What Is Contract Lifecycle Management Software? Analysis of Features, Benefits and Pricing
What is contract lifecycle management software?
CLM solutions help manage the entire lifecycle of contracts, going beyond contract creation. These include the orderly management of contracts from bidding to award and compliance to renewal. They fast track contract management processes lending to you agility to pursue simultaneous contracts with faster compliance.
So, why use contract lifecycle management software? For starters, it connects all relevant processes, files and people to a centralized system that ensures compliance and data integrity, leading to cost-efficiency. Moreover, contract lifecycle management software adapts to a gamut of industries, more commonly in B2B industries, such as, construction, technology, mortgage and finance. It also adapts to noncommercial sectors such as education and life sciences.
In this guide, beyond answering–what is contract lifecycle management software?–we’ll also discuss the definition of contract lifecycle management software and its other aspects, including:
- Examples of Contract Lifecycle Management Software
- Benefits of Contract Lifecycle Management Software
- Types of Contract Lifecycle Management Software
- Features of Contract Lifecycle Management Software
- Buying factors to consider
- Pricing of Contract Lifecycle Management Software
- Potential issues
Making your contract management efficient has a direct impact on your profitability. It also helps nurture long-term client relationships, preventing disputes or non-compliance as a result of contracts left in disarray.
Welbaum Guernsey, a litigation service, lists the common causes of contract disputes as: errors and omissions; vagueness; and incomplete cost estimates. If you’re using contract lifecycle management software, these causes can be avoided easily; thus, saving you money and time from litigation.
This guide aims to walk you through the basics of contract lifecycle management software in the hope that you see the value and even its critical role to your company’s long-term profitability.
Examples of Contract Lifecycle Management Software
To help you understand the current market landscape here are a few examples of contract lifecycle management software.
- SAP Ariba. A cloud CLM solution with focus on the procurement process. It speeds up negotiation and contract drafting between buyers and suppliers. Key features include supply chain collaboration, strategic sourcing, spend analysis and invoice management.
- IBM Emptoris. An end-to-end enterprise CLM that covers all the bases in contract management from creation through implementation and compliance. It features contract performance monitoring and analysis.
- ContractWorks. A small business CLM solution featuring intuitive tools like Google-style search, templates and unlimited users. It features e-signature as an option. Key features include alerts & notifications, permission-based user roles and reporting.
- Accelo. It’s a CLM-integrated project management solution that helps you manage and track the contract terms of client projects. It includes key features such as invoicing, automated notifications and task management.
- Concord. A fully featured CLM solution featuring key tools like e-signature, online document editing and discussion space. The system also allows unlimited storage and open API for third-party configuration and data localization.
SAP Ariba lets you customize forms with unique specifications.
Benefits of Contract Lifecycle Management Software
What does contract lifecycle management software do? There are plenty of benefits to be had with this business solution. These are the advantages of contract lifecycle management software.
- Visibility on all your contracts. All your contracts are captured in a central place and shared with authorized users. The details are captured and indexed for quick data extraction where necessary. This gives you granular visibility and tracking capability, keeping you in the loop of your agreements and their terms.
- Accelerated authoring. You can save contract templates and clause archives in a library and quickly pull them up to create a new contract fast. A self-service wizard-like tool may be available to help you draft the contract. This setup applies to recurring or standard contracts that can be structured with fixed and variable parts. Templates also add a control layer over what go into your contracts. Likewise, CLM solutions may allow collaboration that lets people co-author or brainstorm on a contract in the cloud and on the fly wherever they are internet-connected.
- Controlled approval process. You can set up the CLM system with multi-tiered approval workflow that guarantees the contract draft passes the scrutiny of all key parties; thus, reducing the risk of errors. Legal, management, finance and other key departments can do pre-approvals before you sign on the binding terms. Having a systematic approval process also keeps all parties aware of their roles in fulfilling the contract.
- Negotiate with clarity. CLM solutions provide you with tools that allow you to track changes from draft to the latest version and flag the differences. This helps you push your agenda with transparency. Also, a checklist of issues for each contract may also be provided so you stay focused during negotiation.
- Secure signing. Once the final contract is signed off by all parties the printed file is kept in a secure place. CLMs may employ a barcode tracker to protect document integrity and prevent or capture tampering. A digital version may be kept in an encrypted location as backup reference to the hard copy.
- Capture risks, obligations, insights. CLM solutions feature compliance management that lets you track, report and alert you of terms that need addressing. This is critical to organizations with hundreds of contracts. Furthermore, contract lifecycle management solutions can analyze your contracts for potential risks or opportunities with a few clicks. For urgent issues or disputes, CLM solutions let you surface specific data or clauses to back you up.
Keeping track of your multiple bids is made easy with IBM Emptoris’ view interface.
Types of Contract Lifecycle Management Software
There are no distinct types that apply to this software category except for what generally apply to most business solutions today. These include:
- On-premise vs. SaaS. CLM solutions may be installed in your server for a license fee or subscribed at for a monthly price.
Example: Accelo vs. eContractHub
- Small business vs. enterprise. Some CLM solutions are designed for small business featuring a limited feature-set, while other systems are robust to meet enterprise requirements. Enterprise solutions include advanced features like bigger storage, larger library of templates, predictive analytics, extensive collaboration platform and flexibility to adapt to various contract types.
