Why You Need Enterprise Contract Management Software

Key takeaways:

• The right enterprise CLM integrates with your tech stack, supports airtight compliance and security, and gives all stakeholders visibility.
• Traditional contract management is risky, slow, and siloed, leaving critical agreements buried in inboxes or hard drives.

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Contracts usually aren’t a problem…until something goes wrong.

Right now, you probably have hundreds of contracts sitting dormant in your filing cabinets or as PDFs on a hard drive. This lack of oversight and transparency in traditional contract management adds risk to your business, including unexpected financial penalties like late fees, payments for dormant services, and compliance blind spots.

Don’t wait for these ticking time bombs to explode into a mess of disputes, delays, or—worst of all—ligitigation.

The new generation of contract lifecycle management (CLM) software changes that.

By consolidating and streamlining contract management and extending access and control beyond legal to your sales, marketing, IT, or procurement teams, enterprise contract management reduces risk and accelerates your deal-making process. Here’s why it’s an essential piece of your tech stack.

What is enterprise contract management?

Enterprise contract management is a framework for digitally managing business agreements made with customers, partners, employees, and vendors across your entire organization. This moves the entire contract management lifecycle online, from creating new contracts to sharing and archiving them.

Contract management software (CLM) automates the process. If you’ve ever wanted to pull your hair out from chasing down signatures from multiple departments or from looking through file after file to find the up-to-date item you need, then you know how much time this can save. Even if you do have a current software tool, if it feels like you need a PhD just to figure out how to navigate the interface, it’s probably not the right choice.

Organizations that silo their contact management face bottlenecks that delay workflows and dampen collaboration and productivity. According to WCC, organizations lose an average of 8.6% of total spending a year to cost leakage in contracts. If you could prevent just 2% of the average 8.6% cost leakage, you’d save over $500K a year through your CLM investment.

Who needs enterprise contract management software?

Enterprise contract management makes sense for organizations already utilizing a basic CLM solution for some of their contract management processes but who need a more robust and comprehensive solution. Think legal and procurement teams that have a dedicated contracting process, but want a tool that can help them work more efficiently.

Automated systems allow companies to swap out inefficient, time-consuming manual controls for streamlined processes and better workflows. Imagine how CLMs can improve your typical enterprise legal workflow:

• Collecting signatures for non-disclosure agreements (NDAs) online, tracking status to completion
• AI-assisted document review to automatically highlight problematic clauses and suggest changes
• Standardized M&A contract review ensuring compliance and giving your team a better chance at preferred terms
• Assign roles and responsibilities to designate workflow owners, approvers, signers, achievers, participants, and assignees for common vendor agreements like MSAs and SOWs

NDAs are a great example of the kind of low-level tasks that take up an enormous amount of time for legal teams. These are standard agreements without a lot of surprise clauses that basically require a once-over and collecting signatures—but can hold up critical deals. Enterprise contract management software automates these standard agreements, helping teams like Demandbase get deals over the finish line more quickly.

“NDAs were the perfect and obvious first candidate for AI,” said David Mitchell, VP of Legal at Demandbase. “There is and there will always be a high volume of NDAs that come to our team, the vast majority of which are on customer paper. Average turnaround time for NDAs has gone from two to three days to one to two hours.”

Speeding up contract review is a win-win across Mitchell’s team. “We were spending a nontrivial amount of time every week, every month, every quarter reviewing and negotiating, and it’s a very real gating item for our sales organization because they can’t move forward until they get the NDA signed off,” he said.

What to consider when making the decision to implement enterprise contract management software

The real question you should be asking? Whether or not your organization is maximizing your current CLM. Even the best technology can’t wave a magic wand and fix a broken process or teams that refuse to work together. Before you dive into the details of which kind of software is right for your team, first, evaluate your organization’s current adoption rates of your existing system and what feedback your teams have about the process.

