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Contract Management Software 2020: Ultimate Guide

What is Contract Management?

Contract Management, also known as Contract Lifecycle Management ( CLM) is the management of the company’s contracts from creation through execution to renewal/expiry. These contracts can come from vendors, partners, customers, and employees. Contracts can be Sales Contracts, Licensing Agreements, Service Agreements, Non-Disclosure Agreements ( NDA ), Employment Agreements, Government Contracts to name a few. Digitizing and automating contract lifecycle management is one of the key aspects of Digital Transformation. Contract Management is the backbone of the quote-to-cash process.

Stages in CLM

What is Contract Management?
Create

Request for a new contract can originate from Sales Teams either for new contract, amendment, or renewal. Typically in an enterprise, the Legal department is responsible for generating the contract either standard or custom specifications. Contracts are created using authoring tools and templates to include all request points, terms, and clauses.

Negotiate

Multiple parties are involved in the negotiation phase to discuss/debate what final terms and clauses need to be incorporated. This is a collaborative effort that involves back and forth communication and various versions of the document need to be tracked.

Approve

Once the contract terms are finalized, it needs to be approved by all the parties involved. Depending on the size of the contract and size of the company, there could be many people involved and also would involve a hierarchy of approval process. People involved could be Legal, Executive, stakeholders, internal team members, and customers.

Sign

Digital signatures are needed to sign digital documents. The correct authority needed to sign contracts needs to be defined. These rules could be based on the type of contract, amount, location, and other variations. Once the contracts are signed, they have to be appropriately stored for easy access and search.

Until the contract is signed, nothing is real

G D

Glenn Danzig

American Musician
Execute

Once the signed contracts are in place, communicate to all concerned parties - obligations involved, milestones, deadlines, and penalties.

Track

This phase involves overseeing and reporting on performance, handle claims and disputes, negotiate and record changes. Also, contract execution has to be closely monitored for any signs of non-compliance.

Renew

Many contracts have end dates which the parties need to track to decide the next steps - lapse, renew, or renegotiate. If the work is of a recurring nature, the contract should not be allowed to lapse and needs to be renewed. Renewals typically go through almost the same stages of lifecycle like a new contract, but with much less rigor.

Exit

Contracts that have end dates need to go through the termination process identifying any ongoing obligations. Concerned parties have to be communicated about the contract ending.

What is Contract Management Software?

Contract Management Software helps to manage and automate the various processes within CLM. In addition, it helps to store and manage the contract repository which is critical for

E-contracts. Contract Management is not a standalone activity. It is very much intertwined with quoting and revenue generation processes and legal functions. For Sales, contract management is used to automate and enable faster, more accurate production and delivery of legal-approved contracts to a company’s prospects or customers.

Top 4 Benefits of Contract Management Software

Improved Visibility into Contract Management

Contracts go through several stages by the time they get fully approved and several people/roles are involved. By having an automated contract management system, companies get full visibility about at what stage the contract is held up and can analyze the progress of the contract. Automated workflows associated with SLA ensure that there are no bottlenecks and executive intervention can be provided at any stage. Along with associated metrics and analytics, companies can fully manage the contracts efficiently.

Improved Collaboration and Negotiation

Automated contract management ensures that all the people and stakeholders collaborate on the system. This avoids manual back and forth process and helps team members to resolve issues and questions efficiently. Reviews can be done more efficiently on collaborative platforms. The negotiation process and the associated back and forth can be optimized with the collaboration platform. Ability to track changes, automatic versioning, comments, chat, ability to share, and check documents improve the collaboration.

Improved Operational Efficiency

Contract Management System is a key step in the organization’s journey towards digital transformation. Key features of Contract Management Software like workflows, collaborative add-ons, e-signature, and central storage, easy search and access, security, and access control help organizations to bring efficiencies.

Improved Audit Compliance

Contract Management Software provides audit trail capability and the user can view entire contract history on a centralized dashboard. This helps companies to better prepare for audits with complete contract history and ensure compliance with Sarbanes Oxley or other internal compliance norms.

Who are the users of Contract Management Software?

In an enterprise, the Legal Department is often responsible for creating, managing, and maintaining contracts.

Depending on the size of the company and the size of the transactions involved, companies can have a dedicated role called Contracts Manager. Contracts Manager is responsible for financial health and monitoring of contracts, ensuring quality compliance, and the company’s procedures are adhered to and objectives are achieved. In such a case, the Contracts Manager is the key user of Contract Management Software.

