Contracts are the building blocks of a business. No matter the company size, industry, or products and services sold, contracts are an integral part of everyday operations. They are “living” documents that need to be carefully constructed, stored, managed, and maintained, and as a company grows and changes, the number of contracts, complexity within those contracts, and overall contract processes tend to morph as well. And, as we all know, growth is often accompanied by growing pains.
Were Darwin alive today, he might look at the methods used for contract management as an evolutionary process. In order to most effectively control sales and contract processes—and ensure those processes grow with you—there is a “survival of the fittest” element for a company’s contract management system. Without the proper system in place, a company can experience a bevy of problems, including getting dinged in audits, not properly addressing key contract milestones, and missing out on revenue. But with the proper system in place at the right time, a company can recognize revenue faster, remove bottlenecks from approvals processes, optimally manage ongoing obligations, and structure more profitable deals.
Why is it important to make sure a company’s contract management is constantly maturing? A CLM system that can keep up with the speed and style of your business will ensure that you are properly addressing:
At what point does it make sense to move to a new system in order to stay “sales fit?” As a general guide that takes into account the factors above, see the following methods of contract management, and where your business is (or wants to be!).
In this group, contracts are maintained in a completely digital format and are likely stored in files or a Microsoft Access database. Contract activities are performed offline, but contract progress and deliverables are tracked in a spreadsheet that requires frequent updates.
Companies in this group either use a homegrown system (or series of disparate systems) to manage contracts, or have implemented a simple contract management database system, like Microsoft SharePoint which seamlessly works with a suite of Microsoft products. Since implementing a SharePoint server on-site requires intensive cross-departmental collaboration, often companies in this category default to a SharePoint-based vendor for their contract management needs. These vendors can architect the system to work with business processes, and companies are able to access contracts relatively easily in the cloud.
Enterprise contract lifecycle management is powerful and advanced software specifically created to manage a large volume of contracts and complex contract processes. Those in this category of contract management have moved beyond contract storage; contracts instead “live” in a secure contract repository where they can be searched comprehensively, including at a clause level. All old contracts—no matter what format—can be imported too, so they can be searched efficiently. You can create contracts from approved, secure templates, construct a contract by simply dragging and dropping clauses, and know at a glance where a contract is in the approvals process, and where it should go next. One-touch mobile approvals prevent bottlenecks (particularly handy at quarter-end), and alerts, analytics, and easy reporting keep companies on top of obligations management.
Companies need to meticulously vet solutions and partner with the right contract lifecycle management vendor to ensure all current and future needs are met. With this type of software—and particularly for organizations with complex contract processes—companies don’t want to get trapped by baseline functionality they might grow out of and need to replace.
Companies need to carefully consider the pros and cons of using suite vendors. Naturally, the price is right, CLM comes as part of the suite, and the user experience is likely familiar to what has been used before. However, some organizations require even stronger, more configurable contract management systems, and for that, they need a vendor that serves up automated contract lifecycle management as their core business and can handle any and all levels of complexity.
However far your contract management processes have evolved, keep what’s next on your radar. Set yourself up for maximum contract ROI by concocting a strategy and regularly checking in on progress to increase your contract management capabilities as your business expands. By putting the building blocks in place early on to grow the sophistication of your contract processes, you’ll be saving headache, time, and money in the long run.
Let us be your guide!
Selectica (NASDAQ: SLTC) develops innovative software that the world’s most successful companies rely on to improve the effectiveness of their sales and contracting processes. Our guided selling, sales configuration, and contract lifecycle management solutions support the Global 2000 and growing mid-size firms in closing billions of dollars’ worth of business each year. Our patented technology, delivered through the cloud, makes it easy for customers in industries like high-tech, telecommunications, manufacturing, healthcare, financial services, and government contracting to overcome product and channel complexity, increase deal value, and accelerate time to revenue. For more information, visit www.selectica.com.<< Back to resources