Contract Management Software Readiness Checklist - Bloomberg Law (2024)

Contract management is the discipline used to create and oversee a contract throughout its lifecycle. This lifecycle can involve multiple stages of getting the contract from initial consideration to termination and requires an organized, systemic approach. There are plenty of contract automation tools that companies can use to improve their contract management processes, including contract management software (CMS).

Before you dive into the process of evaluating and implementing a CMS at your organization, you should first assess your need and readiness to invest in a technology solution.

What’s the purpose of a contract management system?

CMS solutions are designed to automate and streamline the contract management process. These powerful tools offer a unified platform for legal and business teams to create, negotiate, sign, renew, and report on business contracts by automating the manual work traditionally involved in a contract workflow.

When done right, contract management software can:

• Improve contract performance
• Fulfill obligations
• Mitigate risks
• Reduce costs
• Increase productivity
• Help ensure compliance

When contracts are poorly managed, the results can have significant impacts on your business. Beyond loss of revenue and operational inefficiencies, poor contract management puts your organization at risk of several other potential consequences, such as regulatory penalties, security breaches, and reputational damages.

What’s the difference between a CRM and contract management software?

Customer/client relationship management platforms (CRMs) are designed to help businesses manage their interactions and relationships with customers. They typically include features and functionalities to help organize customer data, streamline communication, and optimize customer engagement.

While some CRMs offer functionality to generate and sign agreements with clients, legal departments shouldn’t rely on CRMs for contract management. Contract management software (CMS) is specifically designed for managing contracts, including:

• Drafting tools
• Approval workflows
• Version control
• Compliance management
• Analytics

Checklist: Do you need contract management software?

• Do you expect contract volumes to increase significantly?
• Are you about to undergo a merger/acquisition process?
• Do you manage more than 50 active contracts?
• Is it difficult to locate your organization’s executed contracts or key provisions?
• Are you wasting precious time on routine drafting, review, and negotiation processes?
• Do you struggle to maintain version control while drafting and negotiating?
• Are you spending too much time on repetitive admin/contract management tasks?
• Is it difficult to keep track of key dates and contract obligations?
• Do other departments frequently request ad hoc contract reports?
• Do you need to start measuring and improving turnaround time on contracts?
• Do you lose data and context when someone leaves your team?

If you answered “yes” to any of these questions, then it may be time to start thinking about investing in a contract automation tool to streamline some or all aspects of your contract management lifecycle.

Is your legal department ready to implement contract management software?

You’ve established that you have a need for contract management software, but is your team actually ready to implement one? Choosing the right technology is a crucial step in optimizing your contract workflows, yet it’s only one piece of the puzzle.

While the benefits of contract management software are clear, legal teams must first understand, improve, and ultimately simplify their existing contract lifecycle management framework before procuring technology.

Understand your current contract management process

Taking the time to assess the current state of the people, processes, and policies involved in contracting is essential for legal teams to ensure they select the right technology that aligns with their specific requirements, optimizes their operations, and provides a good return on investment.

If you don’t have a contract lifecycle management framework or the existing one fails to meet your needs, that’s okay, you’re not alone – 48% of organizations report having foundational improvements to make before implementing contract management software, according to InnoLaw CLM Launchpad data.

To ensure the successful selection, adoption, and implementation of contract management software you must have a solid foundation to build on. If you need help establishing and maintaining a contract management framework, leverage our Contract Management Playbook, which includes a step-by-step process checklist to help create a more efficient and consistent approach to contract management.

Identify opportunities to optimize your contract workflow

If you already have well-defined and documented processes, run a quick audit with our Sample Contract Management Review Questionnaire to identify any potential gaps or areas for improvement.

At a minimum, you should be able to answer these questions before making the jump to technology automation:

• Does legal know when contract review is required?
• Are contract management roles clear between legal and business?
• Where are your executed contracts stored? Can you easily find and access them?
• What contract templates does your department use?
• Do you use e-signatures?

How much does a CMS cost?

The two primary categories of CMS – focused and enterprise – can vary widely in cost. There is the baseline annual cost of the software, often priced by the seat, and additional implementation or support costs might also factor in.

Focused solutions are often a minor investment typically starting around $20,000 per year. Enterprise solutions can be a significant investment of $100,000 or more per year.

However, there are other costs to consider when evaluating contract management solutions. First is the cost of inaction. Poor contract management affects the organization’s bottom line because of operational inefficacies, redundancies, and the impact of compliance failures.

According to World Commerce & Contracting, contract management shortcomings can lead to average revenue loss of 9.2% annually. This figure soars to 15% for larger enterprises. An EY study showed that more than half of business development leaders (57%) say their organizations have seen slower revenue as a result of contracting inefficiencies and 50% have missed out on business.

Then there are the hidden costs associated with lengthy, complicated implementations. Focused CMS solutions tend to be faster to implement and learn, reducing the disruption to the team and increasing the likelihood of adoption.

The implementation of enterprise CMS solutions can stretch from six months to more than a year and often affects a number of departments throughout the company, requiring significant change management and oversight.

Bloomberg Law is your guide to contract simplicity

Once you’ve determined your need and readiness for contract management software, you’ll take the next step and begin evaluating the available options. While there are many contract automation tools on the market, you’re likely seeking a solution that not only simplifies and streamlines the contract management lifecycle but also aligns seamlessly with your organization’s existing workflows – enhancing efficiency without imposing undue financial burdens.

Download our Buyer’s Guide to Contract Management Software to ensure you consider all relevant factors and set yourself up to successfully make the business case for your chosen technology. The guide offers a structured approach to understanding contract management software options so you can better align your organizational needs with the capabilities of various solutions.

Choosing the right contract management software is crucial. Bloomberg Law Contract Solutions can help you solve the most pressing challenges in your contract workflow with an easy, out-of-the-box solution built specifically for in-house attorneys to more efficiently store, manage, draft, negotiate, and analyze contracts. Request a demo to see how Contract Solutions can help you manage your contract workflow with confidence.