Unlock revenue growth with your contract data
Businesses run on data.
The universal language of business is made up of benchmarks, KPIs, graphs, metrics, and spreadsheets. Legal, however, has historically lagged behind in proving their value in numbers. While sales, marketing, and other departments propel themselves with data and analytics, using curated and colorful reports to tell their stories, lawyers have been relegated to using words—and waffling phrases like, “Well, it depends.”
Legal teams now have a massive opportunity to unlock new revenue growth with their contract data. But to take advantage of this opportunity, you first need to be able to extract and understand the data living in your contracts.
In this guide, we’ll cover:
- Current challenges collecting and using your contract data effectively
- Getting started: Transforming contracts from a cost to an asset
- Framework for strategic data collection
- Identifying and removing roadblocks from your contracting process
- Telling a data story and empowering data-driven decision making
- 5 ways data helps build your legal department strategy
Without a process to track and effectively use your contract data, you:
- Lack visibility into your contracting process: it’s difficult and time-consuming to identify the roadblocks in your contracting process and answer basic questions like: “What’s the status of my agreement? Where should I focus my attention?”
- Can’t demonstrate the value of your legal team: without data to justify headcount, increase resources, and determine priorities, legal teams struggle to prove their value across the organization
- Increase risk: Contractual obligations can pose severe risk, representing thousands of dollars in cost and lost revenue opportunities to your company if they are not fulfilled.
Contracts are the building blocks of business. It’s the most cross-functional activity in your business. Using your contract data effectively not only helps your legal team, but also every team across your organization.
Getting started: Transform your contracts from a cost to an asset
When you think about data, you have to think about the questions you want to answer with the results you’ll receive. There are no one-size-fits-all guidelines for the specific data points you should be tracking because every business is different and has different questions that need answering.
But regardless of what your business is trying to achieve and what your team is trying to achieve for your business, if you want to be a high-performing team, you will need to answer two key questions:
- What’s in our contracts?
- What steps can we take to improve our contracting processes?
The first is simply, “What’s in our contracts?” The data you’ll rely on to answer this question is called contract metadata, and we’ll talk more about what that is below.
The second question you need to answer if you want to be a high-performing team is, “What steps can we take to improve our contracting processes?” This question is really critical because contracting is the single most horizontal activity in the modern organization—and when you involve many departments, approvals, and steps, you introduce friction at every step. So you want to understand as best you can how to reduce friction and remove bottlenecks.
The data you’ll rely on to help you diagnose inefficiencies in your contracting process is called process data. When applied to your organization’s current problems and goals that involve contracts, process data allows you to confidently make strategic decisions for your team.
Let’s dive into the differences between contract metadata and process data.
Why is it important to track metadata?
Contractual obligations can pose severe risk, representing thousands of dollars in cost and lost revenue opportunities to your company if they are not fulfilled. Here are some example of how you can use metadata:
Scenario 1: Data Breach
Your company experiences a data breach. How quickly can you determine your contractual obligations for customer notifications and remediation measures?
Scenario 2: Renewals
Automatic renewals cost your company tens of thousands of dollars annually. Can you prevent automatic renewal of contracts that exceed a set threshold?
Scenario 3: Compliance
The regulatory and legal landscape is constantly changing. When new regulations require updates to your contracts, can you identify and update outdated templates quickly?
Process data, by contrast, is the information you mold to improve your contracting methods. In other words, every step that a contract undergoes until completion is what process data consists of.
Here are some examples of metrics you can track with process data:
- Total contracts completed
- Contracts completed by group
- Average days to completion
- Average days spent per step
- Actions taken by user
While most companies rely on process data to maximize growth, this information can also be used to find alternative solutions if setbacks arise. That’s why process data plays a vital role in strategic planning—helping executives determine, for example, which agreements and plans should take priority over others.
CLM software provides excellent contract data management. It organizes and structures metadata and process data for easy access, searching, and use as needed. When you initiate a new contract, all you have to do is input the information into the program, which then organizes all of the data for you. This allows your team to easily search any relevant contract data among the vast amount of stored information.
You can also add existing contracts into the platform, digitizing information noted on paper. This helps automate and modernize your business practices, allowing you to quickly update contractual information as needed.
Framework for strategic data collection
Now that you understand what process data and metadata are, here’s a framework we developed in partnership with our customers that demonstrates how you can incorporate data into legal strategic planning.
This framework is tactical enough to gain specific insights, but also broad enough to easily incorporate it into your current process.
Step 1: Strategic Research & Planning
- Ask the leaders of each business unit about their priorities. What reports would they like to see 6 months from now?
- Are there audits that you need to prepare for?
This is your opportunity to find alignment with business stakeholders on what matters most to them, allowing you to focus your data projects on the ones that carry the highest financial and strategic value to the business. It’s also about being forward-thinking and not only considering the data you need now, but the reports you want to compile six months or more from now.
Step 2: Benchmarking
- Gather industry best practices and metrics from forums (like CLOC and TechGC) and legal engineers
Step 3: Process Design
- Bake data collection into the contracting process
- Make the process easy for business users
Step 4: Learn & Iterate
- Every six months to a year, evaluate whether the contract process is working and whether you need to collect more or less data
- Determine who actually requests things from legal and, in turn, who actually needs to see the data
- Revisit requested reports
Following these 4 steps will ensure that you’re collecting the right data and allow you to put it to use building your legal team strategy.
