Everything you need to know about Contract Management
What is CLM?
Contract Lifecycle Management (CLM) remains a high-priority technology investment for medium and large enterprises. In fact, a study by Gartner indicates that the number of companies interested in acquiring a CLM has increased by 40% over the last year.
As a result, there is now a great deal of choice as CLM vendors are enhancing their products to enable better lifecycle support for legal processes. One of the most notable benfits it provides is the creation of a Single Source of Truth for the company’s contracts, which functions as a centralised repository that will serve as a place of reference, both for consultation and work, for the entire team.
In addition, the incorporation of new and emerging technologies in contract management has further boosted the saturation of this market, so being faced with choosing the CLM you really need may not be an easy task.
Why do Legal Departments need a CLM?
One of the main functions of a company’s legal department is to manage all the organisation’s procurement processes.
In terms of its key capabilities, it is undoubtedly the negotiation and approval of contracts, the creation of contracts and their respective clauses and all the necessary templates. It is also part of their competence to manage storage, record keeping and contract search in order to establish an optimal organisation.
The situation is complicated when the team does not have the right tools to perform all of the above functions, so that the team can reach a state of saturation and disorganisation with serious consequences such as forgetting key dates or losing important documents.
Therefore, having a Contract Management software is the solution to streamline the legal processes of negotiating third parties contracts through the automated review of contracts.
How do I choose the CLM my team needs?
There are a number of different CLM vendor options available today, but do you really know which one best fits your legal team’s needs?
Check all the capabilities we are going to develop below and detect which ones are necessary and which ones are not to drive your department towards agility.
Capabilities of a Contract Management Software.
1. Application setup and maintenance
This functionality is based on the creation and management of the clause library, contract templates and generating alerts and reminders that automatically notify stakeholders of key dates, including the expiry and specific obligations of a contract. It also focuses on exception management, access rights and workflow configuration. In addition to the above, you can create and maintain current versions of contract templates by category.
2. Request a contract
You can use a portal or web form to allow your business users to request a contract revision or the creation of a new contract.
3. Creating a contract
This document generation functionality includes the creation of the contracts themselves, as well as the necessary clauses. In addition, it has a word processing tool, an import utility and the possibility to establish agreement relations.
4. Negotiation and approval workflow
With this capability, you can compare documents, manage approvals automatically, and maintain audit and version control audit trails throughout the contract negotiation process. The negotiation and approval workflow includes many more capabilities that facilitate the process of agreeing terms and conditions with a third party. Negotiation, email integration and collaboration tools will be key to improving ease of use. There is also the ability to draft a document directly in your CLM or via Office 365 templates, manage collaboration with suppliers and have the various e-signature options.
5. Storing contracts
You will have a contract repository, the application of record retention policies and integration with the active directory.
6. Searching contracts
Within the contract search, it covers metadata search, full text document search, PDF search and attachment search. It allows you to search by entering a keyword to locate documents, both through the contract metadata and within the contract documents, including the main contract and attachments, regardless of the format of the attached document.
It also performs fuzzy search, which uses approximate string matching that returns results similar but not exactly the same as the searched terms. The strong search functionality will highlight where the searched term is found in a contract record.
7. Running standard reports
The ability to run standard and customised reports on cycle times, obligations, compliance and metadata management in a dashboard that you can custom configure.
8. Advanced analytics
You can automatically review and compare contracts, compliance reports, risk scores and financial reports. This capability often uses machine learning or natural language processing to deliver results.
9. Updating / renewing a contract
This capability allows you to manage your workflows and record keeping for contract modifications, changes and version control.
10. Enabling sales workflows
Enables integration with CRM and configuration, pricing and quoting (CPQ) applications.
11. Enabling procurement workflows
Enables integration with strategic sourcing and purchasing applications.
12. Enabling legal workflows
Enables integration with legal contract management applications.
Now that you know the market situation, the needs of a legal team and the capabilities of a Contract Management software, the next step is to analyse which ones really fit your needs.
Our team of experts at Docuo will advise and help you, both to choose the Contract Management solution that best suits your use case, and to configure your customised legal processes.