Contract Management Software

Introduction

Contract management software is the name given to software solutions that have been designed with the purpose of assisting organizations or individuals across Canada with the creation, storage, and management of contracts and all related information. Not only can software of this kind allow users to set out terms and conditions and draft contracts, it can also provide the relevant tools for tracking milestones and monitoring compliance throughout the entire contract lifecycle. Furthermore, the software can help Canadian businesses and other organizations to manage their relationships with the individuals or groups with whom they have established written agreements.

The potential legal repercussions for failing to meet the terms of a contract make careful management and tracking of these documents incredibly important. Organizations may enter into contractual agreements with a wide range of individuals, organizations, or groups, including suppliers, vendors, clients or customers, and employees. The process for drafting contracts can also be very time-consuming, and contract management software can help with this through the provision of templates, automation and communication tools, and a digital signature option.

In general, contract management software can be seen as a more focused and specialized version of similar tools on the market, such as document management software. There is also significant crossover in terms of functionality with tools like legal document management software, although contract management solutions are typically more focused on the management of legal contracts rather than other legal documents. Software of this kind can also be categorized alongside procurement software as examples of tools that assist organizations with the management of transactions or agreements. Aside from sharing similar features, these tools can often be integrated to create more seamless workflows or make the transfer of data between applications easier.

While precise features do vary, and while it is important to understand that no two software solutions are the same in terms of how well features are implemented, the main functions of contract management solutions do tend to be similar, and there are some core features that can be said to define the software category. In general, when using any high-quality contract management software, users should be able to carry out the following actions:

• Establish terms and conditions for an agreement and create the contractual agreement
• Manage all relevant documents, so that they can be easily accessed or amended
• Track contracts throughout their lifecycle, monitoring compliance and/or completion
• Respond to contract expiry alerts, and take relevant actions for contract renewals

What is contract management software?

Contract management software is the name used to describe software solutions that have been designed to assist businesses, organizations, individuals, and certified contract managers with the creation, management, and tracking of contracts of all kinds. This will usually include options to outline the terms of the contract, create the document itself, store the document securely, and use tools for finding specific contracts or terms within contracts.

Assistance with the creation of contracts is useful because it can be a complex, time-consuming process where accuracy is critical. Software of this kind can be used to automate some repetitive or predictable tasks—ensuring both accuracy and attention to detail—while simultaneously providing a level of consistency and reliability to this process. Additionally, procurement and contract management software enables organizations to track compliance with contracts over their full lifecycle and respond swiftly to any situations where contracts are coming to an end and need to either be renewed, renegotiated, or removed from the pool of active contracts that require tracking.

Modern businesses, and other organizations need to manage their relationships with customers, clients, business partners, suppliers, staff, and others carefully, and a level of trust needs to be established. Contracts can assist with this by providing clear guidelines for how the relationship will work and what the expectations are on both sides. Therefore, contract management software can also play a vital role in managing the most important relationships.

What are the benefits of contract management software?

The benefits of contract management software for Canadian businesses are largely centered around attempts to make the creation of digital contracts easier while also making it quicker to access specific pieces of information contained within them. With that being said, it is important to explore the advantages or positives of acquiring a high-quality contract management solution in greater detail, and some of the most important benefits are outlined below:

• Greater productivity: A major benefit of contract management software is its ability to make various contract management tasks quicker and easier to carry out. This can then improve overall levels of productivity within an organization, as it frees up more time for the workforce to focus on other activities. For instance, the creation of contracts can be a time-consuming and frustrating process when contracts are drawn up manually. Yet, contract management software can automate several key aspects and provide templates for the contract documents so that issues are minimized. This then provides a greater level of consistency while also saving time. In addition, digital signatures mean that contracts can be finalized faster, and the terms of the agreements contained within contracts can be implemented almost instantly, rather than waiting for face-to-face meetings or conventional mail.
• Improved organization: Storage of hard copy contract documents can take up a lot of space and can also provide real challenges when it comes to organizing contracts and finding a specific document when it is most needed. The use of a contract management application can help to vastly improve this by allowing companies to store their contracts digitally instead. Not only does this save physical space and eliminate the potential for documents to be misplaced, but it also provides numerous other benefits too. As an example, when somebody needs to find a specific contract, it can be found by manually exploring the list of contracts, through the use of a search function, or by filtering the contracts based on parameters like the date the contract was signed, the overall value of the associated deal, or the business or region the contract applies to. Ultimately, this means contract documents are not only kept safe and secure—and organized in a logical way—but are also much easier to sort through.
• Risk mitigation: Another significant benefit associated with the use of contract management solutions is the ability to mitigate many of the risks associated with handling contracts. Businesses that do not effectively manage their contracts are at greater risk of accidentally breaching their agreements, and this can be incredibly costly, leading to potential legal ramifications, financial penalties, and lasting damage to company reputation. Furthermore, contracts that are not renegotiated and/or renewed in a timely way could result in a customer, supplier, client, employee, or business partner looking elsewhere instead. High-quality software can help organizations to avoid these problems by alerting users to expiring contracts, and providing around-the-clock access to the contract documents so that compliance can be ensured and progress can be tracked throughout the entire lifecycle.
• Client satisfaction: The act of keeping contracts readily accessible and safely stored can also help to improve client or customer satisfaction by guaranteeing the terms of contracts are actually adhered to always, and it can also help to bring about a swift end to any contractual disputes that arise. Moreover, the software can also assist with client or customer satisfaction by ensuring that agreements are carried out digitally. According to Gartner research, it is currently projected that 80% of all interactions between suppliers and buyers will take place across digital spaces and channels by the year 2025. Contract management solutions can boost satisfaction by guaranteeing that deals and other forms of communication take place in the channels other companies expect them to.
• Timely decision-making: One of the most fundamental aspects of good contract management involves taking the right actions—in the right moment—to maximize the benefits of the agreement and keep all parties happy. Contract management software can play a vital role in facilitating timely decision-making by allowing users to access information when they need it so that renewals are not overlooked, negotiations are carried out on time, and other important business decisions are made when they need to be. Alerts can also be set up, prompting responses or encouraging action to be taken by the right people, precisely when that action is required.

