How to choose a contract management solution

Contract lifecycle management, when applied methodically though the whole life of a contract, can result in very significant cost savings and efficiency improvements. In addition, it can reduce risk because assessing all contracts for risk will highlight those that need to be more carefully managed. Similarly, knowing which contracts are business critical will help the procurement function in the timely management of contract renewals and tendering competitions.

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Investment in a Contract Management System to deliver this management capability can deliver a significant return on investment (ROI). What should a business look for in a system to help manage the contract lifecycle?

Find a system that fits your business

If you’re buying an off-the-shelf package, you don’t expect a 100% perfect fit with the way your business operates. Nevertheless, the package should have sufficient flexibility for you to customise it, even though you may also need to change some of your working processes to fit around the new software.

Document management is a must

Remember that contracts are documents, and any system must be able to store contracts, specifications, emails, drawings and other related documents safely and in a way that allows them to be easily retrieved later. You may want to look for a system that uses numbering or some kind of classification, or one that allows you to index documents using keywords.

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The system will likely need a central document repository and a database of contract clauses that are used in standard contracts. It must also be able to handle versioning. Most businesses and organisations have document retention policies and will need a system that can implement these policies.

Business Intelligence functionality

A good Contract Management System will provide insight into your contracts and how the business could manage them better. A dashboard is a vital tool in this respect, allowing managers to see the real-time big picture and drill down to the detail.

Leading consultancies are talking about blockchain and smart contracts. However, the fact remains that most companies are not willing to place business-critical contracts into a context that isn’t yet fully understood.

Despite this, the benefits of a CMS system are now fully appreciated, and most businesses that do not have one are now moving to acquire one and reap the efficiency benefits.