The terms ‘contract management’ and ‘contract lifecycle management’ may seem synonymous. But there are some critical differences between them.
What’s the difference?
It’s important for organisations looking for opportunities to improve processes, profitability, compliance, and security to understand the differences between contract management and contract lifecycle management. You don’t want to miss out on the opportunity to use your contracts to achieve your organisational goals.
For the purpose of this blog, our definitions are:
• contract management – the manual approach to managing contracts with email, spreadsheets, and file storing
• contract lifecycle management – the strategic combination of people, process, and technology to ensure organisations get the most out of their contracts.
Managing contracts with Excel
Organisations typically use an Excel spreadsheet contract management template to manage contracts with a database that captures key information, including:
• counterparty name and address
• contract name
• contract expiration date
• notify days to cancel/renew
• next contract review date
• contract amount
• internal legal contact
• limitation of liabilities
• notes etc.
You can add formulas to track how long it takes to reach milestones, and use lists to keep your data consistent. You can password-protect your workbook, and use the track changes feature to ensure updates are reviewed and approved.
Is a spreadsheet enough?
For organisations with extremely limited budgets, a simple approval process, and the internal resources to monitor and oversee data integrity and document version consistency, a manual approach might be enough. The combination of emails and a contract management Excel template may help increase visibility over your contracts, and could be the first step towards taking real control.
The pitfalls of contract management spreadsheets
Spreadsheets can help you gain more control over contracts, but simply using a spreadsheet and emails to manage your contracts brings its own set of challenges.
To be effective, spreadsheets need to be diligently monitored, reviewed and manually updated to ensure data accuracy and database functionality. Even when these areas are closely managed, the reality is that spreadsheets are susceptible to human error, they don’t support document search functionality or document version control, multiple spreadsheets may be used and saved in various files, and even when password-protected, spreadsheets may not meet security regulations.
For most organisations, contracts help define the performance of their customers, vendors, and partners leading to decreased costs, increased profits, and more ROI. Spreadsheets are not built to provide the insights necessary to get the most out of contracts.
The limitations of Excel
So if you restrict your contract management to Excel, you won’t:
• receive alerts around pricing or under-performance
• identify potential opportunities for increased profits via cross-sell or upsell
• be able to use electronic signatures and document version tracking
• receive automated email reminders and calendar alerts
• eliminate data entry errors
• be able to streamline your approval process
• receive support secure anytime/anywhere access and collaboration.
There’s no doubt that managing contracts with a spreadsheet is preferable to no system at all. But when the volume and complexity of contracts increases, it will be cumbersome, and at times impossible to get the most out of your contracts without contract analytics and performance metrics, an automated review, approval, and renewal process, and standardised clauses and terms.
What is contract lifecycle management?
Contract lifecycle management moves beyond contract management by focusing on requests, authoring, negotiations, approvals, signatures, obligations, compliance, and renewals. Excel is not built to support full contract lifecycle management effectively or efficiently.
For organisations managing hundreds to thousands of contracts, or complex agreements, a comprehensive approach to contract management is the path to more control, risk mitigation, and increasing the value attained with contracts.
Implementing contract management software is the fastest way to improve contract management, and a leading contract management solution will fully support and streamline the contract lifecycle with the latest technology.
Managing contracts with intelligent CLM software
Contract lifecycle management software supports faster contract execution by removing roadblocks that delay contract authoring, negotiations, approvals, and renewals. Intelligent CLM Software enhances contract request, review and approval productivity by providing real time contract visibility – resulting in improved ROI, decreased risks, and lower costs.
Benefits of CLM Software include:
• the elimination of time-consuming, error-prone, repetitive tasks
• secure document storage and collaboration with version tracking
• reduced risk and increased compliance
• increased transparency
• reliable collaboration, negotiation, approval, e-signing, and renewal processes
• faster closes and more predictability.
Which option should you choose?
The contract management strategy you choose should be based on a combination of your goals, your time, your budget, and the level of value, security, and compliance you need to get out of your contracts.
If decreasing cycle time, reducing risk, and increasing profits, productivity, and efficiency are benefits that will provide the advantage needed to meet your goals, then it’s time to consider an approach that moves beyond contract management to contract lifecycle management.
Contract Insight – advanced contract management software from Four
Contract Insight is state-of-the-art intelligent contract management software from Four Business Solutions that is easy to use, simple to install and reduces your total cost of contracts.
• It’s a Windows PC based contract management software solution, with systems hosted on Microsoft Internet Technologies, utilising Windows Servers, .NET technologies and Microsoft’s MS SQL Server Database to store and retrieve data faster and more reliably.
• Security features include dedicated firewalls, monitored ports, monitored logs, backups, failover facilities, private web, private databases and server scans; all with username and password authentication.
• Contract Insight Enterprise can be either installed on your company’s servers or hosted as a Cloud-based SaaS solution. On-site help is available from our team, or you can allow Four Business Solutions to manage the solution via our cloud deployment.
If you’d like a free trial to understand how Contract Insight can boost your business, please call me, John O’Brien, on 0800 6250 025.