The terms "contract management" and "contract lifecycle management" may seem synonymous however, there are clear lines that can make or break the positive impact and value that contracts create. Organizations looking for opportunities to improve processes, profitability, compliance, and security must develop an understanding of the difference between contract management and contract lifecycle management so when the time is right, they can adeptly leverage contracts to achieve organizational goals and reach new heights.
For the purpose of this article, "contract management" describes the manual approach to managing contracts with email, spreadsheets, and file storing. In contrast, "contract lifecycle management" describes the strategic combination of people, process, and technology used to ensure organizations get the most out of their contracts. The difference is far beyond ten letters.
Managing Contracts with Excel
Organizations typically use an Excel spreadsheet contract management template to manage contracts with a database that captures key information, including:
- counterparty name and address
- contract name
- contract expiration date
- notify days to cancel/renew
- next contract review date
- contract amount
- internal legal contact
- limitation of liabilities
- and more
Formulas can be added to track how long it takes to reach milestones, and lists can be used to keep data consistent. Some level of security (that may not meet regulations and compliance) can be added to Excel by password-protecting the workbook, and the track changes feature can be leveraged to ensure updates are reviewed and approved.
For organizations with extremely limited budgets, a simple approval process, and the internal resources to monitor and oversee data integrity and document version consistency, a manual approach may suffice. The combination of emails and a contract management Excel template may help increase visibility into contracts and could be the first step towards taking control of contracts.
The Pitfalls of Contract Management Spreadsheets
Spreadsheets may help some organizations gain more control over contracts, nonetheless, using a spreadsheet and emails to manage contracts brings its own set of challenges.
A contract database in Excel will certainly bring more accountability and transparency into contracts and may decrease the amount of lost contracts and missed renewals, nevertheless, spreadsheets fall short.
To be effective, spreadsheets will need to be diligently monitored, reviewed, and manually updated to ensure data accuracy and database functionality. Even when these areas are managed closely, the reality is that spreadsheets are susceptible to human error, they don’t support document search functionality or document version control, multiple spreadsheets may be used and saved in various files, and even when password-protected, spreadsheets may not meet security regulations.
For most organizations, contracts are a tool that help define the performance of customers, vendors, and partners leading to decreased costs, increased profits, and more ROI. Spreadsheets are not built to provide the insights necessary to get the most out of contracts. Managing contracts in Excel will not:
- provide alerts around pricing or under-performance
- reveal opportunities for increased profits via cross-sell or upsell
- support electronic signatures and document version tracking
- provide automated email reminders and calendar alerts
- eliminate data entry errors
- streamline the approval process
- support secure anytime/anywhere access and collaboration
Managing contracts with a spreadsheet is preferred to no system at all. When the volume and complexity of contracts increases, it will be cumbersome, and at times impossible to get the most out of your contracts without contract analytics and performance metrics, an automated review, approval, and renewal process, and standardized clauses and terms.
What is Contract Lifecycle Management?
Contract lifecycle management moves beyond contract management by focusing on requests, authoring, negotiations, approvals, signatures, obligations, compliance, and renewals.
Excel is not built to support full contract lifecycle management effectively or efficiently.
For organizations managing hundreds to thousands of contracts, or complex agreements, a comprehensive approach to contract management is the path to more control, risk mitigation, and increasing the value attained with contracts.
Implementing contract management software is the fastest way to improve contract management and a leading contract management solution will fully support and streamline the contract lifecycle with the latest technology.
Managing Contracts with Leading CLM Software
Contract Lifecycle Management Software supports faster contract execution by removing roadblocks that delay contract authoring, negotiations, approvals, and renewals. Leading CLM Software enhances contract request, review, and approval productivity by providing real time contract visibility resulting in improved ROI, decreased risks, and lower costs.
Benefits of CLM Software include:
- elimination of time-consuming, error-prone, repetitive tasks
- secure document storage and collaboration with version tracking and redlining
- reduced risk and increased compliance
- increased transparency
- a reliable collaboration, negotiation, approval, e-signing, and renewal process
- faster closes and more predictability
Which Path Should You Take?
The contract management strategy you choose should be based on a combination of your goals, your time, your budget, and the level of value, security, and compliance you need to get out of your contracts.
A contract management spreadsheet template will help improve contract management with more organized contract data and will offer more visibility into key dates, but the lower financial investment will not position you to get the most value out of your contracts by:
- providing a centralized repository to locate documents
- making audits easier
- ensuring all stakeholders have the right information at the right time
- helping you analyze data, find trends, or reveal risk
- positioning you take a proactive approach to contract management
- leveraging workflow to assign document creation and related tasks to the right people
- enforcing standardized templates, clause libraries, and approved language
- using workflow, alerts, and notifications to speed up the sales process
- preventing unfavorable auto renewals, missed deadlines, payment errors, or lost opportunities
If decreasing cycle time, reducing risk, and increasing profits, productivity, and efficiency are benefits that will provide the advantage needed to meet your goals, then it is time to consider an approach that moves beyond contract management to contract lifecycle management.
CobbleStone offers contract lifecycle management software to fit most budgets while supporting the contract management needs of many organizations. See how easy it is to get on the path to better contract management by requesting a free demo.