CLM Software Defined
Contract lifecycle management (CLM) software is a technology solution typically offered through the cloud, designed to help legal and business teams manage their contracts digitally, from creation to renewal and everything in between. By streamlining the entire lifecycle of a contract, this software provides a unified workspace, enabling business users to self-serve and manage routine contracts at scale.
Although many businesses still rely on legacy enterprise CLM software to manage contracts, these platforms often fall short of addressing the complex challenges in-house legal teams face during these modern times. While they may move static files to the cloud for storage, the ability to locate, understand, and query these contracts is limited, and contracts tend to remain siloed instead of being fully collaborative.
As a result, contracts often end up as multi-versioned Docx and PDF files scattered across shared drives with little to no visibility. Legal teams continue to rely on multiple tools to get contracts created and signed. Even with a traditional CLM software in place, contract management can be clunky and time-consuming.
These days, newer software providers like Lexagle are taking a fresh approach to contract lifecycle management. By offering a unified workspace where legal and business teams can work together to manage contracts from beginning to end, platforms like Lexagle have made it possible for businesses to streamline their contract workflow and reduce the low-value administrative work required by legal. This not only removes bottlenecks from the negotiation process but also gives legal complete visibility into contracts.
Let's delve into exactly how CLM software works and how to choose the right platform for your team.
Contract Lifecycle Defined
A contract lifecycle refers to the step-by-step process involved in creating and managing a contract. This process covers all the stages from the initial drafting to the tracking of the contract after it has been signed.
Although the duration of each stage in the contract lifecycle may vary depending on the type of business contract, the general process remains the same. The stages include creating the contract, reviewing it, negotiating the terms, signing it, tracking its progress, and renewing it.
However, due to the legal complexity of contracts, it's not uncommon for them to move back and forth across the contract lifecycle. For instance, during negotiation, a contract may return to the review stage following changes proposed by a counterparty. Once changes are agreed upon, it will then be approved by relevant stakeholders, typically through approval workflows, before it can be signed. You make check out this blog article for more information on the contract lifecyle.
Should I Just Stick With Manual Contract Management System?
Relying on a manual approach to managing contracts also entails some specific risks that should be considered, which we will discuss below.
Lawyers are swamped with low-value tasks.
If there is no strong structure or management tool in place, business teams may continue to depend on legal teams for direction, even for routine contracts. This reliance on legal teams for low-value tasks can drain their time, which could lead to missing essential deadlines on more significant projects.
The probability of human error is higher.
Errors in legal agreements can be quite expensive. When teams try to manage contracts without a contract lifecycle management solution, they can overlook standardized language, fail to enter crucial data, or misplace vital information. These oversights could compromise both the contract's performance and your relationship with the other party over the long haul.
Transparency is lacking.
In today's collaborative business environment, many contracts require the involvement of multiple parties to reach completion. However, without a proper contract lifecycle management solution in place, businesses often rely on manual processes for contract creation and sharing, resulting in numerous versions and limited control.
This can lead to comments, amendments, and changes being misplaced or overlooked, creating additional work for legal teams as they strive to finalize contracts.
Manual data tracking is inefficient.
In the absence of a centralized and automated data collection system, manually managing the contract lifecycle can lead to incomplete or inaccurate data. As contracts provide valuable metrics to track, this can result in missed opportunities and financial costs for businesses, especially if important information like renewal dates and potential risk areas are overlooked. Additionally, this can make conducting contract audits a challenging task.
Managing change can be challenging without proper tools and processes in place.
A manual contract lifecycle can lack flexibility, causing challenges for complex contracts that require multiple rounds of revisions.
Instead of efficiently amending and commenting on contracts, counterparties, and colleagues may need to create and send over new versions of a document, leading to delays in the review process.
In contrast, advanced contract lifecycle management software enables contract stakeholders to make changes to contracts in real time, with the ability to redline and edit collaboratively where everyone can view and respond to these modifications.
Do I Really Need a CLM Software?
As a business grows, managing contracts using tools like Word, Excel, and shared drives becomes increasingly difficult. Legal teams may find themselves facing three essential questions that are difficult to answer:
- Where can I locate the most recent versions of contracts, and are they signed or have they been amended? Where are the relevant attachments?
- What are the contents of my contracts, and do they contain the most up-to-date and risk-adjusted terms?
- Who owns a particular contract, and who is responsible for carrying out the necessary actions during each phase of its lifecycle?
These pain points typically drive businesses to consider using a CLM software.
Benefits of Using A CLM Software
Build a contract creation process that allows everyone in your team to create contracts on their own.
A CLM software offers a self-serve workflow for users to create new contracts, accelerating the process and reducing the reliance on legal teams. The new contracts are based on templates with standardized and pre-approved language, which helps to minimize risks and enhance performance.
As a result, commercial teams such as sales teams can now close deals more efficiently without having to wait for legal teams. With this system in place, legal teams can act as enablers instead of being viewed as obstacles to progress.
Foster increased collaboration in your organization.
By using a unified workspace, multiple parties can collaborate and negotiate contracts more efficiently and quickly within a web browser. This collaborative approach minimizes the need for extensive internal reviews and reduces the time spent on negotiation, which can often be a lengthy process.
Increase efficiency through automation.
Using software to manage your contract lifecycle can automate many aspects of contract administration, making the process more efficient for your business. With contract automation software, users can benefit from:
- Automated alerts and contract reminders that keep all contract stakeholders informed and up-to-date.
- Customized contract dashboards that provide full visibility into every contract, ensuring that all parties have access to the information they need.
- Automated tracking that monitors milestones and deadlines, helping to avoid costly oversights and ensure that contracts are fulfilled on time.
Make data retrieval fast and convenient.
A CLM software will provide efficient and quick access to contract data, as contracts are stored in a centralized and data-rich repository that can be easily searched, audited, and analyzed at any time.
During the entire lifecycle of a contract, the software collects and organizes data, with every element of the contract captured as structured data, making it simple to search and query.
As your contract portfolio grows, the accumulated data can be leveraged to improve contract processes, inform your strategy, and develop contracts that drive better business outcomes through data analytics.
Integrate with your existing platforms to build a single source of truth.
One of the primary advantages of CLM software is its ability to integrate seamlessly with your current software solutions. This eliminates the need for manual data retrieval and entry, saving time and effort while ensuring that contracts are accurate and up-to-date. By automating data exchange, businesses can streamline their workflows, reduce errors, and improve overall efficiency.
Prepare Your Business For Expansion With Lexagle.
As your business grows, it can become increasingly challenging to manage the volume of paperwork and contracts that come with it. That's why Lexagle, Asia's leading contract management platform, is here to help. With our platform, you can automate your contract management process, minimizing the need for manual intervention. Our secure cloud-based solution lets you store and access your documents from anywhere, while our e-signature feature allows you to sign agreements on the go. Our platform also provides actionable analytics, enabling you to make informed decisions based on real data. Book a demo with us today to discover how Lexagle can serve you and your business.