What’s the importance of contract management software?
Businesses don’t exist to manage contracts, but many are stuck spending too much time on this non-core work. A true contract management system helps by automating workflows, shifting time-consuming contract cycles from internal employees who should be focused on strategic projects to cloud-based, contract management platforms that simplify the contract management process into a few clicks.
In a climate where competition is fierce, timing is critical, and professionals are being pressed to do more with less, contract management systems speed up contract negotiation and approval processes, reduce costs, and generate data, giving businesses an edge on the market.
What are the benefits of a contract management system?
Contract management systems create an important advantage by freeing lean business and legal teams from spending large amounts of time on large volumes of routine contracts, allowing them to focus on more complex, higher-value work.
A contract management system can also transform disjointed, multi-turn negotiation processes into organized, streamlined workflows involving one or two exchanges within a centralized repository that provides real-time status tracking, an audit trail of existing contracts, and the ability to extract contract data.
As the contract lifecycle management strategy solidifies thanks to this advanced contract software, several other benefits emerge. As the contract management system aggregates, analyzes, and reports contract terms like jurisdiction and governing law, term, non-solicit clauses, and relevant exemptions and carveouts, trends begin to appear. Analyzing digital contract data trends offers insight into ongoing obligations and operations, as well as helping to create benchmarks for future negotiations.
Finally, before the rapid growth of legal technology over the last decade, businesses paid hefty fees for all legal services to traditional law firms and typically did not have access to the contracts those law firms worked on or the data in those contracts. By combining a smart contract management system with new alternatives for processing routine contracts, including more cost effective alternative legal services providers, businesses can right-size their legal spending while allocating traditional law firms to more complex work.
What are the key features of an effective contract management system?
The data that emerge from a contract management system are among the most important benefits. As noted, contract data analysis gives businesses greater insight into their operations, enabling them to make data-driven improvements. Bringing together an advanced contract management system and legal experts who understand the intricacies of contract negotiation and contract workflows results in a complete contract management solution that fundamentally changes how businesses interact with their routine documents.
Contract data can also train artificial intelligence and machine learning programs, laying the groundwork for contract intelligence and automation. As these datasets grow, AI-powered contract management platforms will first analyze contracts and establish whether certain provisions are present before advancing to a point where specific terms can be negotiated, with almost no human involvement.
Sufficient contract data is the key. It comes from the processing of large contract volumes through sophisticated contract management software that reduces cost while speeding up contract creation and execution, increasing adherence to preferred terms, and improving overall business outcomes.
Why contract management systems are a must-have
Contract management systems that help organizations cut costs, speed the approval process, minimize risk, and generate contract data will soon be indispensable for all legal departments. While it’s a competitive advantage at the moment, a strategically driven and purpose-built contract management system that supports contract automation and intelligence will be the standard driver of both excellence and innovation across the industry.
“For those departments that have the patience to keep on the data analytics path, the continued development in perspective and capability will yield greater results over time,” according to the Corporate Legal Operations Consortium. “As they become more sophisticated users of data analytics, in-house legal professionals are certain to drive the industry forward, obtaining greater visibility into their department operations and uncover new insights into how to improve their business performance.”