurement and accounting software, as well as the electronic signature software I mentioned previously. This will help to ensure that all information is up-to-date and accurate, and that contracts are executed efficiently.
- User-Friendly Interface
Finally, it’s important to look for software that has a user-friendly interface. It should be intuitive and easy to use, so that your users can quickly get up and running. The software should also be easily configured, so that you can set role-based dashboards and reporting specific to each user’s needs.
What About Artificial Intelligence?
One of the newer features that’s been making its way into CLM software is the use of artificial intelligence (AI). While AI technology is still evolving in its use in CLM software, it can automate several manual and time-consuming tasks in the contract lifecycle process such as contract review, data extraction, contract analytics and risk analysis. This not only increases efficiency and accuracy but also frees up valuable time for your employees to focus on the actual management of the contract.
AI-powered contract management software can also analyze large amounts of data and identify patterns and trends that are difficult for your contract managers to detect. This information can be used to identify and mitigate potential risks, optimize contract terms, and improve negotiation strategies.
Finding the Right CLM Solution for Your Organization
There is no one-size-fits-all when it comes to CLM software. Ultimately the choice comes down to aligning your near-term functional requirements, and your long-term technology strategy, with a solution (and vendor) that’s the best fit for your organization.
Here are a few key questions to consider when evaluating options:
- Are you even ready for a solution? Make sure you have well defined policies and procedures to guide the workflow you need in your software.
- What functionality is required, desired and nice to have? Being clear on what you really need will help you narrow down options.
- What do your contract management policies say? Your software must support workflow and controls that ensure your policies are enforced.
- What’s your budget? Solutions can run from a few thousand to hundreds of thousand. Knowing your budget will allow you to narrow the market.
When selecting contract lifecycle management software, it’s important to know which features are most important to you. But to also look for a solution that is modern and integrates new technologies such as threat intelligence and AI so you know that whichever solution you select will stay fresh and current with a changing software landscape.
My team at Vendor Centric has helped dozens of clients find the best software solutions for their organization. Contact us to learn how we can help you too.