What are the features of contract management software?

The features of contract management software solutions are intended to help the software serve as a one-stop-shop for managing contracts with suppliers, vendors, clients, customers, business partners, employees, and various other groups of people. Although exact features and their actual implementation will vary, along with the overall quality of the software, most applications within this category will share the same core features and the same basic functionality. In particular, buyers can expect the vast majority of contract management solutions to include the following features:

• Contract drafting: Establish the terms and conditions of a contract and create the contract itself. A variety of tools may be included to assist with the drafting of the contract, such as a pool of commonly used terms and conditions, the use of artificial intelligence to assist with language choices, and options to change the format of the document. Once the document has been created, it can also be shared with all of those who require access to it, with options for mutually agreed amendments to be made or for new clauses to be inserted. Furthermore, most high-quality solutions will provide options to add digital signatures. Digital signatures are now fully recognized in hundreds of countries around the world, including the United Kingdom, and can significantly speed up contract completion.
• Document management: Store all contracts and other relevant documents in a centralized location so that they are easily accessible in the future. Documents can typically have keywords or categories assigned to them so that they can be organized and grouped together in logical ways and more easily found in the future. Generally speaking, options will also exist to duplicate existing documents, delete documents, and move documents to other file directories. The best solutions will offer a comprehensive range of options so that organizations can manage everything related to their contractual agreements from a single application, preventing the need to use multiple applications and move between these different software solutions.
• Contract lifecycle management: Manage all the different stages of the contract lifecycle and track contracts as they move through this lifecycle so that timely decisions can be made. Professional contract management software will usually offer the tools that organizations need to track contracts from the drafting and negotiation stages, contract implementation, and right through to contract completion or renewal. Understanding where each contract is within its lifecycle is crucial for establishing a reliable contract management workflow, and can help to ensure that the right decisions are made in the best possible moment in order for all parties to be satisfied.
• Contact management: Keep contact information for employees, suppliers, vendors, customers, clients, business partners, and others who are relevant to contract management tasks. Aside from storing and managing the actual contract documents, good contract management solutions should include the right tools for managing relationships. This means having contact email addresses, physical addresses, telephone numbers, social media accounts, and other contact information readily available. These contact details will be kept safe and secure, with access permissions restricted only to those who require it in order to carry out their job effectively. In many cases, integration is also on offer, allowing contact details to be shared between multiple applications.
• Pre-built templates: Utilize pre-built templates, for a much faster contract creation process. Once contract terms have been established with one type of business partner, many companies find that subsequent agreements follow the same basic blueprint and end up looking very similar. Through the use of templates, the entire procedure of actually drafting a contract can be sped up, and the use of templates can also help to standardize many of the contracts a business signs, which then makes management much easier. Of course, most good software solutions of this type will allow templates to be used to form the basis of the document, however, changes can still be made so that contracts are still able to be amended or tailored to meet the needs of a particular client or business partner.
• Full-text search: Find specific documents, or specific pieces of information contained within contracts, through the use of a robust full-text search function. In most cases, the search process will rely on the user entering a search string, with the search engine then using this string to find close or exact matches within relevant documents. Businesses can use this to locate a document with a specific name, to find a contract that has been signed with a specific business partner, or to find highly specific words or phrases within the documents themselves. The basic technology for full-text search can also now be used to carry out a voice search. Here, voice recognition technology means that the initial search string is entered through a voice command instead. After that, the basic search technology remains very similar, but this adds an extra layer of convenience and efficiency.

What should be considered when purchasing contract management software?

