All you need to know about Contract Management
Contract Management, also known as contract lifecycle management, is on a roll. For what was once considered a detail, 2020 has seen an unprecedented investment in the tools and use cases of good contract management, whether it's a new appreciation of force majeure clauses in the pandemic or the cascading effects of Brexit.
What is Contract Management? What is the business behind this discipline? How can you implement a Contract Management solution within your company? Hyperlex, THE online contract management solution for the entire company, deciphers this subject for you.
- Contract Management, definition
- The different phases of Contract Management
- Contract management: a challenge for the company
- Contract Management and Contract Manager
- The tasks of the Contract Manager
- What is a contract management solution?
- Who are contract management solutions for?
- What are the advantages of a Contract Management solution?
- How to choose the right Contract Management solution?
- 5 tips for implementing a Contract Management solution
Contract management definition
Contract Management is the science of managing and monitoring a contract throughout its life cycle - from conception to expiration, through negotiation, validation and execution - by coordinating internal methods and resources.
The different phases of Contract Management
The creation phase
It all starts with a request... for a contract. The various parties involved discuss what they expect from the agreement, a modification or a renewal. In order to draw up the contract properly, it is essential to identify the risks by gathering all the necessary information. This is often the task of the contract manager.
The negotiation phase
In business, negotiations can involve both commercial and legal terms, and there can be a lot of back and forth.
Validating contracts can be a long process (endless e-mail exchanges, reminders, forgetting to write, confusing versions of the contract, etc.).
💡 Did you know?
Digitizing the validation process speeds up, simplifies and secures the exchange of contracts in companies.
For example, it is possible to define validation workflows based on contractual criteria so that contracts are validated by the appropriate people. When a new contract that meets the criteria is created, the workflows are automatically triggered and your internal policy is assured!
Obviously, the signature is a key step.
The icing on the cake of the digitalization of the contract validation? Integrating the electronic signature, which closes this system as securely as quickly.
Throughout the life of the contract, commitments will be tracked: orders, modifications, renewals, terminations, key dates, deliverables, payment windows, milestones, performance objectives, etc.
Reporting and auditing
Within the life cycle of a contract, there are also analyses of the contractual activity of the company or sometimes, the realization of audits!
💡 Did you know?
Did you know that? A Contract Management solution that uses artificial intelligence allows you to identify at a glance the risks and opportunities of your contracts and therefore gain visibility on the content during the negotiation phase!
Here are three concrete examples:
Extremely useful for negotiation, versioning means being able to compare different versions of the same contract while keeping a history of the changes made. But it is also the ability for users of the Contract Management solution to notify their collaborators with a simple comment, for example, so that they can integrate other modifications into the contract.
- Summary sheets automatically filled in for each contract
The summary sheets offered in some Contract Management solutions highlight key data such as clause types, dates, amounts or durations. Artificial intelligence can automate the completion of the sheets to save valuable time for all those working on the contracts.
- an intelligent search engine
It will allow you to easily find examples of clauses or other legal elements already used in the past, in previous negotiations. No more doubts about what has been concluded previously!
Good to know: Hyperlex supports you throughout the life cycle of the contract.
To see our contract management solution in action, ask for your personalized demonstration!
Contract Management and Contract Manager
Contrary to what one might think, a Contract Manager is not always a lawyer. He or she is the person in charge of managing contracts on a daily basis: on the one hand, drafting them, and on the other, monitoring the application of contracts throughout their life cycle.
To do this, the Contract Manager acts as a project manager on the subject of contracts: he coordinates the processes necessary for the proper control of the legal and financial risks incurred.
The missions of the contract manager
The contract manager draws up and monitors the application of the contract throughout the contractual cycle. More specifically, a contract manager is responsible:
- to study the draft contract in order to understand it as a whole and analyse it
- to draft the contract and negotiate the contractual obligations
- to be able to change the contract or renegotiate it (in the event of disputes, penalties or simply a change in scope)
- to propose measures to cover the company in accordance with the clauses in force
- Evaluate opportunities related to the performance of the contract
- to keep contractual documents.
