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An eSignature Tool vs. a CLM: How to Choose Wisely

Written by: Leo Rodriguez
Here's a breakdown of the key differences, to help you make an informed decision.
Written by: Leo Rodriguez
abstract illustration of a pen, symbolizing an esignature tool

Streamlining workflows and maximizing efficiency are the fuel that keep you a step ahead of your competitors. This holds true when it comes to managing contracts.

Traditional paper-based processes and PDFs can be time-consuming, prone to errors, and difficult to track. Fortunately, technology offers solutions: electronic signature (eSignature) tools and contract lifecycle management (CLM) platforms both aim to simplify the contracting and signature process. But which one is right for your business? Let’s break down the key differences to help you make an informed decision.

eSignature tools: an easy way to sign

eSignature tools provide a simple and secure way to collect electronic signatures on documents. These user-friendly platforms allow you to upload your contracts, designate signing fields for different parties, and send them out for signature electronically. Signers can then review and sign the document from any device, ending the need for printing, scanning, and mailing. eSignature tools offer several benefits:

  • Improved speed and efficiency. End the back-and-forth of paper-based agreements. Electronic signatures enable faster turnaround times on contracts, accelerating business processes.
  • Reduced risk. Most eSignature tools have security features to make sure the authenticity and integrity of signed documents. Audit trails provide a clear record of who signed and when, minimizing the risk of disputes.
  • Increased convenience. Both you and your signing parties can access and sign documents from anywhere, at any time, on any device with an internet connection. This flexibility simplifies the process for everyone involved.
  • Cost savings. Reduce costs associated with administrative tasks such as printing, mailing, and document storage.

However, the majority of standalone eSignature tools have limitations:

  • Limited functionality. They primarily focus on the signing process. Features for drafting, negotiation, or post-signature management are typically absent.
  • Siloed off from the rest of the contracting process. Because they are standalone tools, they fall short on providing deeper business insights surrounding the contract lifecycle.
  • Organizational challenges. While eSignature tools often offer basic storage capabilities, managing a large volume of signed contracts can become cumbersome.
  • Vulnerability. This article in TechRadar highlights a report from cybersecurity researchers who say they “observed an uptick in attacks looking to steal people’s DocuSign login credentials.”

What is an eSignature API?

An eSignature API, or electronic signature application programming interface, is a tool that allows developers to integrate eSignature functionality directly into their own applications. Think of it as a bridge connecting your software to an eSignature service, enabling you to:

  • Send documents for signature. Upload documents, specify signers, and initiate the signing process within your application.
  • Track document status. Monitor the progress of documents through the signing workflow, including who has signed and when.
  • Download signed documents. Retrieve the fully signed documents and any associated audit trails.
  • Manage templates. Create and store reusable templates for frequently used agreements.
  • Customize branding. Apply your company’s branding to the signing experience.

Essentially, eSignature APIs empower you to stay in the systems you already use to streamline the entire eSignature process, eliminating the need to switch between different applications and manually manage document flow.

eSignature APIs empower you to stay in the systems you already use to streamline the entire eSignature process.

CLM platforms: manage contracts from start to finish

CLM platforms offer a comprehensive suite of tools designed to manage the entire contract lifecycle. They go beyond simple eSignatures, providing features for:

  • Automated drafting and collaboration. Streamline the creation of contracts with pre-approved templates and collaboration tools for efficient contract negotiation and review.
  • Workflow management. Automate approval and signature workflows to ensure contracts follow a designated path and deadlines are met.
  • Centralized storage and organization. Store all your contracts in a secure, central repository for easy access and retrieval. Advanced search functionalities help you quickly find specific agreements.
  • Reporting and analytics. Gain insights into your contract data with powerful reporting tools. Track key metrics like turnaround times, clause usage, and expiration dates.

While CLMs offer a wider range of functionalities, they come with some considerations:

  • Complexity. CLMs can be more complex to learn and use compared to basic eSignature tools. Implementation can require more time and resources.
  • Cost. CLMs typically have higher subscription fees than basic eSignature tools.

Choosing the right tool for your needs

So, which tool should you choose? Here’s a guide to help you decide:

  • Low-volume, simple contracts: if you deal with a small number of straightforward agreements, an eSignature tool might be sufficient. It will provide a quick and easy way to get signatures without overwhelming complexity.
  • High-volume, complex agreements: if you manage a large number of contracts with intricate details, a CLM platform is likely a better fit. It offers the functionality and organization needed to streamline the entire contract lifecycle.
  • Focus on security and compliance: if security and regulatory compliance are top priorities, a CLM platform often provides more robust features to address these concerns.

