20,000 to 40,000—that’s the number of contracts the average Fortune 1000 enterprise manages at any given time! Managing business contracts on a large scale comes with unique challenges, from compliance risks and contract value leakages to cross-functional misalignments and privacy concerns.
According to WCC, inefficient contract management processes are responsible for an astonishing 9% revenue loss every year in enterprise companies. This is a wake-up call for contract managers: there's a gap to fill, and technology is just the right fit.
In this guide, we will discuss everything you must know about enterprise contract management, including practical tips and tools you can use to maintain productivity at any scale.
What is enterprise contract management?
Enterprise contract management is an approach to high-volume contract management where an organization's legal agreements from various departments and regional branches are consolidated within a single repository and managed from a single source.
To make this work, contract-facing teams often rely on automated systems to manage routine processes, establish libraries, and track compliance at scale.
Who should use enterprise contract management software?
Source: Andy Ramirez via Quora
If your company falls within any of the below-mentioned categories, enterprise contract management (or Contract Lifecycle Management (CLM)) software is a must-have:
#1 Scaling businesses
The larger the business, the higher the volume of contracts it manages. If you work in a medium or large-sized organization, you’ll find that managing contracts at high volumes can be chaotic.
There’s a plethora of repetitive processes at each stage of the contract lifecycle, and manual processes will barely keep up with the amount of work required for managing contracts at scale. You risk getting burned out, missing crucial errors, and losing finances.
Using enterprise CLM software drastically reduces such risks by automating these repetitive processes and establishing guardrails that leave no room for errors.
#2 Organizations in multiple regions
Most large organizations are spread across multiple locations. Within each regional branch, you'll find multiple departments that work with contracts as part of their day-to-day, like sales, procurement, HR, and legal teams.
Each of these departments creates contracts for business operations using formats and terminologies they've developed on their own.
At this level of operations, it's easy for siloes to form. With limited standardization across regional teams, contracts will lack consistency, and the chances of errors will be elevated.
Organizations use enterprise contracting tools to connect all their business units across regional branches to one system, enabling a more holistic management approach.
With enterprise contract management software, stakeholders can get a bird's-eye view of all the contracts the organization is winning in all its regional branches. This is how you achieve effective collaboration and create an efficient strategy for winning more deals.
#3 Companies operating under stringent regulations
If your organization functions within highly-regulated industries like health, insurance, and manufacturing, then you already know the risks associated with violating an industry standard.
Enterprises need to ensure their contract management processes are airtight and on point, with error margins as tiny as possible to avoid penalties and reputational risks. Achieving this with a manual approach is backbreaking work, considering the sheer volume of contracts these enterprise-level businesses manage at any given time.
With an enterprise CLM, organizations can avoid contract compliance risks using inbuilt guardrails and standardized workflows. That way, the company stays completely safe while pushing for new milestones.
Also read: What is Contract Compliance? The Ultimate Guide With Tips and Best Practices
How does an enterprise contract lifecycle management system work?
An enterprise CLM starts by pulling contracts siloed within business units across an organization's regional branches into one central repository in an organized, searchable format. This allows in-house legal professionals and other stakeholders to get a good overview of how contract processes are being handled across the organization with just a few clicks.
Afterward, it arms users with a suite of tools for managing contracts more productively. These tools cover instances like approval automation, template creation, eSignature, reporting and analytics, etc.
Additionally, contract management solutions enable effective collaboration by integrating with business tools already used by teams in the organization. That way, data is exchanged more swiftly, and negotiation processes take less time.
Source: Laura Clemens via Quora
Benefits of an enterprise contract management software
Enterprise contracting systems can benefit your organization in many ways. Here are a few things that make them a must-have for your company.
#1 Centralized, searchable repositories
Centralization of contract documents is one of the most important features of enterprise CLM systems. Contract repository systems pull agreements from all business units and store them in searchable formats.
A study by IDC revealed that employees spend about 1.6 hours of their workday searching for information. With contract lifecycle management systems, information retrieval will take only minutes, giving you time to achieve more with your day.
#2 Templatization of high-volume contracts
Contract management solutions allow you to create templates for all kinds of contracts (NDAs, SOWs, etc.), so you don't have to start from scratch whenever a new deal comes around.
