The terms “contract management” and “contract lifecycle management” may at first seem interchangeable. However, there are clear differences between the two. Organisations looking for opportunities to streamline contract processes, increase revenue, improve compliance and maintain security will benefit an understanding of the differences between contract management and contract lifecycle management so that – when the time is right – they can adeptly leverage contracts to achieve organisational goals and reach new heights in contract administration.
For the purpose of this blog, “contract management” can be defined as the manual approach to managing contracts with email, spreadsheets, and file storing. In contrast, “contract lifecycle management” can be defined as the strategic combination of people, process, and technology used to ensure organisations get the most out of their contracts.
The outdated process of managing contracts with MS Excel
Some organisations use an MS Excel spreadsheet contract management template to manage contracts with a database to capture key information, including:
- counterparty names and addresses
- contract names
- contract expiry dates
- notification for days to cancel/renew
- next contract review date
- contract amount
- internal legal contact
- department
- limitation of liabilities
- notes.
Formulas can be added to track how long it takes to reach milestones, and lists can be used to keep data consistent. Some level of security (though it is comparatively error-prone and may fail to meet regulations and compliance) can be added to MS Excel by password protecting workbooks, and the “Track Changes” feature can be leveraged so that updates can be reviewed and approved.
For organisations with extremely limited budgets, a simple approval process, and the internal resources to monitor and oversee contract data integrity and document version consistency, a manual approach may suffice (at least at first). However, there are many risks, inefficiencies, and pitfalls to such processes – especially as contract complexity and the number of contracts increase.
The pitfalls of contract management spreadsheets
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 managed closely, the reality is that spreadsheets are susceptible to human error, they don’t support contract search functionality or document version control, multiple spreadsheets may need to be used and saved in various locations, and even when password-protected, spreadsheets may not meet sufficiently robust security regulations.
For the majority of organizations from various sectors, contracts are a tool that help define the performance of customers, vendors, and partners – leading to decreased costs, increased profits and greater ROI. Spreadsheets are not built to provide the insights necessary to get the most out of contracts. Managing contracts in Excel will not:
- provide alerts around pricing or under-performance
- reveal opportunities for increased profits via cross-sell or upsell
- support electronic signatures and document version tracking
- provide automated email reminders and calendar alerts
- eliminate data entry errors
- streamline the approval process
- support secure, widely available access and contract collaboration.
What is contract lifecycle management?
Contract lifecycle management moves beyond this blog’s definition of contract management by centralising and unifying:
- contract requests
- contract authoring
- contract negotiations
- contract approvals
- electronic signatures
- obligations
- compliance
- and contract renewals.
A process reliant on spreadsheets (however robust, revolutionary, and multi-use MS Excel may be overall) is not built to support full contract lifecycle management effectively or efficiently.
For organisations managing hundreds to thousands of contracts and complex agreements, a comprehensive approach to contract management is the path to more control, proper risk mitigation, and increased value attained with contracts.
Implementing leading contract management software is the fastest way to improve contract management. A reliable contract software solution will fully support and streamline the contract lifecycle with the latest contract software technology.
Experience full contract oversight with CLM software
Robust contract lifecycle management software supports faster contract execution by removing roadblocks that delay contract authoring, negotiations, approvals, and renewals. Future-minded CLM software enhances contract requests, review, and approval productivity by providing real-time contract visibility resulting in improved ROI, decreased risks, and lower costs.
Benefits of CLM Software include:
- elimination of time-consuming, error-prone and repetitive tasks
- secure document storage and collaboration with version tracking and redlining
- reduced risk and increased compliance
- increased transparency
- a reliable collaboration, negotiation, approval, signing and renewal process
- faster closes and more predictability.
Enjoy full contract lifecycle management
Now that you know the differences between a manual contract management software process and a proactive and centralised contract lifecycle management software process, it’s time to get started with a contract lifecycle management software solution at your disposal so you can easily conquer the full contract lifecycle. That solution is Contract Insight® – a leader in contract lifecycle management software solutions, according to Forrester Research.
Contract Insight from Four
Contract Insight is a cloud-hosted (SaaS) or deployed (on-premise) contract management solution. The acclaimed platform is trusted by thousands of professionals for their contract management, legal document management, procurement and sourcing needs. Used by many Fortune 500 companies, Contract Insight gives you real time visibility into your contracts. It doesn’t just shore up your security; it will help you meet contract compliance regulations, centralise your contract management and improve your overall contract administration process.
For more information, contact John O’Brien, CEO at Four Business Solutions, global business consultants and software integrators providing business processes improvements in Finance, Supply Chain and Operations, across a broad range of industries.