Sales team members, managers, and stakeholders are key users of the software as they will be involved in giving inputs to contracts, negotiate, amendment, approval, and sign. They rely on contract management software to reduce paperwork, speed up the approval process, and simplify the contract and proposal process.

Company Executives who need to approve and sign are users of the software.

Finance team members are key users as they need to get visibility into payment terms and schedules, pending transactions, financial liabilities, and compliance exposure. Finance and Compliance go hand in hand.

Procurement professionals need to use contract management software to negotiate better deals and ensure supplier compliance. In Fortune 500 companies and multinational enterprises, procurement professionals rely on contract management platforms to ensure supplier accountability, ensure commercial compliance, improve contractual governance.

Which industries benefit from Contract Management Software?

Contract Management Software is relevant for almost any industry where there is a need to have contracts with customers, suppliers, and clients. Some industries specifically benefit a lot from the usage like Telecommunications, Financial Services, Energy, Healthcare, Technology, Life Sciences, and Pharma, Manufacturing, Professional Services, Retail to name a few.

The telecom industry is a dynamic industry where digitization is highly prevalent in commercial operations. It needs the ability to launch new products quickly, with many different plan options for its customers with associated contracts and terms and clauses. Contract Management Platforms by Apptus and iCertis support this need.

Financial Services need to deal with their Corporate and Retail clients that involve a lot of paperwork, negotiation, amendments, and renewals. They also have to ensure regulatory compliance. Contract Management Software helps them to achieve their business goals with centralized contract management and achieve customer satisfaction.

Energy companies are globally dispersed and have an array of business partners, suppliers, and distributors and operate in a highly regulated market. They need robust contract management support to handle highly complex contracts that range from infrastructure to sourcing, risk and obligation management, and collaboration with multiple stakeholders.

The healthcare industry needs frequent plan changes and updates to stay competitive and customer friendly. Also, they have to ensure compliance in a highly regulated market. This requires close contract collaboration between insurers, physicians/doctors/hospitals, and stakeholders.

Medical device and diagnostic equipment manufacturers can improve their sales effectiveness, ensure contract compliance, and handle rebate disputes when they work with suppliers, customers, and partners. Pharma and Biotech companies are challenged by complex drug and clinical trial processes, highly regulated promotional programs, and complex supply chains. They need more complex contracts to deal with such challenges. Also, they need to link contract obligations to R&D project milestones. Products like iCertis, Apttus specially cater to such challenges faced by the Pharma industry. Pharma industry’s procurement divisions rely on contract management software to optimize productivity and cost across the supply chain, manage vendor compliance.

4 Key Business Problems Solved by Contract Management Software

Longer cycle time to close contracts

Contracts go through several stages of processing before it is finally approved. Several functions and roles are involved and it could cross department and/or organizational boundaries. All these introduce delays and bring unpredictability in closing the contracts. Contract Management Software with automated workflows expedites the review and approval process. Dashboards provide visibility and email notifications sent to concerned people help in unblocking the processing and proper escalation procedures can be set up. All these result in faster closure.

Lack of Consistent Process

Contract Management Software helps organizations to bring consistency in the process and procedure adoption. The software provides several standard templates tailored for different business usecases and can be customized to fit the organization’s needs. Organizations can ensure that people are using standard templates with latest clauses, all these available from the standard library.

Adhoc Contract Storage

Contract Management Software provides a central repository to store and manage all company’s contracts. They also provide easy search, store, archival, and retrieval mechanism since records are digitized. This greatly reduces the administrative burden for the organization.

Missed Renewal Reminders

Renewal based revenue is the easiest way of generating revenue for an organization. Contract Management Software helps to set notifications based on rules and generate alerts when renewals are due. With this, organizations can rarely miss renewals.

7 Key Features of Contract Management Software

Workflow Management

Contracts pass through several functions as part of their lifecycle. Automates workflows help in streamlining this process and ensure that all the steps are followed. The workflow manager helps to track and monitor contracts. Some software like Contract Logix provide visual workflow designer with options to design multiple steps, assign tasks, send notifications, and conditional branching.

Centralized Repository

The ability to store and archive all contracts in electronic form in a centralized repository is a key feature of Contract Management Software. User needs to have easy and secure access to the contract documents. The software also provides the ability to view documents at a level that is apt for the role and the task. Documents can be viewed in full, or snippets at function, organization, and task level.