When purchasing contract management software, there are a number of issues that need to be carefully considered, since buyers need to know that they are not only buying a high-quality option, but also the best possible option for their own specific needs. It is important to recognize that the ideal solution for one organization or individual may not necessarily be the best option for another. Therefore, this concept of finding the right match is crucial. A great way to explore the various considerations that buyers need to work through is to ask some key questions and try to come up with detailed answers. The following are examples of the types of questions buyers should ask themselves:

• Is contract management software safe and secure? Today, companies collect more data than ever before, and contracts are among the most important documents they store. For this reason, companies need to think carefully about the contract management software they acquire and research precisely what features are in place to keep their documents, contact information, and other relevant files or data secure. For instance, are there options included for backing up data so that it cannot be lost? With cloud-based solutions, it is important to understand how data will be stored, who is actually in charge of keeping it safe, and precisely what technology is in place.
• What is the best deployment option? Today, the majority of professional-grade contract management solutions on the market are cloud-based, and this provides many different benefits, including reduced startup costs and more predictable long-term costs; increased accessibility, especially from remote locations; a reduced chance of contract data being permanently lost; centralization of all key data; and improved options for sharing data with all who require access to it. With that being said, cloud-based solutions do require continuous and reliable internet connections, and some buyers may feel a greater sense of control associated with on-premises software applications. Ultimately, buyers need to weigh up the pros and cons of both cloud-based and on-site deployment and consider which is likely to be the best option to contend with their specific needs, challenges, and uses.
• How much does contract management software cost? The cost of any software is an important factor to focus on, and buyers need to go into the process of finding software with a clear budget in mind. With that being said, the issue of cost is more complicated than many buyers initially realize, and this needs to be viewed in terms of the total cost of ownership—and the total cost of usage—rather than simply in terms of the initial upfront costs. The purchase price of a chosen software solution will omit many costs that are highly relevant, such as the cost of setting the software up, the cost of adding the software to existing workflows, and the costs linked to training employees to actually know how to make the best use of the software. There is also the issue of long-term subscription fees with cloud-based solutions offered by a third-party software provider, along with potential costs related to accessing support when it is needed and keeping the software up-to-date.
• What integration options are available? For businesses to carry out their work effectively, encourage collaboration, and oversee all that they need to, it is crucial for technology to be as integrated as possible. Therefore, buyers need to think carefully about the integration options that exist within different products on the market and select the software that provides the best options. For example, integration may be possible with customer relationship management software or contact management software. It is also worth thinking about whether mobile integration is on offer and whether contracts created through the software can be exported to other file formats so that they can be opened and edited in different programs.

What are the most relevant contract management software trends?

The most relevant contract management software trends also need to be taken into careful consideration when buyers explore their options. Clearly, organizations need to focus on acquiring software that has been developed with an awareness of the current state of play within the field of contract management. However, they also need to think about whether or not their chosen software has been developed with one eye on the future too, as this can help to save a significant amount of time and money when it comes to replacing software further down the line. Some of the most significant emerging trends to focus on are explored further below:

• Growth of artificial intelligence: More frequent use of artificial intelligence (AI) technology is a trend that is affecting many different types of software, and it applies to the field of contract management too. This technology can be used in many different ways, providing tools for greater automation but also facilitating more robust or watertight contracts. For example, through machine learning, it is possible for software to analyze the language used within a contract and make smart recommendations for improvements or for clauses that provide greater clarity or further protection. Capterra’s research reveals how Canadian SMEs can utilize machine learning technology to improve business operations. Going further, artificial intelligence can potentially provide users with quick answers to basic questions about how to use the software effectively or how to carry out specific actions.
• The rise of smart blockchain contracts: Another significant emerging trend that buyers should be mindful of when selecting their software for contract management is the rise of smart contracts that utilize blockchain technology. With these contracts, the use of non-modifiable code and continuous verification can help to make contractual agreements more reliable, accurate, credible, and foolproof. Gartner anticipates that, as of 2023, the use of smart blockchain contracts will increase data quality by 50%, which could further increase uptake, and Gartner's analysts have made suggestions that businesses should pilot these smart contracts now, with a view to testing the advantages. With this in mind, it may be important for buyers to think about software solutions that help to enable the use of smart contracts or which offer complementary features that may be useful.
• Increased complexity of contracts: Finally, there is a general trend to be aware of within contract management, which is the increased complexity of many contracts. This has occurred for many reasons—including the effects of globalization and companies signing agreements with businesses in other parts of the world—and a growing demand for personalized contracts, rather than 'one size fits all' solutions. Regardless of the causes, those involved with contract management as a discipline need to be aware of this reality, and they need to respond to it. This is likely to mean prioritizing contract management software that can deliver a more tailored, customizable experience. Although templates are still going to be extremely valuable, the best software may use these templates as a starting point and provide plenty of scope for any necessary changes or modifications to be made.

Sources:

The features highlighted were identified based on their relevance and the percentage of products in Capterra's directory that offer them. The following sources were used for this document:

1. Contract Management Software - Capterra Canada (Date accessed: Monday, April 25, 2022)

2. Gartner Says 80% of B2B Sales Interactions Between Suppliers and Buyers Will Occur in Digital Channels by 2025 - Gartner.com (Date accessed: Tuesday, February 1, 2022)

3. How implementation of machine learning can help SMEs - Capterra Canada (Date accessed: Monday, April 25, 2022)

4. Gartner Predicts that Organizations Using Blockchain Smart Contracts Will Increase Overall Data Quality by 50% - Gartner.com (Date accessed: Tuesday, February 1, 2022)