In the growing and increasingly competitive marketplace of today, the need for business process efficiency has never been greater. Companies must capitalize on every opportunity and resource available to them, maximize efficiency, and minimize cost if they wish to succeed in the modern business environment. Employees have a difficult time managing the daily workflow simply because they are expected to do more work in less time, with fewer resources.
In order to solve this workflow problem, many companies have begun to go paperless—or, in other words, to use digital documents and document management software to maximize workflow efficiency. Managing documents electronically reduces efficiency struggles.
One paperless solution which helps to maximize efficiency is contract lifecycle management (CLM) software. Just as switching every other function of a typical office to digital content management increases efficiency in the overall workflow, switching to electronic contract management is designed to improve efficacy in the contract management process. Consider the following benefits of an online CLM system.
- Streamlined Workflows: CLM software uses a central storage repository for both contracts and contract related data. The information stored here is easily searchable, making it available in seconds to those with proper access. Such access can be granted throughout the company, meaning that gaining proper approval, drafting, negotiating, and monitoring contracts can be done by anyone at any time. This reduces the amount of time spent recording new information, searching for information, sharing information on paper, and gaining approvals on new contracts.
- Increased Data Security: Digital storage and contract management is not only quicker, but also more secure. Contract management services are held to high security standards, and most offer bank–level security for their clientele. Access controls allow software administrators to keep their data private, dictating who can and cannot access, edit, and utilize information.
- Improved Risk Management: Contract management software brings with it an increased ability to mitigate potential risks inherent within a contract. Companies are more able to monitor contract compliance when they can view contracts and identify key information at a glance. This helps both parties remain faithful to contractual terms. CLM software also reduces non-standard contracts throughout the company by implementing standardized templates and language. Fewer contracts will fall through the cracks, and fewer contracts will go unfulfilled when contract management goes paperless.
- Increased Visibility: Using digitally stored contracts increases the transparency of a company. Auditors and administrators can easily track a document from genesis to termination, as all phases are visible and recorded in the CLM system storage repository. This makes it easier to keep tasks on track, identify problems and opportunities, plan for potential risks, and comply with governmental requirements of transparency and internal control.
The Paperless Process: 7 Steps for Success
The most effective method for implementing a paperless contract management solution is by using these 7 steps for success.
1. Analyze Your Current Contract Management Process
If you don’t have a clear understanding of your current contract management process, then it will be difficult to completely understand what a paperless management system can do for you. Begin by asking yourself a few questions about your process:
- Who is involved in managing each contract?
- How is information recorded?
- What is our drafting process?
- Is our language standard throughout the company?
- What is our negotiation process like?
- How are contracts stored?
- How do we retrieve contracts later?
- What percentage of contracts are lost or go unfulfilled?
Analyzing the current management process of your company, using questions like these, can help you understand the holes in the process. This allows you to set reasonable goals for improvement, which gives you a direction for implementation throughout the company.
Be careful that you do not analyze only a single department and then generalize the results, particularly if your company does not have a standard contracting procedure. Analyze each individual department to identify weaknesses, strengths, and areas of noncompliance before you begin the process of software implementation.
2. Identify a Pilot Department
One of the ideas which often causes problems for a company attempting to make the switch to paperless contract management is the notion that the transition must be universal and simultaneous. This mentality will cause confusion and a misunderstanding of the advantages of technology.
The best method is to first identify a department of your business to be the guinea pig, such as procurement, legal, or sales. Implement the contract management software in their sector, and then use the tech department to better explore, understand, and implement the available technology before expanding to the rest of the company. This allows you some time to monitor the adjustment, understand how to use the software, and develop methods for proper implementation into your specific company.
3. Develop a Leadership Team
Having identified the desired test sector, and implemented on a smaller scale, the next step will be to gain proper C-level buy-in and approval for a larger scale implementation. Obtaining this sanction from the higher-ups helps you to set the direction and goals for the project. With this new direction and set of goals, you can now establish an implementation leadership team.
This team ought to include the C-level administrators, representative stakeholders, and internal experts who can give feedback from respective departments regarding the needs, successes, and failures of individual departments as they institute the software. The idea is to ensure that every department has a voice in the proceedings, understands how to use the software properly, understands and is willing to work towards the established goals, and understands what is feasible using the software.
Select stakeholders for the leadership team that are high enough in the company’s overall hierarchy that they will be able to push the team’s agenda across the company. Select leaders who can motivate and inspire other coworkers, diligently implement the paperless system, and work well with other departments. It is all too common for one or two departments to implement the software and new management protocol flawlessly while other lag behind and refuse to comply. Choose leaders who will stop this from happening, as it will defeat the purpose of the software investment and reduce ROI for the CLM software that you’ve chosen.
4. Implement the CLM Software Solution Universally
With a proper lead team, as well as an idea of how the software can work within a department, begin the larger scale implementation. Use IT administrators to train employees on the proper use of the software and answer questions about its implementation.
Run through the process using a sample contract to demonstrate to employees what the best method for contract management should be. Show them how to search for particular information, access and edit drafts, and sign and negotiate contracts using the software.
Use your leadership team to monitor compliance and take note of and and all issues which may arise. Adjust implementation plans according to what you discover about each individual department, but try to keep the implementation as standard as possible.
5. Increase Awareness and Compliance
Be certain that every employee understands the goal of CLM software implementation, how to use the software, and what the proper contracting protocol is. The purpose of this awareness is to increase compliance with company contracting and procurement protocol.
Suppose, for example, that procurement uses standard language in their contracts to mitigate risk, increase clarity, and avoid lawsuits. Engineering, on the other hand, does not. Their language may seem clear to them, but it may actually be ambiguous in a legal setting. Engineering, then, is leaving the company open to possible litigation, noncompliance, or even failing to procure contracts which meet company standards altogether. One goal of universally implementing CLM software is to eliminate this risk entirely.
If every department uses standard contract language, clauses, and procurement practices, then the company is exposed to less risk due to ambiguous contracts or shady business partners. Standardize as much as possible, and make employees aware of every standard.
Having every department store their contracts in the same location also reduces the risk of lost contracts. The most updated version of every contract is immediately accessible to each department, meaning that a contract can never go missing. Maintaining compliance throughout the company will reduce risk, streamline inter-departmental contracting processes, and result in a higher ROI than you would otherwise achieve.
6. Measure the Impact of the Paperless Process
Have a system of useful metrics established to determine both the efficacy and the overall impact of the CLM software as you implement it. Notice whether or not it helps you capture, store, monitor, and access information. Assess whether the software has streamlined your approvals process, or not. Ascertain the extent to which the software has increased contract compliance, standard contract language, collaboration, and the number of contracts procured on a regular basis.
7. Evolve and Adapt the Paperless Process
Think of your contract management process as a versatile new system which must always be improved upon and adapted. While you should find a contract management solution that will last you for 10 or 15 years at the least, you will want to find one which can evolve with your company. It should never stagnate your company’s growth, but should grow with it.
Carefully document the good and the bad methods of implementation, usages, and outcomes of your CLM software. Note the methodology, and then keep a record of what your company does to adapt the software. This record will be useful to the next generation of leaders and system administrators, who can see clearly the development that the company has undergone to get to this point and the future trajectory of the software in relation to the company.
These steps are simple suggestions for implementing a paperless contract management process. They are designed to maximize the benefits of using CLM software and increase efficiency throughout your company.