Search

Effective Contract Management Software provide versatile search capabilities that allow capturing full text of documents, metadata, document history, comments, notes, and all associated information. Some of the software provide a text-based search wherein a phrase can be used to search for relevant documents.

Role-Based Access

Since contracts are company confidential documents and several people need to work/access it, Contract Management Software provide role-based access control system to govern access to the documents. Access control could be at any granular level based on user roles, geographies, departments.

Visualization - Dashboards and Reports

Contract Management Software provide dashboards to visualize insights and take action. Dashboards provide visibility into contract management metrics that help stakeholders and executives to take action. Some vendors like iCertis provide personalized dashboards specific to the role. In addition, the software provides reports regarding the various aspects of the lifecycle. Reports can be customized as per organizational and role-specific needs.

eSignature

Having an integrated eSignature capability speeds up contract approvals and hence the overall cycle time. Contract Management Software can come with embedded eSigning ability or can provide integration with other e-signature solutions like DocuSign, Adobe Sign, and other electronic signature platforms.

Template Library

One of the key benefits of Contract Management Software is it provides ready to use standard templates that are specific to business and industry. Additionally, it can include a company-specific clause library that speeds up the creation of contracts.

AI in Contract Management Software

AI is applied in Contract Management Software by vendors for solving a variety of use cases and providing enhanced value to customers.

Apttus applied AI to automate routine legal tasks so that lawyers can focus on high-value activities. It provides intelligent recommendations so they can deliver their expertise with full knowledge of all available, relevant information.

Artificial Intelligence can convert unstructured contract documents into structured enterprise data. Applying AI in contract management can help the enterprise in identifying business risks and opportunities; Machine Learning and AI help in identification and analysis of the contract language, clauses, and other data. This helps in identifying risks and helps in negotiation. Especially while processing large volumes of data in complex contracts, this will be useful. AI helps in classifying the clauses, helps to build the clause library.

AI algorithms backed by NLP can do abstraction and migration and can create an index of all provisions, terms, and obligations. So companies can extract all important information from contracts like vendor names, renewal dates, organization data, milestones, penalties. Further, these can be auto-tagged and alerts can be set.

iCertis provides a set of AI-based applications. They have capabilities to quickly import third-party contracts at scale, analyze past negotiation history to gain insights for improvement, and visualize deep data insights that provide unprecedented visibility into contract relationships and performance.

Buyers Guide - 7 Factors to Consider to Select Contract Management Software

Assessing Business Requirements

It is important to assess the business goals, current processes, roadmap of the digital transformation journey before selecting the tool. One size does not fit all. The software has to fit into the existing ecosystem and processes and not the other way around. Having good clarity on business goals helps to look at the features needed critically. For example, if ad-hoc processes or longer cycle time is a problem, a software tool that provides advanced workflows, alerts and notifications, analytics, and associated e-signature would help to solve business problems.

Size of the Company

The choice of the software is largely dependent on the size of the company - Enterprise or SMB. Also, it depends on the nature of the business. A service provider company dealing with a large number of clients with a huge volume of contracts would need the scale. Enterprise companies need more robust features around sophisticated workflows, robust user control, personalized dashboards for the various users, and a high degree of customization, and data security. An SMB would need a simplistic platform with ease of use, less administration, and configuration overheads.

On-premise vs Cloud

On cloud or SaaS deployment models provide lesser administrative overheads for companies and also can be cost-effective if the scale of the contract management system is moderate. However, companies with stringent security and control systems might have reservations to go for the cloud model. Such companies might prefer an on-premise model to have full control over data security, user control, and contract repository management.

Capabilities

Contract Management Software come with a varied set of capabilities as detailed in the earlier section and it is important to assess the features to see whether it meets the needs. AI-based systems provide additional value in terms of improved analysis, automated tasks, and can help in risk management.

Integration

Integration with other tools in the organization enhances the value delivered to the user and provides a seamless experience. If a user has to switch between applications, it can be a productivity killer. Contract Management Software should integrate with popular CRM like Salesforce or Microsoft Office 365 to create, view, approve, or collaborate contracts.

Data Security

Contracts and agreements are confidential data of a company. The contract repository and the access mechanism should ensure data security through password protection and encryption. Contract data should be encrypted during transit and at rest to protect from tampering by unauthorized users. Advanced encryption technology like AES 256 bit encryption and TLS 1.2 standards are adopted by Contract Management Software. In addition, the software should also support data privacy standards like GDPR which many local governments make to mandatory to adhere to.

