Exploring the Capabilities of Contract Management Software: Part 2 of a 3 part series
In the first part of this series we discussed the Current State of Contract Management Software Adoption. According to PayStream’s 2016 Contract Lifecycle Management Report, a slim 22 percent of organizations currently use a contract management system, yet many more are feeling the pressure both from upper management and with business challenges to better manage their contract management process. If you are feeling the pressure to convert, or if you are just looking for a more streamlined way to manage contracts, the following are some highlights of the capabilities and benefits.
Contract Authoring and Creation
The initial process of drafting up a contract becomes easier, more consistent and faster using contract management software. By having legal approve your contract templates and clauses upfront, anyone in the organization is able to request a contract to be created with pre-approved language, saving time and ensuring they are legally correct. Contract creation templates are highly configurable, can be simple or complex, ensure accuracy and consistency within the organization, and are easy to use. Users can utilize a pre-configured template to request a contract, and after approval the solution automatically populates the template with the requested information. Contract management software also allows for easier collaboration between multiple individuals or departments when drafting a contract. Total Contract Manager leverages the familiarity of Microsoft Word, allowing for easy adoption. During the review process, edits and important information won’t be left out.
Contract Approval Workflow and Negotiation
By utilizing an approval workflow, the process to finalize a drafted contract becomes much easier, and helps ensure the proper person views a contract at the right time in the process. Much like the contract template, the approval workflow is fully configurable, and can be constructed according to contract type, price, area and dollar amount threshold, and can go through both administrative and legal review. By simplifying the internal approval process, contracts are completed within shorter timelines and are more accurate.
After internal approval, contract management software allows individuals to send the contract externally for negotiation and external approval. By using the same system, many of the collaboration tools are the same, and again can be configured based on the organization’s needs. Suppliers can also access the same tracking, patching and attachment tools in order to ensure effective collaboration and communication. The process is made even more efficient by allowing all parties to electronically send, sign and store official documents, making it easier to track for future questions.
Contract Tracking and Renewal
Traditionally once a contract has been reviewed and made it through the entire approval process, it is filed away and only pulled out of storage for the rare instance that it needs to be reviewed. This practice is risky, as important deadlines and renewal dates are often missed. Using contract management software on the other hand provides constant contract lifecycle monitoring, ensuring negotiated terms are fulfilled and deadlines are met. Expiration dates aren’t missed with a contract management solution as users are notified of upcoming expirations, preventing lapses in contracts and saving time and money. Contract management software also monitors auto-renew dates, and even allow users to set their own auto-renew, allowing a contract to renew a set amount of times automatically before it is no longer active.
Contract Reporting and Analytics
All of the above features are a great improvement over the manual input and tracking of contracts, and these alone are great pluses to a contract management software tool. But many systems take it a step further, offering reporting and analytics to optimize existing contracts. By evaluating data from a contract’s lifecycle, organizations can better determine trends in contract compliance, costs, duration, and other KPIs. Organizations can even analyze existing agreements to determine if they should have recurring purchase orders, if they need to host a sourcing event and ways to work more cost-efficiently with existing sourcing partners.
As you can see, there are many benefits and capabilities designed to save you time and money. If you are ready to commit to a solution, check out the the next blog where we will discuss some contract management solution adoption best practices.
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Raki Prasad is a Product Manager at JAGGAER and specializes in contract management.