Contracts and agreements are an important part of any company’s operations. Some address the legal obligations between the company and other parties and some relate to purchase/sale of products and services among other things. Since contracts are negotiated individually and changes are made on a case by case basis, they require legal reviews and management approvals. Once a contract is in place, it needs to be monitored for compliance, expiration and renewals and triggered events as required. Amendments and subcontracts need to be generated as needed over the life of a contract.
Despite the importance of the contract management process, a lot of companies do not have a contract lifecyle management system and some even manage them by hand meaning that contracts and their revisions are in Word and PDF files and are kept in ad-hoc manner over the networks and systems. The history of approvals is usually lost and/or is not traceable. The e-signatures are not integrated into the process. It is not easy to find the relevant documents when needed. Event milestones such as renewals can be easily missed. Security and integrity of data concerns are not adequately addressed. This makes the process of generating and monitoring very difficult and error prone.
Important Contract Lifecycle Management Features
- Integrated contract repository
- Workflow for approvals and notifications
- Secure Internet/Cloud based
- Security standards
- Powerful Document Management and Authoring
- Authoring
- Document info
- Document Versions
- Document security
- Document sharing
- E-signature
- Integration with email (Outlook)
- Integration with Purchasing (PO) and Financials
- Customizable/Configurable/Extendable system
- Support different devices
- Reports, dashboards and reminders
- Role-based, Easy to use, Easy to implement
It is important for companies to invest in a robust Contract Lifecycle Management system which addresses the following key areas.
Integrated contract repository – A system to carry all contracts with their related documents, history and status in a safe and easily accessible repository. The contracts should be easily searchable based on any factor such as the parties involved, types, dates, status and other factors.
Workflow for approvals and notifications – The system needs to provide a flexible workflow to capture and ensure all necessary approvals based on the type of contracts and the amounts and other parameters. The system should store all approval histories as an audit trail which would be easily reviewable and reportable. Such workflow needs to be smart enough to issue reminders for incomplete approvals and keep the stakeholders informed of the contract approval progress. Workflow system need to be easily adaptable to the companies’ practices and be easily configurable as requirements change over time.
Secure Internet/Cloud based – The security aspects of the system are very important. A CLM system is best to be Internet/Cloud based so that there are no dependencies on the machine installations, software version, etc. Security standards such as the following need to be complied with.
Security standards – For the Internet based system, the security compliance such as ISAE 3402 and ISO 27001 standard certifications is very important to have.
Powerful Document Management and Authoring – Documents are an important part of the contract management. Therefore, the following capabilities are highly recommended.
Authoring – For generation of the contract documents, the system needs an easy process for a one-time import of different contract templates. It needs to be able to use them for the creation of the final contracts in a process which is similar to mail-merging for inserting the database information into the contract forms.
Document info – Users should be able to drag and drop documents into the system or email them to the contract object in the system. Each document needs to have searchable meta data that can be easily updated.
Document Versions – You need to be able to upload as many document versions as need be. The system needs to maintain each revision and make it available when needed.
Document security – Documents need to be secured for different roles as necessary. A check-out and check-in process should be available for documents. Document statuses such as draft, under review, published, etc. need to be available.
Document sharing – Documents are to be emailable from the system and also available to share based on a unique url.
E-signature – Electronic signatures are becoming very popular and commonplace. It is important for the system in include e-signature capabilities of its own and also provide integrations with popular systems like Adobe and Docusign. The e-signature process needs to be fully integrated with the contract workflow for ease of application and integrity of the process.
Integration with email (Outlook) – The system needs to be fully integrated with email systems to be able send out the contract documents to the parties and also issue notifications and updates as the contract management progresses.
Integration with Purchasing (PO) and Financials – Contracts which are for purchase or sale of goods and services would need to generate purchase orders and eventually invoices. This may be done within the contract management system itself or through seamless integration with the company’s backend financial system. Ease of integration and accuracy of the process is a key.
Customizable/Configurable/Extendable system – There is no system that can match a company’s current and future processes 100 percent as things are different from one company to another company and also things evolve over time. Therefore, a contract management system – CLM – needs to be easily customizable, configurable and extendable.
Support different devices – The system needs to support laptops and mobile devices. Imagine that an executive is traveling and needs to review and approve an important contract. It would be very helpful if the executive can bring up the contract, review and approve it on his/her mobile device while traveling.
Reports, dashboards and reminders – The system needs to provide a variety of reports and dashboards on a variety of key performance indicators (kpi). These include backlog of contracts in the works, upcoming contracts for renewals, compliance metrics and other factors. Modifying existing reports or creating new reports and dashboards needs to be available and easy to do.
Role-based, Easy to use, Easy to implement – This may sound like a cliché but it is important to assess the system for ease of use for different roles and ease of implementation. The system should allow for employees to request contracts and easily communicate with the contract management group. Providing ‘Single Sign on’ capability so that the users do not need to login separately and are automatically brought into their contract requests if they are already logged into their network for their email of other aspects.
Free Demo
Free DemoFree DemoAbout the author
Mehdi Khalvati, Ph.D. is the president of Axxerion Inc. Axxerion’s Contract Lifecycle module addresses creation, management, notification, finances and approvals for contracts. For more information, please review the contract lifecycle management page. Please send your feedback, thoughts and comments to mehdi@axxerionusa.com.