In the past, contract managers kept their documents in physical file cabinets and maintained a separate spreadsheet of different agreements with key terms and dates. The human paper-based approach to contract management led to all sorts of problems: from misfiling and misappropriating particular documents to paralyzing managers with tremendous workloads.
The heavy burden of contract management led many organizations to implement contract management systems. As discussed above, a contract (lifecycle) management system (CMS or CLM) handles everything from creation to collaboration on contracts through various stages of their lifecycle. Although there are numerous CMS solutions available, each having its distinguishing characteristics and features, the core functionality is prevalent in all software of its kind, which we will discuss below.
As an aside, it’s worth noting that CMS solutions extend to different business scenarios that account for the primary users of the software and will vary in their functionality and access control levels. For example, sales teams may integrate CMS with their customer relationship management (CRM) software to keep track of sales-specific contractual obligations; HR departments might integrate CMS with an HR Information System (HRIS) to automatically handle employment contracts and benefit agreements.
The core functionality, though, will typically revolve around the following features: storing contracts, keeping track of certain key provisions, searching for contracts based on specific criteria, and reporting on those contracts.
This way, nearly every CMS will have an extensive repository with copies of all contracts in virtual file cabinets, categorized and tagged for tracking and quick discovery. The aggregation of contracts also provides a bird’s-eye view of all the entity’s contracts. Besides the repository, contract management software typically offers such handy features as rich editing and formatting. More advanced solutions are often enriched by a polished UX with drag-and-drop functionality, action-based triggers, granular access control, and automatic logic to facilitate smarter workflows. The best software allows for multi-party collaboration, chatting, and commenting on different versions of the contract or its provisions.
The modern B2B sales process often resembles a patchwork of disconnected systems. A CMS, in this regard, offers a solution by connecting multiple processes in a single end-to-end platform that automates tasks and efficiently orchestrates complex workflows. To ensure even further merging of business processes, a CMS needs to integrate with other software packages through APIs.