It also has an advisory role on the choice and conduct of purchasing and administrative procedures.
The good news is that Contract Managers can use a technological solution to carry out these missions!
→ More information about the Contract Manager
How to choose the right Contract Management solution?
Although the usefulness of Contract Management solutions is well established, a number of companies have not yet realized the benefits of the technology and have not adopted the tools.
This is often due to a misplaced focus in the implementation of the digitalization project: the emphasis has been on implementing the technology rather than evolving the processes that accompany what it enables. Here are five key principles that are necessary for a successful implementation.
5 tips for implementing a Contract Management solution
#1 Optimise your contractual processes ✅
Before implementing a CLM tool, it is essential to optimize your current contract management processes, as well as your delegations of authority for contract approval and signature.
It is important to get buy-in from the key users of this process (legal, purchasing, sales, etc.) and from other regions of the world if your company is international.
Without optimization, you risk digitizing an existing inefficient process, which will reduce the adoption of the tool and the overall benefits of the CLM tool.
Our advice: map your existing contractual processes, identify your pain points and design a new process with minimal handovers and clearly identified approvers/signatories for different contract types and risk profiles.
#2 Clean up your contractual data 📊
Contract Management solutions are only as good as the data they contain. It is therefore necessary to think carefully about the contracts and information you want to store in the tool rather than uploading all your information as it exists today.
Migrating contract documents is not a simple "copy and paste", information must be extracted from these documents to make them useful. This means that you need to determine what information you want to have on hand and make sure that your contracts are "readable".
Our advice: Start by cleaning up your existing contract base by removing duplicates and archiving terminated contracts.
→ We also recommend: contract management, 7 questions to ask yourself before investing in an online solution
#3 Optimise your contract templates 📃
Optimizing your contract templates is also an important activity to perform before implementing a CLM tool.
In this case, optimization means:
- Identifying all your existing templates;
- streamlining them, if possible;
- making sure you have the most recent versions.
Optimizing your contract models has several advantages: it improves risk management, as the most recent contract positions are included in the models, and it ensures that you take consistent positions.
It also allows your team members to be self-sufficient, as they only need to identify the right contract template to select for their needs. This reduces the need for other teams in the company to call on the legal department.
Good to know: technology can be a great enabler of this process by using artificial intelligence to analyze your current models against completed contracts. This allows you to identify your most common positions and provide a data-driven approach to developing new standards.
#4 Think small, at least at first 🤏
CLM tools offer many impressive features, but it's important to recognize your company's current maturity level to know if it's ready for these features.
For example, your company may store contracts on local hard drives, draft contracts based on the latest version in use, negotiate via email and sign by hand. In this scenario, a tool could help digitize this process with a central repository, drafting capability from online templates/libraries of clauses, negotiation via a collaboration platform and electronic signature. However, this is a significant change for the user, who at present is content to use basic word processing software.
Our advice: start with a minimum viable solution that will benefit the business, and then gradually roll out additional functionality as the business matures in its use of the contract management tool. A roadmap should be developed to show users how the tool will evolve over time.
#5 Get in the change management boat ⛵
Most of the failures in the implementation of CLM are due to the lack of change management and management support.
Technology is often seen as a silver bullet to fix a broken process, increase efficiency or reduce costs, but it is redundant if not used properly or deployed in the right way.
It is therefore essential to understand the impact of the change on the current working practices of potential users of the tool. Once this impact is understood, there is a need to raise awareness and communicate the capabilities of the tool and what the change means for specific user groups, as well as for the business. This should be done through regular communications from the company's leadership and local managers.
At Hyperlex, we help you structure, simplify and accelerate your contractual processes so that you can focus on what is really important to you: your business. Our turnkey solution will certainly allow you to gain in productivity, but it is above all our team that, by accompanying you in its implementation, will allow you to digitize your contractual processes in line with your needs in order to make the most of technology.
We offer you a tailor-made service to suit your needs
✓ A quick processing of your documents
✓ Personalized support
✓ Flexible subscription packages