You might be ready for a new CLM if:

• You don’t have insight into your current agreements. “They would ask me, ‘How many contracts are up for renewal?’ or ‘How many licenses do we have with our top five customers?’ and every time, I had to physically open every single file with that name and look at the information in the contract,” said Sandra Jadur, former Associate Director of Contracts at Innoaptive. “That’s extremely time consuming.”
• Your department is a cost center instead of a revenue driver. Legal gets a bad reputation that it’s where deals go to die, but that doesn’t have to be the case. With a CLM, “the notion that procurement is a blocker or legal is a blocker, that’s no longer a conversation. There’s a process, and they trust our procurement team to get us through that process easily and efficiently and help us navigate,” said Sid Ramesh, Head of Procurement at Gusto.
• You’re wasting your time on repetitive or manual tasks. Free yourself (and your team) by automating standard agreements—so you can spend your time reviewing impactful decisions and dedicating attention to satisfying work.

Don’t miss deadlines and opportunities because of a contract management process that doesn’t serve your business. Instead, use an enterprise contract management tool that enables more effective record-keeping, milestone tracking, and performance analysis so your team never has to sift through a mountain of paperwork to find the right file ever again.

Factors that go into deciding which enterprise contract management software to choose

But how do you choose which CLM is right for you? Consider these five key factors.

Company size

Do you have multiple departments with clearly delineated roles and specific responsibilities? It’s not just how many employees you have, but whether you have numerous decision-makers who have a stake in contract creation, approval and management.

Inclusive enterprise contract management is ideal for organizations that routinely require rounds of stakeholder review and contract sign-off. From advanced search capabilities to a centralized, easily-accessible contract hub, enterprise contract management lets companies work collaboratively, flagging contract terms, obligations and potentially risky clauses.

Legal compliance

Your organization may be beholden to critical state or federal laws and regulations. Companies in highly regulated industries—like healthcare or finance—must adhere to strict guidelines and rules. Fall short of those standards and the cost can be astronomical, not only fines and financial penalties but litigation and other legal liabilities.

With enterprise contract management, organizations can adopt a proactive risk management strategy. Tools like audit reminders, milestone alerts and compliance monitoring keep stakeholders in the loop on a contract’s status and requirements.

Security assessment

Are your contracts safe? With sensitive data and other critical information, contracts are a target for hackers. Tied closely to compliance, data security includes ensuring that all relevant protective guidelines, rules and laws are adhered to concerning sensitive medical, financial and legal documents. Unsecured storage systems expose your organization to data breaches, ransomware attacks and other infiltrations that can be financially and legally devastating.

Enterprise businesses need enterprise-grade security. Look for compliance with industry standards like SOC1 and SOC2, ISO27001, and specific features designed for GDPR, HIPAA, and other common data regulations.

Existing business relationships

Does your business depend on vendors, property managers, financial advisors and other third parties? Those relationships are often controlled and managed via procurement contracts and other agreements. Procurement contracts establish a legally binding relationship between buyers and sellers that protects both parties throughout the procurement process.

Technological integrations

In addition to your procurement contracts, look at your existing tech stack. Your CLM needs to “talk” to the rest of your organization with the right integrations, whether that’s making sure you’re incorporating the contract stage into your Salesforce pipeline or automatically sending Slack notifications to relevant stakeholders.

Analytics and AI

One of the most useful parts of digitizing your contract management process is being able to see data on every stage of the process so you can optimize it and hold your teams accountable. With a CLM, you can streamline the process by identifying common red-lined items, track time spent between contract phases, and generate custom clauses that meet your legal guidelines.

Ironclad users report a 55% improvement across value metrics like legal involvement, days to execute, and 3rd party paper.

Add an AI legal assistant to your analytics and you’ll really be able to reduce time spent on manual tasks. Says Zuhair Sadaat, former Contracts Manager at Signifyd, “Performing an MNDA review or drafting custom clauses for an order form typically takes an hour to a day. Using Jurist, we could do this in minutes—in some cases seconds.”

