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Zycus recognized as a ‘Strong Performer’ in The Forrester Wave™: Contract Lifecycle Management, Q2 2023  Read More

8 Must-Have Features for Advanced Contract Lifecycle Management Software for Enterprises [with Screenshots]

Need for a Contract Lifecycle Management Solution

In today’s corporate world, managing contracts and the related information associated with them has become an essential component for successful operations. As such, having a contract lifecycle management (CLM) software solution that is robust and offers businesses the ability to maximize efficiency and minimize risk can be invaluable. From streamlining processes to increase productivity, Contract Lifecycle Management Software features can help you ensure contracts are accurately tracked and managed throughout their entire lifetime—from drafting through execution and renewal. In this day and age, enterprises largely depend on contracts to oversee and manage their B2B relationships successfully. Contracts characterize the transactions between two or more parties at defined, agreed-upon costs over a specified time. Equally significant, contracts can identify and track any inconsistencies in transactions and the party responsible for the same.

These are just some of the reasons businesses need to be equipped to oversee contracts and key contract information comprehensively in real-time through an integrated, centralized contract management repository. And considering increased complexity related to post-award claims and an overall higher focus on regulatory requirements and compliance, adopting Artificial Intelligence (AI)-powered cloud Contract Lifecycle Management (CLM) solution has become an enterprise imperative.

Forrester research shows that CLM solution shrinks the timeframe legal teams require to draft and review contracts by up to 80%. In addition, administrative costs associated with contracts are reduced by 25%-30% through implementing automation, according to Aberdeen Research.

8 Essential Features of a Contract Lifecycle Management Solution

1. Centralized Repository

Having contracts scattered in filing cabinets or on departmental servers around the firm will turn your contracts (assets) into liabilities. Look for unlimited digital storage and automated migration capability of existing contracts to a single, centralized contract management system for quick tracking and easy linking of documents to the master contract. A centralized repository that allows users to perform advanced search and filter can spare organizations considerable time and bother.

The electronic repository gives contract managers direct and easy access to contracts across locations and helps them keep an audit trail to stay compliant. Digitizing agreements and employing tagging makes it easy for them to quickly search for the exact contract – or even a section or phrase within a contract – they are looking for. Beyond specific customer and supplier information, firms can keep track of missing key terms or conditions, entitlements, risks, and obligations in the contract portfolio.

In a recent IACCM study, almost 77% of the respondents indicated that project delays or cost overruns represent a regular source of loss.

Below you’ll find a screenshot of iContract Contract Repository which consists of different contracts, their types (whether Sales, Procurement, Legal), the contracting party and their owner.

Centralized Repository

 

2. Powerful Security and Compliance

Contracts hold invaluable company information, and hence it is important that contracts are carefully managed to steer clear of any risks. Therefore, companies that opt to establish a contract repository must confirm that the contract repository solution offers strong security measures, particularly advanced encryption and access control.

While paper contracts are safeguarded in lockers, they are not a match to the security and restricted access controls provided by today’s cloud-based solutions. Documents kept in the cloud cannot be retrieved by someone without approved access since they are secured by encryption, secure server location, data loss prevention, and file corruption prevention. Using highly secure, geo-dispersed servers and a powerful contract compliance management framework provide high levels of protection for documents, making the information more secure. The recurring automated backup feature prevents data alteration without the stakeholders being alerted or notified.

3. Advanced Search and Reporting

For many companies, manual, paper-based contract management often proves to be chaotic and unproductive. Contract specialists spend a great deal of time searching for a specific contract and its supporting documents when it shouldn’t take more than a few seconds and keystrokes. With flexible and cost-effective SaaS-based contract management solutions that include advanced search features, there’s no need to endure archaic, manual contract management.

CLM software saves the legal and operations teams the headache of sifting through share drives and cabinet folders by offering contract metadata search and reporting. With these capabilities, users can search through the content of executed contracts and create and export reports highlighting payments due, deadlines, and other relevant metrics to share with their teams and higher management.

When all contract data is stored in a single centralized repository, CLM software allows extensive search capabilities that provide quick data retrieval. The advanced CLM solutions also pull information directly from the repository to give you real-time, ad hoc reports based on almost any contract field. Contract administrators can generate reports on contract history, compare and review specific contract details, see general status overviews, and review expiration dates without toggling between various applications.

World Commerce & Contracting calculated that poor contract management practices are costing businesses an average of 9% of revenues each year.

In the below screenshot, you’ll see how to set up a trigger in iContract so that you’re always on top of obligations and milestones and never miss any important renewal or expiry date.

Advanced Search and Reporting
4. Post-Award Analytics

During the post-award contracting phase, contract performance metrics ensure that your business derives maximum return on investment. A dedicated analytics feature provides ultimate visibility on the performance of each document, including renewal and deadlines, organization and clause level risks, milestones, and metadata tagging in case of updates to regulations.

Advanced analytics supported by an automated, AI-powered CLM platform creates a new level of participation and understanding in the process. The auto-reports generated by a contract management platform keep teams informed on the progression of the contract with respect to compliance, revenue generated, and largely the efficiency of the process.

As basic as it sounds, missing the contract expiration or renewal date is a CLM issue that many large organizations continue to battle with. CLM solutions provide effective obligation management with milestone and performance metrics tracking that ensures maximum contract value generation and risk mitigation. What’s more, organizations can maximize return on contracts by identifying cross-selling, upselling, and saving opportunities.

A KPMG survey of outsourcing suppliers found that businesses stand to lose up to 40% of a contract’s value without close contract governance.

