3 Simple Steps for Contract Management Success

Contract management can be mundane and time-consuming. Whether a company is a high-growth startup or an established mid-market firm, legal departments are likely one of the last things considered as a potential strategic asset. However, implementing a Contract Lifecycle Management (CLM) system vouches to streamline the process from request to signature to drive efficiency. Below are three keys to successfully implement a CLM system.

1. Process Optimization

Just like building a home requires a solid foundation and structure, implementing a CLM system takes careful planning to ensure it meets company needs. The process structured in the system should streamline contract creation, decrease time between request and signature, and mitigate legal and financial risk for the company.

Before diving into a CLM system, ask a few key questions about the process:

• What information do contract managers need from their requesters?
• What teams are normally involved in the approval process and when are approvals obtained?
• Which standard contract templates are already on file and which templates need to be created?
• Which parts of the process can be automated?
• What controls need to be in place to ensure the contract management process will hold up in an audit?

2. Data Preparation

Everyone’s heard the old saying—garbage in, garbage out. This highlights the simple truth: the quality of data imported into a system has a direct correlation to the quality of information received. But how is data prepared? First, the organization must create a robust data governance model to ensure data integrity. This includes what types of data will be recorded, identifies who is responsible for inputting this data, and establishes guidelines for how data should be managed.

Once governance is established, resources are allocated to create a data upload or validate existing data. This process, though time consuming, is essential to have accurate information. Conducting this process in sprints makes it more manageable.

Leveraging artificial intelligence (AI) platforms to pull data from contracts can exponentially decrease time spent manually reading documents and recording data. It’s crucial to abide by the organization’s IT policies when using AI platforms.

Proper preparation and governance results in accurate information being entered, driving critical insights.

3. Iterative and Rigorous Testing

Break it. Yes, break it. It’s far better to break the system during testing than when a contract requires a 24-hour turnaround. It’s easy to configure and test for routine scenarios, such as generating a standard NDA with no edits or changes. The real challenge comes when trying to test as many one-off scenarios as possible in a new system. This may reveal hidden weaknesses or limitations that must be addressed prior to go-live.

Testing security and user roles is as crucial as testing the process itself. Make sure the correct users can request a contract and that proper approval workflow cannot be circumvented due to permission errors. Try to get users to do things they should not be able to do. This scrutinous testing process results in a better overall user experience and higher adoption rates across the organization.

Bottom line: Successful CLM implementations depend on starting with a solid process framework, ensuring clean and accurate data, and adopting a thorough testing strategy. For guidance on contract management or system implementations, reach out to us at info@trenegy.com.