How to adopt Effective Contract Management for your organization?

Contract Management often considered a back-end legal operation that has nothing to do with critical business impact, can be the most significant engine of an organization. Organizations can no longer relegate it to the junior clerical workforce and forget about it.

Enough has been said about Contract Management’s risk mitigation profitability, increased potential, and assuring compliance for organizations that invest time and effort in the same. If operational efficiencies need to be unlocked through contract intelligence, you need to follow a systematic approach to CLM implementation.

Unless there is time, effort, and resources coming together to build and deploy a robust contract management system for your organization, it does not reap the dividends you expect.

The more efficient the Contract Management, the better your value proposition will be.

If your organization is still functioning with disjointed and disconnected pockets of information and relying on employees to provide that data dashboard from Excel files and SharePoint databases: then it’s time to have an effective contract management strategy in place.

On that note, let’s explore the key factors of this transformation.

Know what you want:

As basic as this may sound, go back to the drawing board. You are revisiting your Contract Management process because something about it is bothering you and not providing the full advantage for your organization. So, understand what that is, brainstorm with stakeholders, and obtain clarity on what you want from the new system. Without this clarity, there are likely chances that you will falter along the way.

For e.g., If legal contracts are not scalable and are unable to keep pace with the business growth, then your CLM has to factor this as the core and work towards addressing the same.

Set your clear KPIs:

Once this clarity emerges, it’s time to document in detail the KPIs you wish to achieve from the new CLM software. It could be any or all of this: profitability increase, time management, resource bandwidth, and risk mitigation Agreeing upon this as a team before you embark on the CLM journey is crucial.

For e.g., it could be the number of days to complete the contract lifecycle or the total number of complete, outstanding, and missed contract obligations, which will help in improving the bottom line.

Assess the third party:

Signing up and entering into contractual agreements can be easy. However, another milestone step is to assess the entities, their credentials, capabilities, delivery schedules, and their ability to understand your concerns. Stating your expectations and obtaining buy-in, and documenting deliverables and deadlines are key.

For e.g., if your organization has a launch date planned it’s important to work backward and obtain concurrence from all stakeholders.

Establish Firm Processes:

Having a set of standardized templates or guidelines, common language, workflows will make the process seamless and straightforward. With multiple departments involved, every member must know their role in the workflow and have the necessary documentation as per the prescribed formats.

For e.g., a Robust contract management workflow minimizes drafting and maintains commercial agreements, It assists businesses to maximize the value from the deals.

Provide Training Solutions:

After implementing the new CLM software, what would be worthwhile is to provide your employees the necessary training in using the same. Comprehensive guides that help new employees understand the functioning are important to have a smooth functioning.

For e.g., on-the-job training in CLM software can be groundbreaking as it adheres to the concept of learning by doing. And encouraging experienced employees to train young and new hires helps the seniors relearn, and the juniors learn.

Continuous Auditing Required:

The implemented CLM software must be checked regularly for input and output. It should not suffer on account of incomplete data or obsolete functions. What worked during launch may no longer be valid, so regular auditing is essential to see what fresh upgrades need to be implemented.

For e.g., Often enough after the first flush of CLM implementation, organizations tend to load the system with unwanted data. To prevent this from happening, periodical audits should ensure data hygiene.

In Conclusion:

Suppose you find yourself able to: access critical contractual agreements easily from a centralized hub, get documents signed effortlessly, and track their milestones and obligations this is when you can safely say that you have an effective contract management solution. Else, it’s time you start planning on implementing one, keeping in mind the pointers mentioned above to craft an effective contract management solution.

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Raja

Raja

Raja leads the Sales and Marketing at Cenza and his job involves creating strategy for the day to day sales and marketing activities, and focused on optimizing the sales for Contract Migration, AI and ML training, Lease Management, and other managed legal services. Also help CLM providers with cost-effective solutions for contract extraction and migration needs.