Does Your Business Need Enterprise Contract Management Software?
Enterprise contract management software streamlines end-to-end contract management. It can save the average business as much as 9% of its annual revenue. For many companies, those savings translate to hundreds of thousands of dollars a year.
While most organizations acknowledge that manual and paper-based contract management procedures are inefficient, some organizations realize greater benefits from enterprise contract management software than others. Here's a quick guide to help you determine whether your organization should consider investing in contract management software.
What is contract lifecycle management?
Because the purpose of contract management software is to manage the entire lifecycle of contracts, you may also see it referred to as a contract lifecycle management (CLM) solution. Before you can determine whether enterprise contract management software is right for your business, it’s important to know what a CLM solution does.
As documents make their way through your organization, administrative tasks and complex manual workflows create bottlenecks in the contract management process. These bottlenecks limit your capacity for growth and put unnecessary strain on key buyer/vendor relationships. Contract lifecycle management increases productivity, decreases risk exposure and drives revenue at every step of the contract management process by introducing:
- Centralized, searchable repositories
- Flexible, configurable workflows
- Templated document generation
- Workflow automation
- Clause libraries
- Digital audit trails and 360-degree visibility
- Increased security
After enhancing existing procedures with an integrated CLM solution, businesses see an average ROI of 356%. Returns are typically driven by reduced risk exposure, a reduction in human errors and a significant drop in contract time to completion.
The impact that contract management has on your organization can vary based on factors like your size, the complexity of your existing workflows or your industry.
Is enterprise contract management software for you?
Contract management isn’t often associated with profitability—yet many businesses spend a significant percentage of their resources on contracts. From authoring and reviewing to negotiating and signing, a single contract can cost your business as much as $49,000.
Not only could your current contract management process be wasting resources, you may be exposing your organization to unnecessary risks and putting needless strain on key client relationships.
The following five questions can help you gauge whether contract management software is right for your business.
How complex is your current contract management process?
From authoring and negotiating to reviewing and approving—every contract your organization produces passes through a familiar carousel of people and departments (sales, legal, financial, etc.). Even the most basic documents, like NDAs, may see approval and revisions from three, five or even 10 parties—and that’s before it gets seen by a client or vendor.
The more complex your document management process is, the more likely you are to benefit from enterprise contract management software that lets you orchestrate intelligent document workflows and automate manual tasks.
Complexity is an indelible part of growth. As your organization evolves, a contract management solution offers seamless scalability—equipping you with the tools you need to expand your operation.
What metrics are you using to evaluate your current procedures?
What does a complex contract management process look like? Before you can truly assess your organization’s contract management needs, it’s essential to identify the biggest pain points in your current process. If you don’t have data on key metrics, like those outlined below, you’re probably not managing your contracts efficiently.
- What is the cycle time of an average contract?
- How many actors are typically involved with each contract?
- How long does your team spend negotiating contracts?
- How long does it take you to retrieve a contract from storage?
- How do you evaluate compliance or security risks in contract language?
Understanding your current process will point you toward appropriate solutions. For instance, as the number of actors involved in the creation or negotiation of a single contract starts to climb, so does the opportunity for human error to creep into existing workflows. In a survey of over 1,300 contracting professionals, 90% of respondents said that human error has a significant impact on their contracting process—resulting in:
- Delays in closed deals (37%)
- Increased costs (34%)
- Missed opportunities due to misunderstood contracts (31%)
- Increased noncompliance risk (29%).
There is no magic number of actors nor is there a single metric that will tell you when it’s time to upgrade to enterprise contract management software. Gaining a better understanding of your organization’s existing procedures will make it easier to size up the impact a CLM solution could have on your organization.
What level of compliance does your organization need?
In industries where regulations like HIPAA or FedRAMP call for strict compliance, document generation and end-to-end document management has an added layer of complexity—which can create costly delays in the contracting process.
The greater your compliance needs, the more contract management software can de-escalate risk.
The regulatory landscape is constantly evolving. New contracts require strict adherence to existing regulations, but your organization may also need to filter through pre-existing contracts to identify and rework outdated language. For example, as the London Interbank Offering Rate (LIBOR) is phased out of existence, $240 trillion worth of contracts may need renegotiating. Without the right system in place to quickly analyze and mitigate risks, the price of managing your contracts will only continue to grow.
Do you have an intelligent, searchable contract repository?
The number one contract management challenge organizations face is finding and analyzing existing documents. Currently, only 23% of business professionals say they can find a contract in 10 minutes or less, according to an annual DocuSign survey. The year prior, 32% said they could find a contract in 10 minutes or less. That may seem absurd, yet as complexity grows, finding contracts can become more and more difficult.
Document management is only growing in complexity. An agile infrastructure is critical for businesses that wish to keep up with the dizzying pace of today’s digital work environment. Despite rapid change, many businesses still use paper file cabinets to organize their contracts—and 39% of documents today are stored as unsearchable PDFs. Neither of these methods offer the quick access or search functionality to support.
How long does it take you to locate and existing document using your current contract management solution? The more time you spend searching for documents across your enterprise, the more you’ll benefit from having an intelligent, searchable contract repository.
AI-integrated contract management software provides searchable repositories, clause libraries, and automated risk assessment tools to help organizations find the right document in seconds—significantly reducing the expense, time, and risk of contract generation and end-to-end management.
How do you manage contract tracking and visibility?
Sixty-nine percent of businesses use email to route their contracts between departments. While on the surface this may seem okay,, once a contract leaves your hands, it becomes invisible.
What do you do if a client asks for a status update? How do you track down a document that hasn’t resurfaced? Using email as your contract tracking mechanism is like building walls between legal, sales and procurement teams.
A 360-degree view of the contract lifecycle is critical. In addition to giving disparate teams the visibility and open communication they need to track contracts from start to finish, an automated CLM solution provides a digital audit trail that helps reduce risks and makes it easy to hold all parties accountable for their role in the contracting process.
For organizations lacking contract tracking and visibility, enterprise contract management software can speed up contract time to completion, help identify critical workflow complications and make it easier to manage client expectations.
What can DocuSign CLM do for your business?
The benefits of enterprise contract management software are evident. A recent DocuSign survey of 1,333 participating organizations showed that the average business saw a 50% reduction in contract completion time and an 80% reduction in contract drafting time after implementing the solution. Procurement, sales and legal teams benefitted the most from CLM.
DocuSign CLM provides businesses with contract management solutions that save money, increase agility and improve the customer experience.
Introduce your organization to searchable contract repositories, workflow automation and the future of intelligent document management by exploring DocuSign CLM today.