Why Your Contract System Should Live in a Contract Lifecycle Management Platform
The durability of an “if it ain’t broke, don’t fix it” mentality when it comes to contract systems isn’t surprising. The contracting function in most businesses remains, at least in part, the province of in-house and external legal advisors. By training, lawyers are small-“c” conservative and resistant to change.
And yet, even the most set-in-its-ways legal department recognizes contracting is rife with inefficiencies, from misplaced documents to erroneous contract terms, to the sheer difficulty of keeping track of a company’s obligations across an entire body of agreements.
For decades, those inefficiencies seemed intractable, a fixed cost of doing business. No longer. Here are the improvements businesses can now make to their contract system by implementing a configurable Contract Lifecycle Management (CLM) platform.
An intelligent library of contract content
Let’s start with the basics. A CLM platform serves as the hub of a contract system. It integrates into every contracting function of a business. Implementation ideally includes digitizing and centralizing every contract in the legacy contract system as far back as the system goes. This constitutes the business’s contracting corpus.
A CLM solution serves as the repository of the corpus. This isn’t just some folder on a server, however. A CLM platform acts as an intelligent research archivist that leverages AI-powered machine learning to parse and analyze the corpus, making it not just word-searchable, but concept-searchable.
Want to know how many contracts over the years had cross-indemnification provisions? A CLM platform can tell you. Need sample templates for sales contracts you’ve historically executed with customers in a particular jurisdiction? Simple. Your contract system will never suffer from content overload or myopia again. Instead, your contract system will place the entire, substantive content of the corpus at your fingertips in a useful and functional format.
An efficient, frustration-free contracting workflow
Email and word processing constituted giant technological leaps forward for the business world, but we still find it amazing how most contract systems shoehorned those advances into modes of contracting that would feel familiar to businesspeople who drafted contracts longhand.
Who hasn’t pulled their hair out trying to keep track of ever-multiplying “versions” of a red-lined draft contract passed back-and-forth over email? Who with any hair left after that hasn’t choked back tears of frustration while reviewing the “fully-executed final” version of an agreement, upon the discovery of cut-and-pasted language from a template that refers to the wrong customer, or of mis-numbered paragraphs that render internal cross-references ambiguous? Contract systems have fought a losing battle against these problems for decades.
With a comprehensive, configurable CLM platform, your business can finally streamline the process of assembling, negotiating, and executing a contract. A CLM solution makes it simple to assemble contracts by integrating the process of drafting and document assembly from a template of approved content. In fact, it’s your full legal playbook of acceptable fallback clauses.
In addition, a CLM solution gives relevant stakeholders access to a single negotiation platform. It tracks changes in an intelligent, easy-to-follow format. It helps proofread for errors and inconsistencies. It collects electronic signatures, distributes the final execution version to the parties, and incorporates the new agreement into the archived corpus. In short, it’s the contract system you’ve always dreamed of. No hair pulling. No tears.
A constant, diligent contract monitor
A particular challenge of legacy contract systems is the job of staying on top of current contracts to ensure performance and compliance, and vetting new contracts to avoid creating tension with existing obligations. The risks of not doing this job well, permeate every facet of a business.
For example, without clear communication and active management, the promises made to customers by an aggressive sales team can cause havoc for a procurement department in juggling vendor relationships. Your finance department needs to keep a close eye on the impact contract language can have on the timing of revenue recognition for tax filing and regulatory reporting purposes.
Your operations and legal departments must defend against the ever-present danger of missing a deadline to make a demand on or send a critical notice to a delinquent counter-party. We could go on-and-on, but suffice to say, if a contract system does not monitor performance and compliance effectively, then the consequences can cause lasting harm to a business.
Fortunately, today you can configure a CLM platform like ContractRoom to mitigate this risk. To give just a few examples, you can set up a CLM solution to:
- Keep your leadership up-to-date on performance milestones and compliance metrics;
- Track and report on delivery deadlines to help your teams coordinate their efforts;
- Set up alerts for when a counter-party appears to have breached a key provision; and
- Monitor how well individual team members execute contractually-required tasks.
In short, when your contract system lives within a CLM platform, it transforms from being a passive collection of documents and practices into an active, 24/7 participant in making sure your business and your counter-parties fulfill your mutual promises.
Transform your contract system
Listen, we understand why your contract system remains mired in mid-20th century contracting practices. Changing your contract system can feel like courting turmoil, which is the last thing any business needs.
But the right CLM solution, supported by the right partner/provider, can make improving your contract system relatively painless. And the benefits on the other side, frankly, will make you forget any adoption niggles almost immediately. Learn more about how ContractRoom can give your contract system the long-overdue performance boost it needs.