5. CLM Integration with Business Suites

Many companies use multiple tools for analytics and communication. Integration of the contract management platform with tools like Salesforce, MS Word, and Outlook allows ease of access and greatly reduces your contract’s turnaround time. System integration (opportunity details from CRM to agreement generation by the CLM), internal sales approvals via CLM workflow, incorporation of product or service data from OM platforms, and routing for financial and risk approval are simple configuration items in the contemporary world of software-as-a-service.

An integrated, secure, and reliable user interface extends productivity and reduces the need for multiple data entry. Contract management solutions capable of simplifying tasks by streamlining and standardizing contracting processes and integrating important tools help unlock the full value of contracts. With salespeople involved in the process, having a common UI that supports new contract requests, workflow, and contract stage information saves both time and effort, along with reducing dependency on other teams for required information.

According to Aberdeen, 35% of salespeople have had trouble closing deals because of a manual signature process.

6. Artificial Intelligence-Powered CLM

An AI-enabled wizard trained by past contract requests provide guidance along the lines of the business purpose of the contract, relevant/missing clauses or terms, and defined milestones based on previous contractual experience with vendors.

AI-powered applications like Natural Language Processing (NLP), semantic analysis, and smart analytics can transform contracting and turn contracts into analytical, structured documents fully complying with ever-changing and complex regulatory compliance. Incorporating NLP rapidly identifies and highlights deviation from defined standards with automatic routing to the legal team for review, accelerating the negotiation process.

AI-powered CLM based on NLP and machine learning technology allows for importing existing contracts and applying appropriate metadata tags to relevant clauses in those legacy contracts. And instead of having to carefully read through each new contract to determine its contents, AI-based CLM technology can extract contract data and metadata at scale to give enterprises deeper and wider views of their contract landscape. This means the business can accelerate productivity with reduced effort, address unanticipated risks, and optimize customer or vendor relationships.

Contract summaries can also be generated using AI and Machine Learning to help users review, approve, and act upon contracts much more easily and accurately than ever before. With AI-powered CLM, users can employ technology to extract components of a contract – clauses, terms, obligations, and entitlements – and create dashboards to represent a holistic view of the contract.

Natural Language Processing, or NLP for short, is broadly defined as a branch of artificial intelligence that deals with the interactions between computers and human natural languages’ text or speech. NLP techniques that rely on machine learning, decipher and make sense of how we communicate with computer systems.

This screenshot highlights how Zycus iContract’s Artificial Intelligence Engine, Merlin, is able to extract metadata from clauses and assess their risk. This feature is helpful to quickly identify risky clauses such as Force Majeure.

Artificial Intelligence-Powered CLM
7. Customizable Dashboards

Visual representation of key contract metrics on customizable dashboards provides access to key contract information right at your fingertips, which both simplifies and deepens the understanding of contract dynamics. Via single-view dashboards, users can easily keep track of wide contracting parameters, such as financials, obligations, contract usage, and expiration dates. This 360-degree view of contractual information, customized to individual requirements, gives businesses the edge to streamline processes.

Automation with improved visibility helps business teams analyze contract process efficacies, adjust to changing conditions, manage alerts and reminders, track user access permissions and activities, measure performance, and constantly develop the overall workflow. Automation also gives a better view of the revenue being produced by each contract and reveals whether the contract adds value, has contractual terms not being met by any of the parties, or needs renewal.

In-house legal departments spend 50% of their time reviewing contracts even as basic as a Non-Disclosure Agreement, creating unnecessary bottlenecks and slowing down business and deals.

8. Flexibility to Business Needs

An advanced contract management solution must include defined user roles, access permissions to facilitate optimal alignment of internal processes, single-click contract generation templates, configurable approval workflows, and version tracking.

Automation of CLM simplifies the implementation and utilization of contracts. It eliminates the need to switch between business systems or duplicate data entry. Configuring contracting process workflows enables quick contract implementation, saving considerable time for all stakeholders involved; it makes additional configuration to align with specific business processes, contract types, and search easy too. For example, routing to specific users based on their specific clause use or clause redlining minimizes the effort required of any single party and can optimize knowledge resources. Also, defined workflows let you track each contract stage duration, reviewers, and the reasons for lag.

CLM automation, using the right solution, delivers substantial improvements and control over productivity and process. Robotic process automation (RPA) can help the CLM system refine the contracting process by learning from prior decisions, defining workflow based on that learning, and providing recommendations to approvers based on those prior actions.

According to a survey by CBRE, 61% of the law firms are using AI to generate and review legal documents, 47% for due diligence purposes, and 42% for research.

Frequently Asked Questions about CLM Features

Q: What are the different contract lifecycle processes?

The different contract lifecycle processes are:

  • Capture
  • Track
  • Author
  • Create
  • Approve
  • Negotiate
  • Sign
  • Analyze

Q: What are the benefits of CLM?

The benefits of CLM are:

  • Reduces contract creation and negotiation cycle time
  • Improves contract utilization
  • Increases stakeholder collaboration
  • Adheres to regulatory requirements
  • Decreases maverick spend
  • Increases savings by maintaining contract compliance

Schedule a demo to learn more about Zycus iContract software for enterprises.

Author

Willam Dyer is the Regional Vice President at Zycus, a leader in the Forrester Wave for Contract Lifecycle Management. William has spent more than a decade advocating CLM solutions for enterprises across geographies, making him a domain expert. He has successfully delivered ROI to numerous clients comprising legal leaders for Fortune 500 companies spanning different industries. In this stint in Zycus, his mandate is providing value and making a business case for global enterprises in the scope of a sales leader. His attention to detail and product expertise makes him the go-to person to strategize go-to-market plans.
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