The Pros and Cons Of Cloud Contract Management
4 to 6 weeks, that’s the amount of time – on average – that most organizations spent on negotiating a contract. It may take longer or shorter, depending on the complexity of the risk both parties are agreeing to and thousands of other underlying factors, But, an average, according to US stats’ that overall average. And this just takes into account ONE – 25% – of a contract’s lifecycle. Companies still have to deal with management, supervision, termination, and/or renegotiation.
Today, taking into account those frightening figures, and damming time-consuming and profit vacuuming stats’ most companies are using tech, and software to bypass this issue. They are effectively outsourcing those headaches. In this blog post, we’ll talk about how to do that — about cloud contract management. The benefits of cloud-based CLM and a few tips on what to search for when getting the necessary software or service.
What is cloud contract management?
Cloud contract management is a process that helps organizations supervise their contracts and agreements. It normally employs CLM – Contract Lifecycle Management – software. The latter is meant to automate, streamline and optimize processes during key stages. Including, but not limited to workflow, compliance, renewal, etc.
An example of this might be an agreement between your company and a cloud service vendor which outlines the fees they will pay for the service. The contract management process helps track who is responsible for modifying the terms and conditions of an agreement, how charges are calculated, what happens to contracts upon expiration or termination, who manages contract renewals, cancellations, and dozens of other things.
In a nutshell, cloud-based contract management process includes the following four stages:
- Contract negotiation and procurement.
- Contract management.
- Contract compliance.
- Contract termination.
By creating a simple, easy-to-digest language, key templates for each vendor and industry you might stumble upon, consistent supervision, and unified terms, CLM software saves you time, and money, and reduces error.
Cloud contract management solutions can be accessed from anywhere, which means that you can work on your business while on the go. – It also offers an easy way to share contracts with other stakeholders like vendors, partners, and customers. – You will be able to access all your contracts in one place, which makes it easier to update and manage them all at once.
Another great thing about cloud contract management is that it provides unlimited storage space for your contracts so you don’t need to worry about space limitations or running out of hard drive space.
Cloud VS manual contract management
Cloud contract management is a service that allows companies to manage their contracts and agreements in one place. It also makes it easier for the users to access the contract information right from their phone on an innovative and easy-to-navigate platform/app. It also makes it easier for the users to access the contract information from anywhere.
Contracts are the core of everything you do. They are ironclad and are there to help you out and define your relationship with suppliers and other parties.
The Institute for Supply and Management studied how contracts help businesses out —- their conclusion?
Contracts supervise more than 80% of a business’s overall transactions, and most companies manage over 100 at a time. The bigger the company, the more they have to supervise. For example, a Fortune 100 company typically juggles over 39 thousand contracts in a month.
Adopting a cloud-based contract management system is most companies’ breaking point — it’s a before and after. It’s the first step they will take to becoming more competitive and gaining an edge in all their contract negotiations.
Let’s dissect some of the benefits CLM brings to the whole process due to its cloud-based functions.
- Remote Data Collection: Cloud-based contract management allows your team to save time and become more efficient when it comes to data collection and data input. It streamlines the process and reduces the need to use traditional manual – and outdated – contract methods.
- Mobile Accessibility: Your team can access your company’s data, all its contracts, all its templates, and its reports, and all your CLM features right from anywhere in the world through multiple devices. Not only that, cloud-based contract systems give them increased visibility and accountability.
- Cost-effective: CLM saves your company time, energy, and most importantly money. Cloud-based management systems mitigate problems and liabilities, editing out costs associated with manual contact management, missed obligations, forgotten auto-renewals, failed contract compliances, management procedures, etc.
- Better flexibility: cloud computing is flexible and dynamic due to how servers are maintained and how functions in them are allocated — this allows companies to add key integrations and features to the way they manage their contracts.
- Real-time collaboration: Documents that are stored in the cloud can be accessed in a flash by anyone at any stage of the contract’s lifecycle. Everything is tracked giving companies a clear audit trail.
Some extra benefits of Cloud-based contract management:
- 24/7 security.
- Contract scalability with just a few clicks.
- Better organization to your contract management capabilities.
- Better productivity.
