You already have a process for working on contracts and agreements, but would you call it a system? It works fine, but is it optimal? You could use Word to edit your old templates to fit new agreements, or you could set up workflows with standard clauses for your recurring contracts, making creating contracts faster. You could simply store your signed contracts in a folder on your desktop, or you could store them in a secure, searchable cloud-based repository where you and your whole team can access them at any moment. You could treat every new agreement, big or small, to a painstaking bespoke treatment with a unique workflow every time, or you could use software that allows you to automate repetitive tasks. Your organization could be so much more efficient in handling contracts.

Poor contract management makes your contracting process inefficient, and it has repercussions. Effective contract management requires high-level collaboration between both internal and external stakeholders. Using emails as a primary means of communication can quickly result in multiple confusing threads. Process inefficiencies like slow negotiations, delays in approvals, and missing milestones are expensive. Relying on spreadsheets to track these deadlines can only get you so far.

Imagine building a new system for contracts that can help mitigate operational risk and minimize cost allowing you to build better, more profitable relationships with your business partners. In this two-part post, the team at Pathways Digital breaks down 10 best practices for establishing the right contract management system for your team or your organization.‍

Identify Your Current Processes and Visualize Your Future State

Setting up a contract management system is no small task, and the first step is to take a good look at your organization's current processes when it comes to contracts and agreements. By identifying which contracts exist, who and what teams collaborate on them, and where points of risk could arise, you have the information necessary to visualize your future state. With an eye towards efficiency, having everyone working off the same standards will ultimately help create better contracts, reduce risk, and strengthen working relationships between departments - all good things for any business.

Understanding the contracts that are in place and having visibility into your current contracts is the first step to managing agreements more efficiently. To set up a successful contract management system, start by identifying your current processes for contracts and visualizing what you ultimately want to achieve. This process will provide clarity on what contracts need to be managed, enable teams to collaborate easier, and minimize high-risk contracts. By having an understanding of both where you’re starting from and how you want things to look in the future, you will be able to establish an efficient contract management process that can support the organization's success going forward. Defining and detailing the ideal future state can also help energize the executive team when it comes time to get their buy-in. ‍

Get Buy-In from your Team

Once you've identified the problem and set your goals for the contract management system, it's time to talk to your team and gain their buy-in. It is important to ensure agreements are noted, efficiency is increased and risks are minimized. Digital transformation can be a difficult journey, but it is essential that every team member buys into the agreements made and works together to achieve success. Collaboration is key, as joining forces will help to minimise risk and maximise efficiency. The transition will require a collective effort from the whole team for it to be successful so ensure everyone is on board with your agreements and the collaboration of the digital transformation process. With effective teamwork and understanding from everyone, there's nothing that your team won't be able to conquer!

Team collaboration and communication are key for success in implementing an effective contract management system-- without a unified team working towards the same goals, any system will quickly fall apart. Take a moment to gather ideas from your team and listen to their concerns. With a plan that everyone can agree on, you'll not only unlock more efficient agreements but also foster teamwork throughout your organization.‍

Defining Success and Setting KPIs

Defining project success at the outset is an essential best practice when rolling out any new digital process, but for contracts and agreements, it's imperative. Clear metrics are key to demonstrating return on investment. Project success metrics can vary depending on what your organization values, and what pain points you’re trying to overcome. Some examples of KPIs to measure include:

• Efficiency. Tracking contract generation, iteration, and time to signature before and after implementing a new system for contracts are all easy ways to demonstrate project success.
• Revenue. Return on Investment depends on the implementation generating more revenue than it costs. Tying hours to dollars will help you demonstrate baseline savings.
• Risk. Comparing historical data on costly mistakes from improperly drafted contracts can help quantify the reduction in risk.

The successful design and implementation of digital transformation for contract process requires clear communication and coordination across teams. Setting KPIs provides the team with guidelines that ensure agreements are met, efficiency is maintained and risks are managed. More importantly, by providing tangible goals to strive for inspires teamwork and helps reinforce an overall organisational culture of accountability.‍

Crawl, Walk, Run

After careful consideration of agreements, efficiency, and risk, it may be tempting to try solving every problem you see in your organization's existing state processes all at once. However, making too many changes too quickly in the implementation phase could put adoption and team collaboration at risk. A more strategic approach is to identify and prioritize one or two high-impact, low-risk use cases first. This will create a foundation for better business performance and foster teamwork along with the other agreements you've mapped out. With limited alteration to their existing workflows, employees have an achievable introduction to CLM and its key performance indicators (KPIs). Demonstrating success here encourages organizational empowerment and confidence in expanding CLM usage into other use cases.

Changing too much too fast in your implementation could put adoption at risk. Instead, identify one or two high-impact, low-risk use cases to prioritize. Start your implementation plan with that more narrow use case and identify its KPIs. Implementation of a single-use case will also make organizational adoption and empowerment more attainable. Instead of re-learning multiple business processes all at once, employees will have a manageable introduction to CLM. Once success is demonstrated, expanding CLM to additional use cases will be much easier.‍

Choosing A Solution That's Right For Your Team

When it comes to finding the ideal digital contract repository for your business, staying informed about the various options available in the market and what each one has to offer is key. The right contract lifecycle management solution can help you save time, improve efficiency, and reduce the risk of agreements slipping through the cracks. But that doesn’t necessarily mean that all systems are built equal, or that all systems were built for you and your unique processes.

Identifying the solution that’s best suited to your unique needs can be made easier with a thorough understanding of all that’s out there. Taking the time to do your research on the best contract lifecycle management solution for you is a critical decision, as agreements are essential for business operations. Finding the one that perfectly suits your needs can bring about enhanced efficiency and help protect your business from risk. It's important to consider all features of potential solutions and determine which ones will be most beneficial for your team's collaboration. Working together to find the right solution that meets the goals of both you and your team can help ensure successful teamwork in the long run.

By implementing these best practices for contract and agreement management, you can make significant progress in achieving process transformation for your team and organization. You’ll be able to improve your overall contract management effectiveness by digitizing all your agreements in a searchable, cloud-based repository, accelerate your contract cycles, avoid errors and missed obligations, and automate and optimize contract workflows.

Consider getting started with Pathways, a solution built thoughtfully for growing companies that are looking for their first #contractlifecyclemanagement solution.

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