71% of businesses are unable to locate at least 10% of their contracts. These businesses are likely to have low levels of contract management maturity, relying on systems and processes that aren’t fit for purpose. This typically looks like a combination of spreadsheets, emails and shared folders.
Choosing the right contract management tools for your business is a route to centralising agreements, improving contract visibility and realising the full value of contract outcomes.
In this article we take a look at the contract management tools businesses currently use that should be avoided - and why specialist software should be implemented instead.
Why businesses need contract lifecycle management tools
Without effective tools in place, stakeholders and contract owners face common contract management pains. These can include spending too long trying to find information, contracts auto-renewing without anyone’s knowledge or approval, or facing the consequences of non-compliance.
To resolve some of these pains, businesses need contract management tools that allow them to:
- Store contracts in a centralised, secure location
- Easily see and track key dates
- Locate contract metadata quickly and easily
- Drive adoption across the entire organisation
- Limited simultaneous access to the stored data
Seeking out quick contract management fixes like using a spreadsheet to store contract data can give these businesses the feeling of control as they look to resolve the issues. But beware that some solutions provide a false sense of security - especially when systems are selected for a quick fix.
Let’s take a look at some of the platforms in question.
Managing contracts through Microsoft Excel is a popular choice for many organisations. Already widely accessible, most teams are familiar with the product which makes it an easy solution to roll out for contract management. Little training is required, usage isn’t overly expensive and the brand name gives businesses confidence in the product they’re using.
Already a natural choice for data capture, using Microsoft Excel as a contract management tool makes sense to businesses that don’t have a system in place.
However, while it provides a solution for storing contracts and capturing key dates, the perceived relief will only be temporary."
Microsoft Excel lends itself to many limitations including:
- Manual data input which is time-consuming and unreliable
- Version control as existing information can be overwritten
- Difficulty tracking dates, obligations and clauses
Using spreadsheets as a contract management tool requires a guardian of the spreadsheet to constantly update the information and even spend time setting calendar reminders to stay ahead of key dates. This level of contract administration can be burdensome and convoluted, taking teams away from their high-value, strategic activities.
Microsoft Sharepoint is another popular contract management tool - particularly for businesses that aren’t yet ready to change their tech-stack. Sharepoint offers a variety of benefits, including familiarity and a shared repository where contracts can be easily stored. Microsoft offers brand comfort and programmes that can be readily adopted.
For those using Office 365, Sharepoint licensing is already included, saving your business time from researching and investing in a new and unfamiliar tool. However, this licensing model - especially if your business opts for the subscription option - is something that growing businesses will need to be aware of.
To get the most from Microsoft Sharepoint, your business will need to:
- Invest in training and additional licences for users required across the organisation
- Adjust existing hardware and software for either on-premise or hybrid models
- Seek guidance from Sharepoint developers where customisations are required
As a contract management tool, Microsoft Sharepoint offers features that can help your business to build better internal processes. However this will come at a cost that will only increase as your teams grow, your portfolio expands, or routing contracts for approval becomes more complex.
Today’s businesses are focused on data security - as are regulators. Morgan Stanley, for example, was made to pay $60 million to settle a data breach lawsuit - a sum that could stop some businesses from operating entirely.
Although cloud-based CLM solutions are becoming more popular, not every business is willing to make the move. This is often due to a lack of trust in the environment, leaving some businesses to opt for on-premise solutions so they can stay in control of their data."
On-premise solutions that can be managed internally give businesses increased security, visibility, and control. But these benefits don’t always outweigh the limitations which include:
- Increased workload on IT teams responsible for maintaining and updating systems
- Limited accessibility while stakeholder work remotely, delaying time-to-contract
- A lack of flexibility that prevents integrations with necessary platforms
Contract management tools need to work alongside your business, rather than make your business work harder. On-premise solutions can become unwieldy and difficult to maintain, preventing businesses from scaling quickly and easily.
Enterprise Resource Planning Solutions
Enterprise Resource Planning (ERP) solutions are also a popular choice for contract management tools. Sharing many similarities with on-premise options, an ERP allows businesses to use a single solution to manage the contract portfolio.
By streamlining to a single solution, IT overheads are reduced while the existing line-of-business applications are supported. However, using an ERP system can complicate the contract management process through:
- Oversimplification as they may not be applicable to automating internal processes
- High costs if the ERP needs to be customised to meet business requirements
- Unwieldy processes as a result of adding bolt-ons to the main system
While ERPs can be used to address immediate problems such as a lack of centralised contracts, they won’t be able to resolve problems specific to contract management. A lack of automation means that internal teams still face high administrative workloads, bottlenecks slowing time-to-contract and the risk of teams working in different ways.
What is the right contract management tool?
By assessing the limitations of popular solutions used by businesses to manage their contracts, it’s easy to see common themes. The potential for costly overheads, a lack of scalability and fragmented processes is increased when your business doesn’t choose a specialist contract management tool.
Choosing a solution that is made purely for contract management purposes will give you the best option for your business. It will directly address the pains across your business, alleviate many of the burdens of contract management and deliver a more substantial ROI than trying to use a combination of tools that don’t speak to one another.
ContractNow is a specialist contract management tool offering:
- A searchable, centralised contract repository for all of your agreements
- Cloud-based technology that is ISO certified, keeping your contract data secure
- Unlimited users keeping cost minimised even when your headcount increases
- An AI Extract Engine that automatically extracts and stores contract metadata
- Automated notifications triggered by key dates that alert you to upcoming renewals
- Customised dashboards and reports for increased visibility
If you’re looking for a contract management tool that addresses your specific needs, grows with your business and adapts to your requirements, book a demo or get in touch.