We’ve broken down the reasons why some companies don’t use contracts management technology and the results are surprising.
Earlier this year, we asked our members why they don’t use – or don’t plan to use – a technology system to manage their contracts processes. While system costs and budget constraints were impediments, many more told us that a lack of knowledge about technology options and concerns regarding access and implementation underscored their reluctance.
Whether building a bulletproof business case for budget or discovering available system functionalities, the critical first step is understanding your organization’s unique contract management needs and selecting a system which responds to those needs without extensive customizations and prolonged implementation. To better evaluate those needs and facilitate a discussion between Legal and corporate IT departments, CEB has identified ten core vendor functionalities, as defined by member organizations.
Available functionalities vary extensively between systems and significantly impact cost. In fact, three distinct technology options exist in the space. Not all functionalities are offered at each level and an understanding of what is included with each option is just as important as understanding which features can be likely sacrificed.
Content Management Systems
For the organization looking to capitalize on technology already available at the enterprise level or looking to procure a cheaper system, utilizing a Content Management system, such as Microsoft SharePoint or Salesforce.com, for contracts administration may prove to be a smart solution. These systems can offer many of the features which move companies to first consider a technology solution, including auto-renewal reminders that provide alerts for contract renewal and expiration dates, custom access permissions for multiple user groups, and a secure storage facility with the ability to pull reports based upon information captured during intake. While many functionalities are supported by these systems, contract clause libraries and contract builders as well as contract approval-routing often require more extensive build-outs than an out-of-the-box Content Management system offers.
Given the engagement necessary to often utilize Content Management systems out-of-the-box, these systems typically work well for companies heavily supported by corporate IT departments. For further guidance, use this toolkit for using Microsoft SharePoint out of the box as a contracts management system.
Contract Administration Systems
For organizations seeking specific implementation of a select group of functionalities, Contract Administration vendors can be a cost-effective solution. Ideal to improve the efficiency of some limited contract processes, contract administration vendors often offer contract repositories or contract clause builder tools. Costs can vary significantly, but are typically lower due to more narrowed support. Despite the availability of most functionalities in a Contract Administration system, some features will typically remain foreclosed, including approval-routing and full integration with email systems. For members willing to access external systems, this is a fair sacrifice; for other members in pursuit of a full-service suite of functionalities, this sacrifice will be a deal-breaker.
Contract Lifecycle Management Systems
Many members likely have familiarity with the names of some long-standing vendors in the Lifecycle Management system space. These vendors typically offer a full suite of functionalities, including enhanced integration and automated approval routing systems – critical features of vendors in this category. Price thresholds start at $75,000, often making it more difficult to build the business case for engagement. However, for members who do not want to compromise on available options, lifecycle management vendors can offer a robust solution.
To learn more about the variables that should be considered for every technology option, use our Contracts Technology Selection Tool which will help you identify the most appropriate option based upon nine key criteria including contract volume and complexity, and review and delegation processes. To learn more about streamlining your contracts management processes and the technology landscape, register for our upcoming workshop on Accelerating Commercial Contracting in Washington, DC, Chicago, or Atlanta.