How Do I Know If My Company Needs Contracting Software?
Just like no man is an island, no company can survive today without relying on the contracts that govern every business interaction. These agreements define the boundaries, establish the responsibilities, and stipulate how each party should operate in a successful business relationship.
Formalized agreements control everything from employment terms to critical business support functions – while also setting expectations from your customers. No business can survive without some form of contract management process that influences most of its daily operations.
In almost every situation, the accuracy and completeness of the signed document will affect the company’s overall efficiency. According to World Commerce and Contracting, the impact of the pandemic illustrated a deficient risk mindset in most organizations. Contracting software systems can help businesses to establish successful relationships and manage risks effectively throughout the organization and life of a contract.
Five Reasons Why Modern Organizations Need Contracting Software
The business world’s complexity seems on an endless upward curve. This trend is forcing companies to focus their efforts on core competencies and, wherever possible, outsource vital support functions. The contracts that govern these processes still determine the operational efficiency of the company, making the draft, negotiation, and award stages of each agreement critical elements for business success.
Even with accurate agreements, the management of the entire contract lifecycle influences the organization’s bottom line. Some estimates put lost revenue stemming from poor contract execution at almost 10%. At the same time, contractual claims can run anywhere from 15% to 50% of the contract value, according to data from the World Bank.
For organizations that want to improve their overall operational efficiency, here are five reasons why you need contracting software, also commonly referred to as contract management software, to help automate and streamline your contract lifecycle management (CLM) processes.
1. Brings Digital Transformation Benefits
A responsive organization can adapt to changes quickly, and the use of technology is one of the main pillars for running an agile business. Contracting software replaces manual processes and paper documents in the company, providing greater oversight and increased contracting efficiency.
Digitalization of core competencies adds value to an organization that spans across critical business units. When the pandemic hit, companies who’d already set off on a digital transformation path were better suited to adapt and survive and those using contracting software were no exception.
Those companies who were slow-walking their digital adoption had to rush to catch up. Using contracting software as part of your digital transformation initiative builds a more resilient organization, ready to face the challenges of the future. McKinsey and Company recommend establishing a digital factory, if you want your digital transformation initiatives to succeed.
2. More Efficient Use of Company Resources
Removing manual processes and paper documents from your CLM is just the start of the positive change you can realize through digital transformation. Implementing contracting software also ensures that you can review, adapt, and increase efficiencies at every stage of your business lifecycle.
Cloud CLM solutions allow your teams to draft new agreements, concurrently negotiate terms internally and with third parties, and collaborate between cross-functional teams (including vendors and suppliers) easily. Predefined templates for different types of agreements that use the right legal language from a clause library ensure accuracy at every step.
You can also free up your in-house counsel to focus on more strategic tasks, instead of conducting extensive reviews of every agreement. Another consideration is that the complexity of the modern business world is necessitating a change in the roles of legal resources.
Expanding enterprises need to make the best use of their legal experts, and contracting software facilitates this change in focus.
3. Continuous Optimization of Business Interactions
Managing contract obligations and expirations are vital to optimizing the performance of a business. If one party to an agreement isn’t performing as expected, it’s vital that you know when it’s ending, so that you can start fielding new proposals from other entities and proactively eliminate the risk of auto-renewals.
A digital contracting system allows you to record all the key dates in a calendar and set up the necessary and automated notifications to alert your teams. With the system keeping track of every date from all your agreements, you can respond effectively and conclude the agreements that are holding back your business.
Another element you’ll need to track is the performance of your business partners during the post-execution phase of the agreement. A digital repository with all your substantiating documents, data, and other key information can help you make intelligent business decisions based on performance metrics in real-time. Contracting software systems enable organizations to continuously improve every aspect of their business operations.
4. Mobilizing Your Workforce
Contracts require input, oversight, and engagement from a wide array of human resources. Today, your teams want access to their work files from any device and location to remain productive. Notwithstanding the effects of the pandemic and WFH, a cloud CLM helps mobilize your workforce by granting them safe and secure access from anywhere in the world.
When resources are traveling or out of the office, they will no longer need to dig through emails and can interact with your digital contract files directly from any connected device. This is another great way that contracting software frees up legal and procurement team resources because end users such as Field or Sales reps can self-service their contract-related questions quickly without burdening other teams.
Cloud CLM systems also help to:
- Reduce the cost of your legal functions
- Increase information security without limiting access
- Scale your business operations as required
- Eliminate silos in your business units by enabling cross-functional collaboration
5. Connecting Company Systems to the Governing Agreements
The best contract management software will integrate with key business systems like your ERP and CRM solutions. This provides your teams with greater visibility into all the elements that determine your business performance. Your teams can make smarter decisions based on actual data passed bi-directionally between related business systems giving you accurate business intelligence and a single system of truth.
It also doesn’t have to end with just connecting your LOB applications to your contracting software. A digital CLM will set up your organization for continuous integration, allowing you to connect other physical systems when required in the future.
The rise of technologies like the Internet of Things (IoT) makes it possible to generate data from intelligent devices that can feed to your LOB systems. With more data available, your technical and legal disciplines can monitor performance relative to the agreements, establish benchmarks using analytics, and make informed decisions going forward.
Streamline Your Business Operations and CLM with ContractLogix
Getting started with contracting software now can help to prepare your business for future success. Contract Logix provides a fully-featured and robust CLM platform that caters to your entire contracting cycles based on any process model. Configurable to your exact needs, Contract Logix transforms your contracting process from isolated, time-consuming tasks to a central nervous system that provides your business with new intelligence and facilitates your digital transformation strategies.
If you need a contracting software system that delivers new operational efficiencies throughout your business, schedule a demo with Contract Logix here.
