With the globalization and digitalization of business relationships, the importance of contracts is growing. Companies are acting under increased regulatory and time pressure and find themselves having to enter into more complex contractual collaborations.
In this context, efficient contract management becomes a crucial success factor – or a genuine business risk, e.g. if deadlines aren’t met or the lengthy drafting of contracts hinders innovative processes and important decisions. In both cases, a business can suffer serious consequences.
More and more companies are turning to digital contract management in order to gain greater security when it comes to handling contracts. Contracts are managed, processed and filed with software support, which makes it possible to manage them holistically, in the context of the respective business process and along their entire lifecycle from a single application.
In this blog post, you’ll discover what requirements a software solution for digital contract management should meet.
1. Mapping of the Entire Contract Lifecycle
The bread and butter of a digital contract management software solution is the mapping of entire contract lifecycles. For this reason, the most important requirement for software is that it does this in full by mapping the complete contract lifecycle – from contract creation, the ability to edit such as review, modification and approval right through to archiving.
2. Integration With Your ERP System
With a software solution, it should be possible to integrate digital contract management into existing processes in your company. To this end, it’s crucial that the software can be connected to existing ERP systems without major technical effort, e.g. through a direct link to SAP.
3. Incorporation into Existing Processes Even Outside the ERP
What’s more, the software should also integrate as seamlessly as possible into existing document workflows in your organization in order to avoid media disruptions. Among other things, this includes connecting to a system for archiving digital documents.
4. Data Exchange With External Applications
While on the one hand it’s paramount that a digital contract management software solution meets your business requirements as much as possible, on the other hand the integration capability of contract management solutions is becoming increasingly decisive. How does the solution connect with third-party applications? Is there API documentation? To which applications are standard interfaces available to enable data exchange? Relevant software providers should be able to answer questions like these in a precise manner.
5. Transfer of Existing Contract Data
When you move your contract management to a fully digital system, you have to decide what happens to your legacy contracts and the data they contain. After all, your company has been managing contracts long before the introduction of new contract management software. That’s why a contract management solution should offer functions that help migrate data from legacy systems to the new central system flawlessly and with minimal effort.
6. Intuitive User Experience
Various people in a company are involved in contract management: lawyers, managers and department heads. An excellent software solution must be simple, clear and as intuitive as possible for the users from your specialist departments without requiring extensive training.
- A graphical dashboard with all important information for contract management, which can be configured according to the individual needs of different users
- Deadline management for current contracts, which displays all key deadlines in a calendar and can create automated notifications via a reminder feature
- Chat and comment features that allow authorized users to exchange information on contract management issues directly from the application
- Full-text search that searches archived contracts, displays the results, opens them up in the application, and logs these steps in detail for authorized users
7. Access via Smartphones and Tablets
Coordinating contracts often involves managers, some of whom travel a lot and therefore depend on flexible working options. A modern digital contract management system should take this into account and be available regardless of the device being used.
In addition to the classic desktop application for PCs and notebooks, contract management should also support the use of mobile devices: on tablets and smartphones as well as on Android and iOS. This works best with an app that supports editing documents in offline mode when travelling – such as on a train or plane.
8. Ability to Collaborate in the Cloud
External parties are frequently involved in coordinating contracts, e.g. business partners, customers or consultants. Cloud services such as Google Drive, Microsoft OneDrive or Microsoft Office 365 ensure these external partners can collaborate seamlessly.
To make this possible, the contract management software must have a corresponding interface for exchanging documents. This interface can then be used to upload a draft contract to the cloud, where a contractual partner can view it, modify it or add comments.
9. Clear Assignment of Responsibilities
An important aspect of managing contracts is the question of who is allowed to edit which contracts. Authorizations for accessing contracts can vary greatly in practice depending on the use case and department. Digital contract management should take this requirement into account by enabling the creation of fine-grained authorization concepts. For instance, this means that the contract authorizations are transferred to the processor if an employee is ever off work.
10. Digital Signature
Digital contract management should be seamlessly integrated into the digital processes of your company. Media disruptions caused by printouts produce delays in the process and also increase the risk of errors. Another crucial component here is digital signatures, which, according to the eIDAS Regulation (2017), are now equivalent to handwritten signatures.
This means that digital signatures can be used in any modern contract management solution to sign a contract in a convenient and legally secure way on any device. Every modern contract management system must have a digital signature feature. This also saves time and money since you don’t have to go on as many business trips.
11. Audit-Proof Storage
Once the contract has been terminated and expired, it is stored in the archive. In digital contract management, it’s essential that this storage is audit-proof. For this purpose, the software must support all legal standards (GoBD, GDPR), which ensure the legally compliant storage of contracts.
Contract Lifecycle Management in ECM systems
A contract management software solution makes it possible to automate all aspects of the contract lifecycle. This enables you to achieve valuable benefits for your company. Learn more in our webinar.