User Control

This is a very critical requirement to be assessed. The software should provide user controls that fit into the usage and role-based needs of the organization. The granularity of access control is directly related to the complexity of the organization structure.

Challenges in Adopting Contract Management Software

Companies can face several challenges in adopting Contract Management Software. Challenges can be faced when they migrate from one tool to another - in this case, lack of data migration support can hinder new tool adoption.

A lot of the adoption challenges depend on the company’s existing processes or lack of, the maturity of digital transformation and ad-hoc contracts. It requires cultural change, skill-building, and, training to ease the adoption challenges.

If the software does not provide enough customization capability, it would seriously hinder adoption. It could be related to the workflow configuration, alerts, dashboards, and reports. Lack of customization might render the software unusable or underutilized.

There should be provision to migrate existing manual paper-based contracts into the digital form. Else it will result in disparate systems to manage.

Contract Management Software

ContractWorks Icon

ContractWorks

4.76
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Contract Management Software | ContractWorks

ContractSafe Icon

ContractSafe

4.72
★★★★★
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ContractSafe: Contract Management Software | Start for Free

ContractZen Icon

ContractZen

4.68
★★★★★
★★★★★

ContractZen - Digital Hub for Corporate Governance

Outlaw Icon

Outlaw

4.67
★★★★★
★★★★★

Platform | Outlaw - getoutlaw.com

Pramata Icon

Pramata

4.64
★★★★★
★★★★★

Pramata - Capture all possible revenue from every active contract

Contract Insight Icon

Contract Insight

4.61
★★★★★
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Enterprise Contract Management Software | CobbleStone Software

Icertis Icon

Icertis

4.42
★★★★★
★★★★★

Icertis | The Leading Enterprise Contract Management Platform in the Cloud

Agree.com Icon

Agree.com

4.41
★★★★★
★★★★★

Agree | Online Contracts & Payments Service

Parley Pro Icon

Parley Pro

4.39
★★★★★
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Product - Parley Pro | Contract Management Software Built for Today

Concord Icon

Concord

4.37
★★★★★
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Concord | The Contract Success Platform

Expiration Reminder Software Icon

Expiration Reminder Software

4.35
★★★★★
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Expiration and Renewal Tracking Software | Expiration Reminder

Trackado Icon

Trackado

4.33
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Trackado: Contract Management Software

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LinkSquares

4.29
★★★★★
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LinkSquares: The AI-Powered Contracts Management Cloud

Seal Software Icon

Seal Software

4.29
★★★★★
★★★★★

Seal Software: The Leader in Contract Intelligence

ContractRoom Icon

ContractRoom

4.29
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ContractRoom: Contract Managemen

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Revvsales

4.25
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Why deal desk - Revvsales

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Apttus Contract Management

4.18
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APTTUS | Intelligent Contract Management Software

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Ariba Contract Management

4.09
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Contract Management Software - SAP Ariba

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Jaggaer Contracts

4.08
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Contract Management Software - JAGGAER

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QuickSign

4.08
★★★★★
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QuickSign : Cloud-Based Digital Signage Software

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Model N Revenue Cloud

4.00
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Cloud Revenue Management System for MedTech | Model N

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ContractClub

4.00
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ContractClub - Free eSign and contract management software

Model N CLM Icon

Model N CLM

4.00
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Contract Lifecycle Management (CLM) Software - Products | Model N

Contract Logix CLM Icon

Contract Logix CLM

3.95
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How Contract Lifecycle Management Works - Contract Logix

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Dealhub

4.73
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DealHub | #1 Solution for CPQ, Sales Proposals & Contract Management

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Docsmore

4.61
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docsmore: Weather The Paperstorm

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Qwilr

4.54
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Qwilr - Software for creating proposals, quotes and documents as ...

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PandaDoc

4.50
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PandaDoc - Sales Documents That Close - Proposals, Quotes ...

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GetAccept

4.48
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GetAccept - sales enablement platform fully enhances your B2B sales experience

iQuote Xpress Icon

iQuote Xpress

4.45
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Quote management software | iQuoteXpress

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Oneflow

4.41
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Contract automation - Speed up your entire contract workflow with Oneflow

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Accelo

4.37
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Manage your projects against budgets and resources in real time

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Uplevl

4.06
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Uplevl - Uplevl