Your 12-point enterprise contract management checklist

If you’re currently evaluating different CLM platforms, or are about to embark on that journey, here’s a handy checklist of the features you’ll want to look for:

• Scalability. Can the solution handle the company’s current volume of contracts and grow with the organization?
• Integration capabilities. How well does it integrate with existing systems like ERP, CRM, or procurement platforms?
• Security and compliance. Does it meet industry-specific regulatory requirements and offer robust data protection?
• User interface and ease of use. Is it intuitive for employees across different departments?
• Workflow automation. Can it streamline contract creation, approval, and renewal processes?
• Search and reporting functionality. How easily can users find specific contracts or generate reports?
• Version control and audit trails. Does it maintain a clear history of changes and approvals?
• Customization options. Can it be tailored to the company’s specific needs and processes?
• Mobile accessibility. Is there a mobile app or responsive design for on-the-go access?
• AI and analytics capabilities. Does it offer intelligent features like risk assessment or performance insights?
• Vendor reputation and support. What is the CLM company’s track record and level of customer support?
• Total cost of ownership. Beyond the initial price, what are the long-term CLM costs for maintenance, updates, and scaling?

As you evaluate each item on this list, remember that a CLM forms the backbone of your entire contract management process.

How enterprise contract management impacts your organization

With enterprise contact management software, contracts are centralized in one contract hub for contract storage, creating a single source of truth for businesses. Using a centralized contract storage system lets organizations level up their contract management so that documents are easily accessible and searchable. This means all decision-makers, stakeholders and managers can track, review, edit and manage contracts throughout their lifecycle.

“If your sales director approves your terms, then you press the button and Ironclad will automatically populate that clause in the contract, and you can go on your merry way. Because why wait for [legal] to approve when you’re competing with deals that might be bigger than yours? We want to get business risk off our plates and into the hands of the sellers,” said Catherine Choe, former Legal Operations and Strategy at Everlaw.

Using an enterprise contract management system allows:

Faster approval. Automated and customizable workflows expedite the contract review process, leading to a dynamic and efficient contract management system.

Improved visibility. A centralized, digital contract repository allows better compliance, robust reporting, standardization across teams, and better communication between departments and users.

Better auditing. A centralized contract hub allows document tracking and review of contracts’ entire history, providing better internal compliance and a more accurate audit trail for each contract.

Milestone alerts. Contract renewals, deadlines and other important milestones can be flagged with automated alerts so that important dates are never missed.

Investing in a CLM pays off long term, too, in total cost of ownership (TCO), or the cost to acquire, operate, and maintain an asset over its lifetime. This often comes down to the overall value of stopping contract leakage. Let’s look at two examples:

1. Reviewing auto-renewals for legacy discounts. Auto-renewals can reduce friction for your customers and your team. But hidden in this tactic is potential for oversight with legacy discounts or changes to terms of service that might require contract re-negotiation. A CLM can flag these auto-renewals and make sure you’re able to review them well in advance to prevent losing a loyal customer.
2. Increase working capital through payment terms review. Compile revenue data from all customer payment terms to determine how many dollars might be missing in non-ideal payment terms, like Net 90. A CLM can help you identify these terms and create a remediation plan to move to Net 30.

What’s more, adding this transparency into your contract management workflow gives your team the ability to track their performance over time—leading to progress with de-risking and cost-savings. “We have contract metrics now, and can actually see things like how often our paper is being used versus counterparty paper. That’s a huge win,” said Adrie Christiansen, Legal Ops Lead at Quora.

Transform business contracts from blockers to enablers

Business contracts are living, breathing documents with a multitude of potential issues, risks, and obligations within their language. While the initial negotiation of a contract can kick up a frenzy of activity and oversight, management, tracking, and reporting are still needed even after the contract is signed. Many contracts include additional milestones, checkpoints, and review requirements throughout their lifecycle.

Bottom line? Organizations need an accessible, collaborative, single source of contracting truth in place that permits ongoing management as well as automation. Making the switch to an enterprise contract management solution can address all these concerns and help an organization get a handle on its contracting today and tomorrow.

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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.