Templates provided by the best platforms come with legal guardrails and standard approval routing. So, not only are you creating contracts twice as fast, you're also doing so without fear of risky errors.
#3 Automation of approval workflows
Stakeholders often have their hands full, so they may forget to approve contracts from time to time. If you rely on manual reminders, you'll struggle with annoying delays and might even miss out on important opportunities.
With a digital contracting solution, this challenge won't apply to you and your organization.
You can simply work with these stakeholders to set up automated contract approval based on triggers like contract type, value, location, etc.
That way, routine contracts with lower risk profiles can be approved without you chasing them around for their manual input. An automated approval process can be a game changer, especially if you're looking to double the amount of routine contracts you close in a given period.
Also read: A Step-by-Step Guide on Contract Workflow
#4 Robust audit trails
Enterprise contract lifecycle management solutions offer 360-degree visibility into the entire contracting process. Thus, you can track contract versions, see who's responsible for specific changes, which files are accessed, and how collaboration is going in general. This helps you keep the entire process transparent while identifying bottlenecks and optimizing for operational excellence.
SpotDraft generates audit trails so that you can tamper-proof your entire contract process with a detailed script of what changed, when, and who changed any part of it.
#5 Insights and analytics
With manual contract management, there’s hardly any way to track data from historical contracts. This makes it hard to optimize and get more efficient with future contracting processes.
But this is pretty easy with enterprise CLM tools, as they come with analytics features out of the box. So, you can dive into contract data, identify bottlenecks, and spot contracts that bring the highest revenue, among others.
Also read: 5 Key Contract Reports to Share for C-level Review
#6 Improved security
Poor security is a major concern for organizations storing contract documents in physical cabinets and basic digital storage systems. In 2019, a study by Varonis revealed that only 5% of folders in organizations are adequately protected. What risks do you think the other 95% are exposed to?
Enterprise contract management software is designed to eliminate security risks by establishing authentication protocols that protect contracts from loss, unauthorized access, and tampering.
Some of the major security features in enterprise contract management software include Single Sign On (SSO), audit logs, extensible permissions, and backups.
What should you look for in enterprise contract management software
The truth is, there are just so many enterprise contract management solutions available today that it is easy to get overwhelmed by options. The key is to remember that all solutions are not created equal. You must prioritize options that meet criteria relevant to your organization's business needs.
Here are some qualities to look out for:
#1 User-friendly interface
When it comes to contract automation, time to value is heavily dependent on how easy the solution is to learn and use. A steep learning curve means you’ll need to work harder than necessary before you begin to see results.
Ensure the tool has a good ease of use rating if you’re considering it.
#2 Customizability
You want a system that not only comes with good features but is also flexible enough to be customized to your organization's unique needs.
This is particularly important when dealing with high volumes of contracts in different categories. You need to ensure that the CLM solution allows you to create custom workflows for your various contracts without hassles.
#3 Customer support
Without adequate support, your experience with tech solutions will be unbearable. Things will not always go your way, so it is vital to ensure that you have a responsive support team to fall back on any time you need help.
#4 Automation features
A good contract management tool should offer flexible automation features to handle the mundane, routine tasks you typically handle manually.
You should be able to automate reminders, approvals, some parts of contract drafting, and much more with the right CLM.
#5 Integration capabilities
Business units within your organization have existing workflows and use specific tools for their day-to-day operations.
You'll need a contract management tool that integrates seamlessly with these tools so they don't have to deal with the annoying context switching. The ability to integrate with these tools also makes the contract management tool a major confluence for data and a powerful collaboration system.
#6 Risk management
One of the main aims of a contract management solution is to help reduce contractual risks. Find out what measures each platform has in place to ensure that your contracts are compliant with industry and federal standards and that chances of risks are driven down to the bare minimum.
Also read: 8 Top Contract Management Software Platforms
8 Best practices for implementing enterprise contract management software
Transitioning your enterprise from the traditional contract management approach to an automated, tech-led system can be challenging. According to a panel by Legalweek, up to 60% of contract management implementations fail.
This is usually due to poor planning, misalignment, and wrong prioritization.
Thankfully, by following the best practices discussed below, you will be up and running in a short time.
#1 Get executive buy-in
“As an in-house counsel, you have to be business-minded because you're part of the brain trust.”
~Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos
Getting top-level support before adopting an enterprise contract management solution is important.
This entails communicating the importance of the adoption, the budget, expectations, and the timeline for implementation and training. Without support from the executives, there’s no chance you will succeed with the implementation.
#2 Establish a SPOC
After getting approval from stakeholders, the next thing to do is establish a single point of contact for the entire program. This needs to be someone with proven expertise and experience. Doing this bridges the knowledge gap between your vendor and your organization.
This individual will help break processes down for internal teams and relay concerns and questions to the vendor on behalf of the organization.
#3 Invest in team training
Indeed, a contract management tool is only as good as its user. Without proper training, time to value will be painfully long, and using the platform to its maximum potential will be hard.
Team training ensures that everyone is moving at the right pace with the adoption. When everyone understands the ins and outs of the contract management solution and how to use it within their teams, the positive effect is felt throughout the organization.
#4 Set up contract workflows
Your contract workflow encompasses everything you need to do to move the contract from request and approval to execution and renewal.
Setting up contract workflow establishes all the critical steps required throughout the contract lifecycle and highlights repetitive processes for automation.
SpotDraft enables you to automate your contract workflows by offering comprehensive templates, eSignature features, and custom automated approval triggers. This helps you create fast-paced yet efficient workflows for your contracts.
#5 Check your existing tech stack and figure out how to blend it with the contract management tool
A CLM system should make existing systems better, not replace them. You should discuss with your vendor about the tools your teams already use and plan ahead on how to integrate them efficiently.
SpotDraft is designed to work with the tools you’re already used to. This is done by providing integration points for popular software like CRMs, collaboration platforms, cloud storage providers, etc.
For custom integrations, you can leverage SpotDraft’s REST API to build integration points for your internal business tools or reach out to a member of the support team for assistance.
#6 Let your data guide you
“It is vital for a GC to position and exhibit the team’s work in terms of value or ROI. That usually comes down to numbers, charts, and graphs. You have to learn to speak their language.”
~Sterling Miller & Senior Counsel, Hilgers Graben PLLC
Ten Things: Asking For More Legal Department Resources (How and When to Go Big)
There’s a wealth of information hidden in every piece of business data. That’s why it’s considered “the new oil.” Always dedicate time to dive into your contract management analytics. You will discover crucial insights like the average TAT for contracts, most profitable contracts, bottlenecks, and more.
By making data-driven decisions, you’ll continuously optimize your contract management experience, improving productivity and generating better results.
#7 Improve alignment
The legal department is often seen as an unnecessarily strict department by other business units because they “over-scrutinize” the content of every contract and delay the entire process.
But this is merely a misunderstanding because the general counsels are simply trying to keep the company out of trouble. A contract management system is naturally built to improve alignment between teams and avoid situations like this.
However, it is important to go further by establishing communications between stakeholders across contract-facing teams to discuss unique concerns and share ideas on improving collaboration.
“You have to start by listening. If you don't do that, you'll end up talking in the wrong direction and not managing risks that actually matter. So, listening upfront, in my opinion, is the best way to build a relationship with business and counsel internal stakeholders.”
~Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos
#8 Set targets for your most important metrics
What do you consider most important for your organization? Do you prioritize an increase the volume of contracts executed monthly, a reduction in litigation, or an increase in renewal rates?
Attach a target value for each of these goals and work with your team to develop strategies for reaching them. With a target established for your team, you'll be able to work with a clear direction.
Why you need enterprise contract management software
Managing contracts at the enterprise level is a completely different ball game. The challenges are significantly amplified, and because of the sheer volume of contracts entering the pipeline at any given time, even the smallest oversight can come with oversized consequences.
But by using an enterprise contract management system, coupled with the right implementation strategies, the entire contracting process becomes streamlined, minimizing risks and maximizing results.
SpotDraft makes contract management a cakewalk for enterprises by offering a combination of functionalities that help teams launch winning contracts at speed and at scale. Users close deals two times faster, reduce contract review TATs by 70%, and save contract review costs by 95%.
From automated workflows and comprehensive analytics to templates enriched with legal guardrails, SpotDraft is packed with everything you need to get your contract management productivity to the next level.
Want to get a practical view of how you can transform your company's contract management process with SpotDraft? Request a demo here.