The best of both worlds

Many businesses take a hybrid approach. They might use a basic eSignature tool for simple agreements and a CLM platform for more complex contracts requiring advanced management features. Others find choosing a CLM with built-in eSignature capabilities more cost-effective and more seamless for managing the entire contract lifecycle. For example, this video shows how easy it is to sign contracts with Ironclad Signature:

Why enterprises should embrace a CLM with eSignature capabilities

For enterprises juggling a high volume of complex contracts, a simple eSignature tool might feel like a step forward from paper-based, or pdf-based, processes. But for true efficiency and control, a contract lifecycle management platform with built-in eSignatures offers a compelling leap ahead. Here’s why enterprises should seriously consider this integrated approach:

Enhanced efficiency across the contract lifecycle

Streamlined workflows

CLMs automate routine tasks like contract routing, approvals, and reminders, freeing up valuable time for legal and business teams. Using a CLM with native eSignature capabilities eliminates the need for an extra tool, which reduces cost and dependency on another third party. With the right CLM platform, you can even opt to use “click-to-accept” for the fastest possible turnaround time.

Centralized management

Gone are the days of scattered contracts and missed deadlines. A CLM provides a single source of truth for all your agreements, with easy access, organization, and search functionality.

Improved collaboration

CLMs foster seamless collaboration between internal and external stakeholders. Teams can work together on drafting, negotiations, and reviews within a secure platform, making sure everyone is on the same page.

Mitigating risk and ensuring compliance

Robust security

Advanced CLMs employ robust security features like access controls and audit trails. eSignatures add another layer of security, providing a verifiable record of who signed and when. This reduces the risk of fraud and provides contract validity.

Regulatory compliance

CLMs can help you adhere to industry regulations and data privacy laws. Automated workflows and reminders help ensure timely completion of required tasks, minimizing the risk of non-compliance.

Improved risk management

Many CLM platforms offer powerful analytics that provide insights into contract data like turnaround times and clause usage. This empowers enterprises to identify and mitigate potential risks proactively.

Strategic advantages beyond basic signing

Standardized contracts

CLMs empower you to create and enforce standardized contract templates, improving consistency and reducing negotiation time.

Advanced reporting

Gain valuable insights into your contracting practices with detailed reports on metrics like contract value, negotiation cycles, and expiration dates. This data can inform strategic decision-making.

Improved supplier management

Streamline your vendor relationships by managing contracts with suppliers within the CLM platform. This promotes better communication and collaboration throughout the lifecycle.

For enterprises seeking to optimize their contract management processes, a CLM with eSignatures is a strategic investment.

What to look for in a platform

Choosing the right CLM/eSignature platform will be crucial for streamlining your contract management process. First and foremost, make sure they function together seamlessly. Sometimes you’ll come across an eSignature tool that acquired their CLM technology (or vice versa) from a different company and has a different code base. What does that mean for you? More clicks, a longer process, and less contract transparency.

Here are some additional features to look for:

  • For eSignature tool capabilities: make sure the platform offers complete eSignature features like approval history, context summaries, and secure signing workflows.
  • For contract management features: look for features like contract creation, version control, redlining, collaboration, and AI assistance.
  • Workflow automation: the platform should offer the ability to automate repetitive tasks like contract routing, approvals, and reminders.
  • Reporting and analytics: access to detailed reports and analytics on contract activity and performance is crucial for monitoring progress and identifying areas for improvement.
  • Security and compliance: make sure the platform meets industry standards for data security and regulatory compliance such as GDPR, SOC I,II and ISO 27001.
  • API, integration capabilities: verify that the platform has a strong API that can integrate seamlessly with your existing systems and applications.
  • User interface: choose a flexible no-code platform with an intuitive and user-friendly interface for both internal users and external signers.
  • Scalability: consider the platform’s ability to scale with your needs as your business processes change and grow.
  • Customer support: choose a vendor with reliable and responsive customer support to provide smooth implementation and ongoing assistance.

By carefully evaluating these factors, you can select a combined CLM/eSignature tool that effectively meets your specific requirements and streamlines your contract management process.

A cost-effective solution in the long run

While the initial investment in a CLM with a native eSignature tool might seem higher compared to a basic eSignature tool, the long-term benefits outweigh the cost. Increased efficiency, reduced errors, improved risk management, and enhanced compliance all translate to significant cost savings.

For enterprises seeking to optimize their contract management processes, a CLM with eSignatures is a strategic investment. It goes beyond simply collecting signatures, offering a comprehensive solution for streamlining workflows, mitigating risks, and gaining valuable insights.

By carefully evaluating your business needs, you can choose the right tool to streamline your contract processes. Whether you opt for an eSignature tool, a CLM platform, or an all-in-one solution, you can significantly improve efficiency, enhance security, and enjoy smoother and faster contract execution.

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Leo Rodriguez has 13+ years experience in Product Marketing at leading B2B SaaS companies (Intuit, DocuSign, Ironclad) and as a GTM Strategy Consultant at PWC. Domain expert in driving growth at leading B2B SaaS companies through product positioning, strategy, packaging and pricing/portfolio analysis. Leo holds a Master of Business Administration (MBA) from Emory University, and a Bachelor of Science (BS) from California Polytechnic State University (Cal Poly).