Identifying and removing roadblocks in your contracting process
Today, legal teams at companies like Impossible Foods, Mastercard, L’Oreal, Cofense, and our own Ironclad legal team collect quarterly contract and process data with the aim of better understanding and ultimately improving the contracting process.
To identify and remove the roadblocks in your contracting process, you need to first have visibility into where your in-flight contracts stand and answer questions like:
- What is the current status of your contracts?
- What’s your average turnaround time?
- Where are contracts coming from (geographic location, department, etc.)?
- Where are the hold ups? Where are things working well?
Here are some examples of general process and efficiency metrics that Ironclad customers track to answer these questions:
- # of Contract Workflows Launched (Overall and by template type)
- # of Workflows Completed Overall and by template type)
- # of Active Workflows (And which step they’re stuck in)
- Average # of Days to Workflow Completion (Overall and by template type)
- Average # of Days to Workflow Execution (Overall and by template type)
- Average # of Days to Execute Legal-Approved Workflows
- Average # of Days spent in Review (Overall and by template type)
Note: A contract workflow is the contract template and the business process associated with it.
Using your process data to track these metrics will help you understand where you should focus your attention and how to optimize the system. You’ll be able to remove the bottlenecks and get business done faster.
STATE OF DIGITAL CONTRACTING
Introducing complete visibility into your in-flight contracts.
Telling a data story: If you’re not measured, you’re not valued
The true power of data is being able to share it with others to tell your story and prove your value.
Here are tried and true guidelines for sharing data:
1. Choose your metrics wisely—less is sometimes more.
At the end of a full quarter of data collection, you’ll have far more metrics than your colleagues have time (or interest) to review. Tell a powerful and compelling story by presenting your findings strategically. Identify two or three big-picture categories —for example, legal intake, sales workflows, departmental CLM usage— then fill out the categories with two to five curated metrics.
Tip: Make sure all metrics connect to your story cohesively.
2. Create a readable format for those not entrenched in your data.
To get colleagues (and time-crunched senior leadership) to pay attention to your findings or report, simplify it. Select a readable length, provide context and definitions, and supplement metrics with powerful, enlightening graphs. Ask yourself, “Will these terms and metrics make sense to someone who started working at this company two weeks ago?”
3. Share the report.
Inform your internal partners about your team’s activity (and its importance to the business). Two good approaches: book time during an all-hands meeting to share your findings and showcase your department’s data-driven mission; or, distribute your report as a quarterly legal review, setting the expectation it’s a recurring initiative.
4. Create a template.
After publishing your initial report, templatize it. Strip the data but keep the structure for next quarter, so you can plug and play without reinventing the wheel. Lowering the lift will streamline things and fashion a consistent report, prime for company-wide distribution.
Empower data-driven decision making across your organization
Sharing contract data is the key to becoming a trusted and strategic partner across the business. Empowering other teams with valuable insights means building cross-functional collaboration and seeking success as one unified, data-driven team.
Here are other ways data can drive better decisions across your organization:
1. Increasing accuracy of sales forecasting.
By analyzing closed-won rate for redlined v. non-redlined agreements, you can understand how likely it is for a deal to close instead of just asking your account executives for their best guess.
2. Understanding quarterly patterns to support EOQ rush.
By looking at volume of contracts and average turnaround times within a quarter, your legal team can be prepared and properly equipped for when sales needs additional support.
3. Power your finance team.
Identify payment obligations for contracts that were in-flight before they were even signed, gain visibility into data like term length and payment amount, and discover the ability to build the correct departments, teams, and approvers into the workflow. This means no contract will be executed unless it’s approved by all necessary parties.
4. Equip your marketing team.
Contract data helps identify marketing opportunities with current customers, including whether or not they signed off on logo and customer case study rights within their contract.
5. Assist your procurement team.
Procurement teams can significantly benefit from contract data in situations like supplier negotiations. By staying on top of payment terms, expiration dates, and other data within contracts, they can more easily manage vendor relationships.
The data you collect depends on your specific company’s goals. Here’s how this looks for Ironclad customers in various industries:
- A multinational cosmetics company’s goals are focused on channel ROI, so instead of just tracking Total Contract Spend on Influencer Agreements, they also track overall channel ROI for easy reporting.
- A construction company gains valuable financial data like W-9s and insurance from Vendor Questionnaires.
- A Major League Baseball team tracks workflows already in flight when selling season tickets and multi-year suite leases for accurate inventory and reporting.
5 ways process data enables you to build your legal department strategy
Here are some use cases to help build your legal department strategy with your process data.
1. Justifying hiring
- Track how your team’s workload is changing over time.
- Identify which areas require additional support.
2. Determining priorities
- Determine which projects carry the highest financial and strategic value.
- See whether the team is spending too much time on low-risk or low-value contracts.
3. Allocating work
- Identify what each of your team members is working on.
- Determine whether projects are understaffed, overstaffed, or properly staffed.
4. Presenting to the C-Suite
- Show how your team’s performance is trending over time.
- Demonstrate how much value your team is contributing to the company.
5. Improving business processes
- Identify what your team’s sticking points are, and how they might be fixed.
- Identify what infrastructure or software capabilities your team could benefit from.
- Identify bottlenecks in the contracting process to get business done faster.
Ready to unlock revenue growth for your business?
Watch State of Digital Contacting to learn how contract data can help you identify what’s working (and what isn’t) in your business processes, helping your team collaborate more effectively, reduce risk, and move faster than ever before.