How to choose the right digital contracting tool? - Key highlights

Contract Lifecycle Management, contract management, digital contracts

Anirudh Vashishth

“A system that enables you to digitize an entire process, where everything that you are doing with regards to your contracts is brought on to a digital platform, enabling each of the stages of contracting, for me, that is a contract lifecycle management system.”

Shashwat Sikka, Co-Founder at Provakil

22nd October 2021: Shashwat Sikka and Swapnil Baj walked us through on how to choose the right contract lifecycle management tool. The webinar was focused on making it easy for people and give them a roadmap to the perfect tool and to understand why they need it.

The webinar briefly touched upon:

  1. What is a contracting tool?
  2. When is the right time to pick a contracting tool?
  3. What is the scope of a contracting tool?
  4. Checklist of all things you need to look at.
  5. Implementations.
  6. Pitfalls to avoid.

What Is A Contract Lifecycle Management?

Contracts are the foundations of every business. All business decision, from the basics, to the most crucial, is noted down in a contract and executed on the same basis. A contract lifecycle management tool is a solution that empowers the entire process of contracting - from initiation to execution.

An ideal Contract Lifecycle Management System should cover the following pointers while digitizing your legal operations:

  1. Digitization of Contracts - Take into account the complete process from authoring to executing a contract.
  2. Searchable Repository - Should make it easy to search a specific contract from a huge number of contracts building an interactive and searchable repository.
  3. Review & Negotiation - Should ease the facilitation for collaboration across teams, both internal & external.
  4. Obligation Tracking & Reminders - Has to keep you updated on compliances and renewals of all contracts.
  5. 360 ° visibility into business operations - Offer intelligent  insights, actionable analytics and comprehensive birds eye view.

What Is The Right Time To Select A Contract Lifecycle Management Tool?

With different types of enterprises in existence, the use cases for everyone are unique. Thus, choosing when to shift to digital contracts is critical.

Here is when you should migrate to a CLM:

  1. If it is getting difficult for you to loo-up information
  2. Your business is growing, but the turnaround time for operations has slowed down
  3. You are missing on essential obligations and critical events
  4. You manage an extensive amount of multi-party negotiations
  5. There is a lack of visibility into business operations
Interesting Fact: With the covid-19 pandemic hitting hard, it was the first time that people were curious to know more about the “Force Majeure” or “Act of God” clause in a contract.

How To Define The Scope Of A Contract Lifecycle Management Tool?

Here are a few parameters that would make it easy for you to make the right choice:

  1. Nature of your business - based on the type (B2B. B2C, etc.)
  2. How mature is your organization in terms of its operations
  3. The size of your contracts team
  4. The scale of business - how many contracts do you handle yearly or monthly
  5. The impact of your contracts
  6. Budget of how much you are willing to invest and the ROI
  7. The desired outcome that you want your contracts to give without any ambiguity
Quick Tip: We recommend you prepare a document of why you need a CLM and the top five most needed outcomes you desire the CLM to give you.

Types Of CLM: Implementation Factors

Every business has its unique requirements and needs a product that suits its requirements. Based on this, the CLMs can be divided into 4 types.

  1. Smart Repository Focused- the most common type needed by the majority of the enterprises who are in the process of going digital
  2. Enterprise Oriented Focused - For the larger enterprises where there are multiple functionalities to manage. This type is the best for companies that are already partly digitized and have set processes.
  3. Self-Serve Focused - There are a lot of very standard contracts. An enterprise that has a standardized approach with minimum deviation from the structure would be the best choice.
  4. Review/Negotiation Focused - Companies with numerous multi-party negotiations and highlights to be taken care of, this type of CLM is the best pick.

Our Customized Checklist For Getting tarted

Once you decide to pick a CLM system, go through check these boxed

✅  Scoping/RFP

✅  Best Fit - if you need a customizable product of just something off the shelf

✅  Identification of your vendors

✅  Take a minimum of 3 demos of various products to compare

✅  Trails

Best Practices For CLM Implementation

These are the few things we feel that you should plan before you implementing a CLM

  1. A detailed deployment plan
  2. Platform and security audit plans
  3. Payment terms with your vendors have to be clarified
  4. Configurability and integrations

Pitfalls - What To Avoid?

Be wary of the pitfalls that you are likely to encounter while choosing a CLM.

  1. If you have unclear goals for why you need a CLM
  2. Decide- quality and the price.
  3. Evaluation of the support model of the vendor
  4. Evaluation of security and tech
  5. If the CLM is less configurable

Wrapping up, a big thank you for joining us. If you are curious about improving your contract operations or you want to migrate to a digital solution, avail a quick demo of our products. It won’t take long!

If you wish to know more about Provakil, get in touch with us. We would be happy to walk you through our solutions.

Digital Contracting