How to choose the right digital contracting tool?

“A contract lifecyle management system is a platform enabling you to digitize the entire process, wherein everything that you do in regards to your contracts is brought on to a digital platform, enabling each of the stages of contracting.”

Shashwat Sikka, Co-Founder at Initio

In this blog, we aim to talk about making it easy for people to know and understand the need for a digital contracting tool. We will briefly touch upon:

1. What is contract lifecycle management?
2. When is the right time to implement a contracting tool?
3. Scope of a contract lifecycle management tool?
4. Checklist of all things important
5. Implementation of contract lifecycle management
6. Pitfalls to avoid while implementing a contract lifecycle management

What is a Contract Lifecycle Management?

Contracts are the foundations of every business. From the smallest to the most crucial, every business decision is noted down and executed according to a contract between the parties. A solution that optimizes the entire process of contracting - from initiation to execution and digital implementation can be called a contract lifecycle management platform.

A CLM has to cover ideally:

1. Digitization of Contracts - the complete process of authoring to executing a contract
2. Searchable Repository - makes it easy to search a specific contract from a huge number of contracts
3. Review & Negotiation - facilitating easy collaboration across teams, both internal & external
4. Obligation Tracking & Reminders - to stay updated on compliances and renewals
5. 360 ° visibility into business operations - for transparent dealings

When is the right time to implement a contracting tool?

Every enterprise is different in how they operate and the nature of their business; hence, every business's use case is unique. Thus, the timing of shifting to a clm has to suit the business's requirement.

Look out for these challenges while deciding to migrate to a CLM:

1. If it is getting difficult for you to loo-up information
2. Your business is growing, but the turnaround time for operations has slowed down
3. You are missing on essential obligations and critical events
4. You manage an extensive amount of multi-party negotiations
5. There is a lack of visibility into business operations

Scope of a contract lifecycle management tool?

Here are a few parameters that would make it easy for you to make the right choice:

1. Nature of your business - based on the type (B2B. B2C, etc.)
2. How mature is your organization in terms of its operations
3. The size of your contracts team
4. The scale of business - how many contracts do you handle yearly or monthly
5. The impact of your contracts
6. Budget of how much you are willing to invest and the ROI
7. The desired outcome that you want your contracts to give without any ambiguity

Types of CLM: Implementation factors

Every business has its unique requirements and needs a product that suits its requirements. Based on this, the CLMs can be divided into 4 types.

1. Smart Repository Focused- the most common type needed by the majority of the enterprises who are in the process of going digital
2. Enterprise Oriented Focused - For the larger enterprises where there are multiple functionalities to manage. This type is the best for companies that are already partly digitized and have set processes.
3. Self-Serve Focused - There are a lot of very standard contracts. An enterprise that has a standardized approach with minimum deviation from the structure would be the best choice.
4. Review/Negotiation Focused - This type of CLM is the best pick for companies with numerous multi-party negotiations and highlights to be taken care of.

Checklist of all things important

Once you decide to pick a CLM system, go through check these boxed

Best Practices for CLM implementation

These are a few things we feel that you should plan before you implement the CLM

1. A detailed deployment plan
2. Platform and security audit plans
3. Payment terms with your vendors have to be clarified
4. Configurability and integrations

Pitfalls to avoid while implementing a contract lifecycle management

Be wary of the pitfalls that you are likely to encounter while choosing a CLM.

1. If you have unclear goals for why you need a CLM
2. Decide- quality and the price.
3. Evaluation of the support model of the vendor
4. Evaluation of security and tech
5. If the CLM is less configurable

Wrapping up, a big thank you for joining us. If you are curious about improving your contract operations or you want to migrate to a digital solution, avail a quick demo of our products. It won’t take long!

If you wish to know more about Initio, get in touch with us. We would be happy to walk you through our solutions.