Why Contract Data Management Is Crucial to Legal Teams
Contract data management is the digital management of contracts across all functions, organizations, and systems. It effectively empowers in-house legal teams to automate their contract management processes and continually extract business intelligence from their contracts, even when they are archived.
Effective contract data management (CDM) solutions give legal teams a strong data management foundation by tracking all contract-related data points and making that data accessible and searchable. CDM can extract information on what’s in your contracts, such as renewal dates and contract value. CDM can also determine the time spent on each contract and the cost by scraping data on how a contract is processed and prepared.
1. Operationalizing system process data
Operational data, which is any data related to processes, helps legal teams examine the time and cost it takes to process contracts and use that data to create the most efficient operating methods to manage a contract through its various lifecycle stages. This means legal teams can effectively use CDM to build processes that will enable them to handle their workloads smarter, faster, and more efficiently.
Examples of this data include:
- Time to complete a contract from initial request to final signature
- Cost to complete a contract from initial request to final signature
- Average reply time for each responsible party
- Turnaround time at each stage of the contract management process
- Number of workflows initiated and completed by specific departments
- Average time from redlines to sign-off.
2. Substantive data to mitigate risks
Contract data management follows the legal imperative to mitigate risks at all costs. The substantive data collected through CDM enables legal teams to get ahead of contractual risks and obligations.
Examples of substantive data include:
- Type of legal entity
- Specific contract dollar amounts
- Contract Length
- Contract Duration
- Contract Author
- Renewal obligations
Once substantive data is collected, a CDM platform will enable you to conduct immediate real-time collaboration by directing comments and suggestions to specific people using @person messaging. Parties can be looped-in as necessary without waiting for additional approval or permissions. Any changes can be seen simultaneously, whether the collaboration occurs with business partners in procurement, operations, finance, marketing, or HR.
3. Increasing revenue with automated flags
Contract data management is vital to increasing business revenue. A good CDM solution flags items in contracts that are up for renewal or have predefined conditions. Automating the entire contract data management process allows you to quickly spot potentially risky clauses. It also prevents the use of outdated or unapproved templates that may leave the business open to liabilities.
Automated flags through the entire contract data management process allow you to focus on more legal work and less paperwork.
4. Contract metadata
Finally, gathering metadata and contract specifics will make it easy to answer common questions, like:
- What percentage of contracts contain a particular clause?
- What percentage of contracts are impacted by new regulations?
- Which contracts have an IP assignation?
- How many contracts are currently under review?
- Which contracts take the longest amount of time to complete?
- How many contracts are up for renewal in the next month or next week?
Controlling and collecting contract data helps legal teams protect their businesses, decrease expenditures and provide critical insights by examining and using metadata effectively. For example, if contract data shows that certain types of contracts take a long time to create, a team can work strategically by prioritizing team requests to allow for that extra time. Alternatively, the contract itself can be evaluated to find pain points that can be streamlined or automated away. In the process, legal teams can free themselves from work-intensive paperwork that can easily be automated.
CDM software constantly tracks and collects metadata on every contract, whether it’s an NDA, BPA, MSA, or an influencer agreement. The collection process continues from initial contract request to creation to redlines to signature sign-off to archiving. This constant gathering of data allows Legal to flag renewals and find conflicts before they become an issue.
Benefits of contract data management
Contract data management goes beyond a simple storage database to archive contracts. A digital contracting platform like Ironclad can streamline and automate every part of the contract management process, generating the type of contract data legal teams require.
An effective contract data management solution incorporates intelligent automated data collection throughout the entire contracting process and enables legal teams to:
- Provide self-serve contract management for business users in any department
- Implement contract workflows to automate requests
- Centralize contract storage and make it easily accessible and searchable
- Empower contract management to become a source of continued revenue
- Use data to increase speed of contracting, collaboration, and negotiation
Contract data management is also beneficial when it works from a single platform and operates seamlessly without relying on multiple, disconnected systems or static storage archives.
Contract data for legal metrics
Contract data management tools can also collect data directly linked to your organization’s most critical business and legal goals. By narrowing your focus, you can act on what your data tells you. Optimizing around company goals can help you improve your operational processes. In addition, working with other departments to establish goals decreases potential friction and gets them invested in the CDM process early on.
You can identify and track the data that corresponds to your team’s most important goals, whatever your goals might be. For example, you can use data to track contract compliance or figure out how to accelerate contract turnaround time. Ironclad unlocks data on both in-progress and completed contracts so that your team can analyze, report, and visualize contract data in the systems they’re used to. Increased visibility into your contracts means that you can quickly identify compliance risks, cost overruns, and business risks. By identifying particular data sets, you can turn contract information into a business asset.
You can use data to implement meaningful process changes. For example, CDM can provide insight into the total cost and hours spent processing each contract. If certain types of contracts are costlier to process than others, you can prioritize them for automation or alter the contract templates so they’re easier to manage. Finding out how and when to implement change is also an excellent opportunity to share your findings with other departments.
Consequences of not using contract data management
Holding back the business
Not knowing where contracts are and not knowing what version of a contract you’re working on holds the business back. With an effective CDM solution you’ll never have to worry about missing an upcoming renewal or checking outdated clauses.
Isolation and friction
Management of cross-functional contract data can be challenging. The development of contracts on an department-by-department basis creates an isolated and disjointed system that puts the business at risk and causes unnecessary friction.
Friction with other departments develops over time because every department has a separate method for creating contracts and managing data. The usual approval process has in-house legal teams reviewing contracts that touch every other department in the business — everything from finance to HR to sales.
Each of these areas has distinctive needs in terms of collecting contract data. Ironclad solves these problems by creating software specific to each department. For example, Ironclad is the only CDM that gives finance full control over contract data, analysis, and reporting.
Contract management in the sales department may need to track completion times from initial contact to final sale. Ironclad automates and standardizes sales contracting with workflows that you can create using collected data and modify at any time. Ironclad has built a best-in-class salesforce integration with real-time updates that keep your deals moving seamlessly.
Loss of business data and revenue
Losing track of contracts means a loss of information and future revenue. Contract data management tools make sure you extract all data, whether it’s for immediate use or for potential analysis down the road.
The loss of business data is an unnecessary risk, and it oftens starts with endless rounds of negotiation and collaboration on phone calls, text chats, instant messaging, email chains, and dozens of drafts. Not having the power to instantly collaborate, negotiate, and review contractual agreements with parties in real-time costs your business growth and revenue opportunities.
Ironclad, along with its award-winning contract management software, gives legal teams a data management foundation by tracking all contract-related data points and turning contracts into critical carriers of operational business intelligence.
Ironclad received the award for Contract Lifecycle Management For All Contracts, Q1 2021 from the leading independent analyst publication, The Forrester Wave™, in 2021. Ironclad was also named one of the 20 Rising Stars on the Forbes Cloud Top 100 Companies.
An Ironclad contract data management platform can collect dynamic contract data in mere seconds across all contract types. Ironclad is the key to operational efficiency and cross-functional collaboration. Schedule an Ironclad demo for your legal team today.