Contract Management Solutions
Contract Management Solutions

Contract Management Solutions: Which Level is Best for You?

Peter Thomson |

If dealing with contracts is a regular part of your job, then you know just how difficult and time-consuming creating and managing them can be. The good news is that the new technology in contract management solutions provides a wide range of options for improving the process.

As one size does not fit all, in this article we’ll look at the different levels of contract management solutions available, and help you decide which is right for you.

Manual contract processing

Of all contract management solutions, manual processing is the most basic form, short of typing the contract up with a typewriter or chiseling it on stone tablets. When using manual contract processing, the parties typically modify a word processor document back and forth by email. Each party will redline any changes they wish to make and send the file back.

Once the contract is fully agreed to, the parties must print to sign or sign (somewhat awkwardly) in the word processor document or a PDF file. Each party is responsible for retaining an electronic or printed copy of the executed document. In either case, ensuring that all of the terms of the contract are met is entirely manual for both parties.

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Referring back to the document to check on the terms will mean opening up the word processor document or pulling the contract out of a filing cabinet. These manual actions are prone to error and would ideally be avoided with the right contract management solution.

This contract management solution remains sadly common in a wide range of businesses but is really only suitable for smaller businesses or ones that produce very few contracts. For enterprises of any scale, the inefficiencies, version control issues, and potential for error and legal exposure make manual contract processing the poorest of contract management solutions.

Thankfully, technology has advanced quite a few stages past this now primitive way of handling contracts.


When first developed, eSignature was a major advance in contract management solutions. No longer did all involved parties need to physically sign and mail documents. The ability to sign a document digitally, right from the computer, made things significantly more convenient for everyone. eSignature services also provided a place where executed contracts could be stored and accessed. No more hunting through your hard drive or digging through filing cabinets to find the contract that you are looking for.

The limitation of eSignature, however, is that it transformed only one point – signature and storage – in a complex contract management process. This leaves much to be desired, both in the creation process and in the stages after the contract is signed.  You are still stuck doing the back-and-forth redlining in a word processor in order to reach the signing stage. Once you have gotten to the signing stage, you still have to manually ensure that everyone is keeping up their end of the deal.

If your business is still signing contracts manually, by all means, move immediately to eSignature. It will provide some immediate efficiency in at least one part of your contracting process. For small businesses dealing with very few contracts, eSignature may be sufficient. For larger enterprises, eSignature is best thought of as a stopgap and bridge to dedicated contract management solutions.

Electronic Signature Integration

Basic contract management solutions

Beyond eSignature, there is a continuum of available contract management solutions. Even the most basic of these will provide some level of functionality for the stages before and after contract signing.

All contract management solutions should eliminate the error-prone process of emailing redlined documents back and forth. These software solutions will allow you to more readily work on the document in the cloud. Redlining is performed online, with more sophisticated change tracking and versioning than a word processor can provide.

This allows users to view previous versions of the contract and see who made what changes or notes along the way. Basic contract management solutions, while a great step up from eSignature, may not include full online negotiation capability.

Basic contract management solutions should also provide some level of templates and modules to make assembling a draft contract easier than cutting and pasting from old contract documents. This also begins to ensure that only current, approved content is used in new contracts.

The sophistication of content management and document assembly varies across solutions. Enterprises seeking to implement their entire legal playbook and fallback positions in software may need to seek more sophisticated contract management solutions.

Legal Document Workflow AutomationAnother distinction between eSignature and basic contract management solutions is that the latter offers some level of workflow and approvals. Contracts often require approvals at multiple stages. Contract management solutions provide approval workflows, alerts, and tracking to replace the confusion of email approvals.

This should include an audit trail allowing users to see who approved the document at each stage and which approvals are still pending. As each approval is made, the software will mark it so you will know when everyone has signed off on the new contract.

Once a contract is signed, it will be stored within contract management solutions, along with other executed or pending contracts. This provides at least easy access to past contracts and text search across multiple contracts.

More sophisticated post-execution capabilities, such as obligations management to help all parties live up to their contracts, are not commonly found at this level of contract management solutions.

Contract lifecycle management

This is the final stage of contract management solutions.  For an in-depth look at how contract lifecycle management (CLM) software (such as VertragRaum) works and how it can benefit you, read this.  But essentially, lifecycle management solutions offer more powerful versions of all the functionality offered in more basic solutions and add a great deal of efficiency, power and ease of use in areas more basic contract management solutions do not cover.

This begins with a content library that allows businesses to build their entire legal playbook of approved content into the contract management solution. This includes not only preferred contract clauses, but also a library of approved fallback positions. It also includes situation-specific content such as clauses that are only used in specific regions or contract types.

This content library, in turn, feeds capability for automated document assembly, in which an approved request for a contract automatically triggers the creation of an initial draft contract by the system without further human labor.

Once a draft has been created, a true CLM solution will distinguish itself from basic contract management solutions with more powerful online negotiation capability. While basic contract management solutions provide essentially an online version of word processor redlining, CLM solutions should offer a true negotiation environment that eliminates the need for most phone calls and emails. The ability to easily propose, accept and reject changes from a computer, phone or tablet significantly speeds up the negotiation. For example, ContractRoom clients have seen their agreements close 10x faster than under their previous contracting process.

Post-signature, contract lifecycle management solutions do considerably more than simply store and search executed contracts. Contract Analysis capability uses AI and machine learning to help identify inefficiencies and risks, enabling you to continually improve your contracting process.

AI also plays a role in automating obligations management to ensure that you and your counter-parties are meeting the terms of agreements. A robust CLM system can contract for obligations and milestones and provide alerts when a milestone has been met or a deadline or expiration is approaching. This allows everyone on the team to always stay on top of the needs and requirements of the contract without manually referring back to hundreds of contracts.

On the spectrum of contract management solutions, a robust contract lifecycle management system provides the highest levels of speed, control, and insight. This makes a CLM system an ideal choice among contract management solutions for larger enterprises with either a large contract volume or complex contracts.

What’s the contract management solutions conclusion..?

Regardless of which solution you pick, there’s one unassailable fact.  Today, there is little or no excuse for continuing to use outdated manual contracting processes instead of contract management solutions. Nowadays, a spectrum of contract management solutions is available for companies of all sizes and needs.

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