Digital Contract Management: How to Implement the Right Solution in Your ERP System
In this article, you’ll discover in brief which pain points a digital solution can eliminate and how you should proceed in order to find suitable software for contract management in your organization.
Do you use an ERP system supplied by Microsoft, Sage, Oracle or another provider and want to digitize your contract management? If so, you should definitely take five minutes to read this blog post!In the following, you’ll discover in brief which pain points a digital solution can eliminate and how you should proceed in order to find suitable software in your organization.
Lack of Structure in Contractual Matters
When it comes to digitization, contract management has long been neglected in many companies. This is certainly due to the fact that handling contracts has a special status in day-to-day business. On the one hand, pretty much all departments of a company work with contracts. On the other hand, the types of contracts and processes that HR, procurement and sales departments have to deal with often differ considerably.
This heterogeneity is exacerbated by the fact that a very large group of people is often involved in processing contracts. In addition to the responsible employees from the respective departments, internal or external lawyers may be involved in this process, as well as members of the management team, business partners or even customers. As a result, it’s often difficult to give contract management a uniform structure with the usually available tools from the ERP system, shared folders, chat and email programs.
Typical Pain Points of Contract Management
In practice, this lack of structure leads to a mishmash of communication tools, ERP tools and media being used in the contract process. This results in various conflicts:
- Creating contracts using text modules, which are filed by employees in folders according to different logical processes, is both time-consuming and inefficient.
- The process of creating and drafting contracts is non-transparent for all parties involved.
- Organizational hurdles drag out the process of negotiating contracts and obtaining signatures.
- Digital files and printed paper versions coexist side by side.
- Deadlines for contracts that are expiring or need to be renegotiated are easily overlooked.
- At the end of the process, there are signed paper documents that have to be painstakingly archived, which ultimately thwarts the digitalization of business processes as a whole.
Why a Digital Solution Enhances Contract Management
The most effective way to eliminate these pain points is to consistently digitalize the entire contract lifecycle management (CLM) process with a unified software-based solution. The purpose of this software is to:
- Map contract management holistically and centralize it virtually in one place
- Standardize contract lifecycle processes while making them more user-friendly and transparent
- Make contract management more scalable across the company
- Ensure seamless digital integration of contract lifecycle management into the overarching enterprise content management
Bid farewell to paper! Digital contracts make life easier for companies and institutions
Find out how to begin your journey towards digital contract management in our guide on implementing a contract lifecycle management (CLM) software solution.
How to Find the Right Software For Your Business
If you want to introduce a software solution for contract lifecycle management into your business, you don’t have to look at all the software products available on the market immediately. The first thing you should do is use your time to analyze your company to detect exactly where the pain points lie in contract management.
Once you’ve recorded these points and clearly structured them in the form of a requirements specification, it will be much easier for you to determine what specific requirements your company has for the digitalization of contract management.
This step will provide you with an initial set of requirements that will make your search for CLM software easier as you are more likely to select the right solution.
Build a Project Team Right From the Outset
Software projects shouldn’t be set up and considered as standalone ventures. This is because implementing software in a company always affects several people and processes – not just IT or a single project manager. This is particularly true in contract management, as different departments and user types are usually involved.
That’s why you should involve all typical user groups in the project as early on as possible. It goes without saying that this doesn’t mean all later users of the software have to work on the project now. However, you should include the relevant groups, e.g. individual departments, each with a representative as a stakeholder in the project who act as intermediaries between the later users and the project managers.
How to Create a Requirements Catalog for the CLM Software
Once you’ve assembled your project team, you should create the requirements catalog for the CLM software in collaboration with stakeholders from the various departments.
The first step is to determine the current status quo of contract management in your company. To do this, make a record of:
- In which departments – and at which locations, if any – contract management plays a role
- Which individuals are actively involved in contract management
- How the role and rights management of the contract management system is structured
- What contract types are used across departments
- Which other business processes are affected by contract management.
Then work out with stakeholders what you expect from digital contract lifecycle management in the future. You should consider the following aspects:
- The software solution must map the workflows that are currently associated with contract management while simultaneously raising them to a higher level by structuring them in a more efficient and user-friendly manner. To do this, note very precisely which processes, departments and people are involved here in your company and how they are structured.
- At the process level, the software must meet the requirements for reviewing and approving contracts that exist in your company. To do this, compile rules that exist for the various contract types.
- An important point that should be considered separately is the media format of the contracts: where does contract management in your company work digitally, and where does it work with paper? Are there processes with mixed formats? The CLM software should address this and, if necessary, offer additional solutions to standardize workflows.
- Note that there are specific legal requirements for some contract types, such as how they must be filed and retained. Make a note of all contract types to which this applies, together with the relevant legal requirements.
- This also raises the question of archiving contracts: how are your digital contracts currently filed? Should these legacy contracts be migrated to the new system?
- Do they need the option to fully digitalize legacy paper-only contracts by scanning and using OCR to insert them into the new system to make them searchable?