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Contract AI Forecast: Risks are Not Expected

4 Stages of Understanding that You Need a Contract Management Solution

Processing contracts without CLM (Contract Lifecycle Management) software is a pretty tough task, especially when new technologies and services evolve faster than ever before. However, many organizations are still drowning in paper documents and come up with a variety of reasons and excuses not to use an adequate contract management solution. To make a step forward, companies need to understand where they are now, identify and face their problems. The process of understanding contract management issues can be divided into 4 stages, let’s consider each one of them.

Contract management software? Not for me!

At this stage, you don’t even realize that you have problems with contract management. You think that “The current process works fine”, and are “Not interested”, or “Don’t have time”.

But just consider this: to be reviewed and approved by CEO, a contract has to go through multiple departments and employees. Sometimes it takes months to approve one. With more than 1000 new contracts per year, this procedure may cause harmful effects such as negative business image, inability to locate the required contract, document losses, etc. Consider also the risk of penalties due to missed deadlines. Legal, business, and financial risks of inept contract management are significant.

Of course, companies may handle the whole process without specific software, but efficiency gained from converting your contract records into a searchable, indexed database is substantial.

Contract management software? Not now!

At this stage, you are aware that you need to do something with the current contract management processes, but you don’t know how to do it yet. You may have an insight into what you need to do, but no confidence or knowledge on how to achieve it. General objections for this stage sound like “We’re too busy, we have just started/are finishing a new/big project”, or “It’s difficult to get our IT group on board with new projects”.

Questions you should ask yourself are: Are you too busy to improve your business? Are you working on projects that will increase your business efficiency and reduce manual labor? Are you developing projects that will help minimize costs and make your business more profitable in the long run? If the answer is “No”, you should definitely consider the change of perspective.

Contract management software? I’m all set!

At this stage, you realize your problem and think you can manage it without a contract management tool, using software that you already have. Senior managers usually say “We’re all set”, and “We already have an ECM (Enterprise Content Management) System”.

However, don’t forget that a contract lifecycle consists of a large number of phases: drafting, negotiating, approving, signing, registering, storing, closing-out and finally disposing. During all these stages contracts must be managed properly. You need to accurately build the whole process, but it’s impossible without a customized CLM (Contract Lifecycle Management) solution.

Contract management software? That’s exactly what I need!

You are now in a place where you’ve discovered what you should do to solve your problems and know this will take some investments. You understand that your company needs a contract management solution, but still have doubts and plenty of excuses not to implement software, like “It is too complicated for end users”, “We have a limited budget”, and “Deployment takes too much time”.

First, you should remember that price of a contract management solution may be high, but cost of not managing your contracts is much higher. Expensive mistakes can appear simply because no one took care of the deadlines in time. In fact, return on investment can be easily calculated and will show that the pay-back for a contract management system is quite rapid for many businesses. With all the solution implementation effects, ultimate total cost of ownership for the contract-related process drops significantly.

As with the money issue, a small investment will save you a lot in the long run. Time for contract creation, document search, and approval process will be significantly reduced. Making analytical reports and statistics will be much easier, you won’t need to spend hours creating reports just to make sense of your data. Besides, you can choose software-as-a-service (SaaS) solution that allows you to get started quickly and easily, within hours of installation and implementation. Adopting a contract management solution will make work easier for everyone.

At what stage of understanding the contract management problem are you now? Are you ready to change? 

If you are prepared to move your contract management to the next level and gain tangible profit from the optimization of this process, try comprehensive digital CLM solution by Axirum.

Get the demo of the system for your company with deep dive into your business processes.

You can also learn more about Contract Lifecycle Management from Axirum on-demand webinars and gain some valuable insights from our article “Digital Contract Management: a Challenge or an Opportunity?”.