Example: ContractWorks vs. IBM Emptoris
- Standalone vs. fully integrated. Most CLM solutions are built on their own architecture, but others are integrated modules of a larger ERP.
Example: Concord vs. SAP
Concord’s dashboard lets you see at once the status of your contracts and bids.
Features of Contract Lifecycle Management Software
How does contract lifecycle management software work? The features of contract lifecycle management software are almost uniform across vendors, varying only in how they are packaged and their pricing terms.
- Contact creation. It facilitates drafting of contracts including pulling up relevant data and clauses from a library and using or creating templates based on your specifications. Versioning is provided to ensure you are using the latest draft and everyone is on the same page. Likewise, authoring tools can be set at different permission levels to protect drafts from unauthorized modifications.
- Audit trail. This monitors all activities done within the system, allowing you to track users behind changes or updates made on drafts. It may also capture logins, downloads, data access and other actions performed in the system.
- Compliance. This runs the gamut of evaluating the quality or feasibility of drafts based on historical contracts. Analyses are also made to guarantee that the terms comply with regulations or client agreements.
- Library. The CLM either integrates with a cloud storage or provides its own where you store drafts, contracts and templates in a centralized location for easy retrieval. The library also archives preset clauses that can be applied to standard contracts. Historical data are also stored for reference.
- E-signature. This may be available as a legally binding option to face-to-face contract signing, saving you time and expediting contract execution.
- Workflow management. Sets up a multi-step approval process with permissions at critical points to ensure all parties are on the same page and only authorized users have access to editing controls.
- Audit trail. Captures messages, annotations and agreements in the negotiated document and guarantees contract’s integrity.
- Alerts and notifications. Alerts can be set for expiring or for-renewal contracts, negotiation details, deadlines, clause inconsistencies and other notifications based on your rules.
- Collaborative editing. Many CLM solutions have collaboration tools for authoring, file sharing, online meetings and discussions that help stakeholders brainstorm and draft contracts in the cloud. A CLM may also integrate with popular IM and web conferencing apps to facilitate online communication.
Buying Factors to Consider
The purpose of contract lifecycle management software is critical to your business productivity and even revenue foundation. But before subscribing to a solution consider these factors; after all, what is contract lifecycle management software but to make things simpler, not complicated, for you.
- Can handle various contract types. The CLM’s document creation must be able to manage various contract types and formats including vendor contracts, customer SLAs, HR and NDA. That means the templates must be configurable to unique contract standards and allow you to add more specifications, as necessary.
- Tight approval process. To protect your contract’s integrity, the CLM must have different levels of user permissions and multi-tiered approval process. Admin can set editing or view-only controls to prevent unauthorized modifications in contracts. Similarly, document versioning ensures everyone is using the latest draft. However, the system must allow reverting to previous versions where necessary.
- Automation. What aspects of contract management should be automated for optimal process efficiency? These may include selecting templates of entire contracts and clause based on rules; generating time-bound reports; and moving the draft through the approval process with triggered alerts to stakeholders.
- Smart search. There should be tags and filtering tools to enable quick retrieval of past documents and data.
- Third-party integration. The CLM must especially integrate with your ERP or accounting system so it can pull up financial data for evaluating the contract’s ROI. Conversely, accounting needs quick access to contract terms for budget forecasting and other financial reports. There should also be integration with key business and productivity apps like cloud storage, sales software, document management and CRM.
- Security. This is always a major factor with vendors. Some of the security features to look for include: two-factor authentication; data encryption; user permissions; and access management. Likewise, verify the vendor for legitimacy and long-term reliability.
Pricing of Contract Lifecycle Management Software
The cost of contract lifecycle management software depends on the feature set and vendor terms.
- SAP Ariba. By quote only; the vendor will match your needs with specific feature-set.
- IBM Emptoris. Also by quote; its set of enterprise features will depend on your requirements.
- ContractWorks. Offers fixed annual and quarterly rates at $500 or $600 per month, respectively. Features include unlimited storage, users, features and upgrades.
- Accelo. Offers two price plans, Plus at $16 per user/month and Premium at $34 per user/month.
- Concord. Has a free app featuring online document editing, discussion board and e-signature; price plans start at $24.99 per user/month.
- Too much automation. Automation is good for standard procedures, but there will be instances when manual override is necessary for special cases. If the CLM does not allow this you may be compromising future negotiations for your inability to adapt to client requests. For example, an approval process may allow a third-party intervention where a client insists to be part of the draft creation.
- One size doesn’t fit all. Not all contracts have the same requirements, and even if they do, not all clients or stakeholders have the same specifications. A good CLM solution must allow configuration in critical areas such as templates, approval process, workflow management and user permissions.
- External parties not allowed. If the CLM solution does not allow access to external stakeholders like clients, vendors and regulators, it may be limiting the potential of cloud collaboration. Access, however, should be layered with permission controls.
- Do you really need one? CLM is great to have if you have multiple contracts to manage. But if you have few clients, the solution may be underutilized. Check the total ownership cost of a solution and mash it up with the ROI of your contracts over a period of time and see if the CLM is worth the cost.