There are many competing products in the automated contract management space. How can an organization choose the right product? It is important to consider the needs and requirements of your organization as carefully and thoroughly as you would examine the feature set and benefits of any other tool.
Not all contract management software’s are the same, but it all comes down to doing your due diligence, setting the right expectations, and being prepared beyond the implementation phase. The following sections will help you understand what makes one contract management software better than another.
What is a contract management system?
A contract management system automates managing contracts by providing tools for creating, tracking, approving, signing, and closing them. A CMS also provides reporting capabilities that allow users to view their contracts, such as status updates, changes made on documents, approvals, etc.
In addition, it provides document storage functionality so that users don’t have to store files or folders with attachments manually. Some vendors offer additional features like workflow automation, email integration, mobile apps, and more.
What Is Automated Contract Management?
Automated contract management refers to tools that automate certain aspects of contracting processes such as:
- Documenting contracts for legal purposes;
- Managing documents throughout their lifecycle from creation through approval or rejection;
- Tracking changes made to contracts over time;
- Providing visibility into who has access to which document;
- Creating reports on contract activity; and
- Integrating with third-party applications like accounting, ERP, CRM, etc.
The term “contract” may refer to anything that requires some form of documentation. In this context, it includes traditional written agreements and electronic versions of these documents, emails, spreadsheets, presentations, and even images.
These types of documents often have multiple stakeholders involved in them, so having a way to track each person’s involvement and progress becomes critical.
Why Use an Automated Contract Manager?
An automated contract manager provides several key advantages over manual methods:
- Increased Efficiency – By automating tasks, organizations save money by reducing labor costs associated with managing contracts. This means more resources available for strategic initiatives.
- Reduced Risk – Organizations minimize risk when using automation because there is less chance of human error. If something goes wrong during the process, the impact is limited to just the affected parties.
- Improved Visibility – With an automated solution, everyone knows where every contract stands at any given point in time. There is no need to rely on memory or guesswork about how long things take. Everyone gets real-time updates on status and timelines.
- Better Control – When everything happens automatically, there is little room for mistakes. You don’t have to worry about missing deadlines or forgetting to follow up on issues.
- More Flexible – A fully integrated platform allows users to create custom workflows based on business rules and policies. For example, if a user creates a new agreement, they could be prompted to enter information regarding the terms of the deal. Or perhaps the user should receive notifications whenever someone else modifies the contract.
- Easier Reporting – Once data is entered into the system, reporting capabilities become much easier. Users can generate customized reports showing the total number of deals closed, average cost per deal, most expensive projects, etc.
- Faster Time to Market – Because the entire workflow occurs within the application itself, companies do not have to wait until after development begins before starting testing. They can start working immediately.
- Lower Costs – The upfront investment required to implement an automated contract management tool will pay off many times over in reduced operational expenses.
What to Consider When Choosing a Contract Management Software
There are three primary considerations you must make when choosing a contract management software:
1. What type of document does your organization use?
A good contract management software should support all standard formats used today, including Word, PDF, Excel, PowerPoint, HTML, RTF, plain text files, and others. It should also allow users to import their file format.
2. How frequently do you update your contracts?
If you plan to change existing contracts regularly, then you’ll want to consider whether you’re willing to invest in updating the software yourself. Most vendors offer upgrade pricing that makes it easy to keep pace with changes. However, some customers find this approach too costly. In these cases, they may prefer to hire a consultant who specializes in upgrading systems.
3. Do you require integration with other applications?
If you already have another CRM, ERP, accounting package, project tracking software, or similar product, you might be interested in integrating them with your contract management software. This would enable you to share documents between different programs. Some products even provide APIs, which means developers can write code that allows two separate pieces of software to communicate directly with each other.
Conclusion
Contract management has been around since ancient Rome. Today’s modern businesses still face challenges related to managing agreements. These include ensuring compliance with regulations complying with internal procedures, keeping track of multiple versions of documents, and more.
Fortunately, technology now offers solutions that help solve these problems. As we’ve seen, there are several types of contract management tools available today. Each one provides unique benefits depending upon what kind of needs your company currently faces.