- Multiple locations for contract storage — if something happens you will always have access to your contracts.
- The ability to handle surges in contracts — your team will be more flexible if there is an increase in contracts that come through the pipeline in any scenario.
What about security issues?
With a blockchain, it is possible to send an agreement directly between two parties without having to sign anything requiring a paper form. This process allows companies and individuals to save time. E-signature issues, and makes the contract iron-clad against cyber attacks or outside interference. Both parties have to agree if a contract can be altered.
Meanwhile, manual contract management is a time-consuming and tedious process. It includes the following steps:
- Data entry of contracts into an electronic system
- Incomplete execution of contracts
- Tracking of contract performance
- Reporting on contract performance
- Managing contracts with multiple parties and vendors.
Cloud contract management benefits
At its core, cloud contract management is a great way to save time and money. It’s as simple as that. Its tech, created and optimized your overall benefit. To give you time to focus on other aspects of your organization, or simply to give you more leisure time — time to navel-gaze, or play with your kids. It not only saves the company from hiring more employees but also provides a cost-effective solution for all kinds of businesses.
Cloud-based contract management software automatically generates contracts and sends them to the right people in the right format. Some of its benefits are:
Procurements, sales contracts, internal agreements, IP licenses, subscriptions — CLM supervises all of them, and more, and makes sure everyone is pulling their weight and sticking to the fine print.
A poor contract management process can put your organization behind the eight-ball. The truth is that a business’s operations can find themselves heavily disrupted due to bad contract management. You can end up dropping the ball on a deal, lose revenue, or get fined due to compliance issues. Bad governance, when it comes to contracts, is a dark shadow most can’t shake off.
Let’s list some of the benefits CLM brings to the table when it comes to contract management.
- Accelerated reviews and automated execution.
- Reduced business risk, with templates and clauses libraries.
- Improved compliance with complete audit reports with just a few clicks.
- Increased visibility — more teams can initiate the agreement process and have negotiating power in such things as pricing and contractual obligations.
- Managed access — a key component of CLM is privacy, who has access to what.
CLM makes it easy for both parties to stick to the lettering and wording of the contract. It strengthens the operation by eliminating human supervision, and, with it, human errors.
You drafted the contract, you signed the contract — and in most cases, you shelved the contract. The truth is that if everything goes well, contracts aren’t brought out of the drawer or folder until it’s time to renew them. They are mothballed. But what happens when a supplier starts to slip? Or when your team drops the ball? That’s when contracts become a must, they single out who fumbled the pass and what can be done to remediate it.
But in most cases, by the time you have to go into a contract’s wording and clauses, it’s too late — your business is bleeding.
This is where CLM comes in. Cloud-based contract solutions can help you understand and can alert you when something is off, when a supplier, a service provider, or even your own team is becoming a threat to your livelihood.
With a few clicks and automated notifications, you can audit a contract and see if everyone is sticking to their word.
CLM automates all steps in a contract’s lifecycle — from start to finish.
Managing a full fledged contract, with all its intricacy can be incredibly challenging — particularly if you just rely on spreadsheets and traditional paper contracts. There are dozens of functions to a contract that, if not properly handled can land an organization in a heap of problems. With CLM software most of these functions can be automated.
Let’s list some of the key contract management actions that CLM can automate:
- Contract requests.
- Contract authoring/writing — AI can even help improve the overall language and decrease liabilities and risks.
- Negotiations — automation can offer complete versions, collaboration editions, rule-based clause ownerships, etc.
- Managing contract obligations.
- Managing contract compliance.
- Automating contract renewals with alerts, audits, renewal dates, re-drafting functions, etc.
How many folks, in your organization, are there just to manage, create, and administer a contract? It is an ongoing process and, in many cases, you need responsible and highly efficient persons to supervise that everything is getting done. Cloud contract management system reduces the need to employ people, and with it signs off on new paychecks, for this process.
Switching to Cloud Contract Management
By eliminating ink and paper from contracting, you gain greater visibility, greater control, and optimized dashboards – along with new tech-heavy tools – meant to streamline your business. Switching to a cloud contract management service is extremely easy, there are multiple solutions online. All innovative and intuitive and customizable.