The Future of Contract Management: Embracing Cloud-Based Solutions

In today's fast-paced and digitally-driven business world, contract management has become more crucial than ever. Gone are the days of manually handling piles of paper-based contracts and agreements. Instead, businesses are turning to cloud-based contract management solutions to streamline their processes, ensure compliance, and reduce risks.

Cloud contract management offers numerous benefits, including improved collaboration, faster contract lifecycle times, and greater visibility into contract data. In this article, we'll explore the exciting world of cloud contract management and why it's the future of contract management.

Understanding Contract Management

Contract management is the process of ensuring that all stakeholders involved in a business agreement are able to create, negotiate, approve, execute and store contracts in a timely and efficient manner. Effective contract management requires a combination of legal expertise, business acumen, and technology tools to ensure that executed contracts satisfy the terms of all parties involved.

Key components of an effective contract management process (often referred to as contract lifecycle) include:

1. Contract Briefing

This is how the contract begins. Typically here the contract owner will brief Legal with the defining the terms and conditions of the agreement, including the scope of work, payment terms, delivery dates, and any other relevant details. Legal will then use this information to begin drafting the contract.

2. Contract Drafting

In this stage, Legal will use the brief provided to them by the business to draft the contract. Ideally the brief they produce will be complete enough for a complete contract to be created, but more often than not, they will need to go back to the contract owner to clarify details of terms and understand context around the agreement.

Many businesses are choosing to adopt contract management technology to improve the contract briefing process with contract briefing templates to ensure that Legal will always be sent the most concise brief possible from the beginning.

3. Contract Approval

Most businesses have very strict internal delegations of authority approval processes in place to protect the business from risk and ensure senior staff members are aware of transactions being made by the business.

Depending on a contract’s terms, it may be required to secure approval from a variety of stakeholders in the business. In some cases, internal team members may need to negotiate terms within each other to achieve an optimum business outcome.

For example, a new supplier agreement for marketing software might require both the approval from the Head of Marketing whose priority is to utilise the best tools to market the business, the Head of Procurement whose role is to oversee and and purchase goods and services for the business, and the Head of Finance whose priority is to ensure the business’s capital is being spent appropriately. Each of the teams will need to come to an understanding of what the expectations are of the agreement before it can proceed to counterparty negotiation.

4. Contract Negotiation

At this stage the counterparties will have the opportunity to negotiate the terms of the contract. In this stage they will ideally come to a compromise where all parties are satisfied with the agreement.

5. Contract Execution

This involves the signing of the contract by all parties involved and the distribution of copies to all relevant stakeholders for signature. Once a contract has been signed by all parties, it is considered 'executed'.

6. Contract Storage

After a contract is executed, it must be securely stored by all parties for reference. Traditionally businesses have used filing cabinets for their contract storage but this just turns contracts into a ticking time bomb.

This is where cloud based contract management software is exceptionally useful as it allows the business to store their contracts virtually so they may be easily kept confidential, but also accessed by only the relevant stakeholders. Having a cloud-based single-storage solution also means that the document can be found even after the original contract owner leaves the business.

7. Contract Monitoring

Once a contract is stored, it is critical to track the progress of the agreement to ensure that all parties are fulfilling their obligations as outlined. This stage can be where agreements can unravel as parties forget what they had agreed to complete at what milestones.

8. Contract Renewal

Once a contract reaches the end of its life, it expires. For most business contracts, the contract expiry will be clearly outlined in the terms of the agreement. However, often it will be beneficial to continue the relationship between the parties.

On these occasions, the parties must negotiate a renewal of the contract. The benefit of running the contract management process on cloud-based technology means that the contract owner can set themselves a reminder well ahead of the contract expiry to give themselves enough time to begin the renewal negotiation process. A cloud-based solution will also include key details such as contact details of all relevant stakeholders and comments left on the original contract so they can have all necessary data to begin the renewal negotiation.

Why Do You Need To Have An Effective Contract Management Process?

Contracts are the backbone of every organisation, serving as legal agreements that formalise business relationships and transactions. It is crucial for every organisation, regardless of size, to have efficient contract management practices in place. This can help to mitigate risks, improve business relationships, and save time and resources.

Mitigating Risks

In any business, risks are inevitable. Contract management helps organisations to identify and mitigate potential risks associated with contracts. It ensures that contracts are clear, concise, and legally binding. Effective contract management practices help in identifying and addressing risks associated with contract performance, such as missed deadlines, quality concerns, and non-compliance issues. By mitigating risks, contract management helps to protect the organisation from unnecessary legal disputes and financial losses.

Improving Business Relationships

Effective contract management ensures that all parties involved in a contract understand their obligations, timelines, and roles. It helps to establish transparency and trust between parties, leading to better communication, collaboration, and accountability. By improving business relationships, contract management can lead to long-term partnerships and increased profitability for the organisation.

Saving Time and Resources

Contract management can also help organisations save time and resources. By streamlining the contract management process, businesses can reduce the time it takes to negotiate, execute, and monitor contracts.

Limitations of Traditional Contract Management Systems

Despite the benefits that contract management can bring to an organisation, traditional contract management systems can be time-consuming and inefficient. They often involve manual processes, which can lead to errors, delays, and increased costs. These systems tend to make contracts less accessible, which makes it difficult to retrieve documents when needed. When using paper-based systems, simple things like version control and document sharing become more difficult. As the world becomes more digital, locally-hosted contract management software becomes outdated.

The Rise of Cloud-Based Solutions

As the limitations of traditional contract management systems become increasingly apparent, many organisations are turning to cloud-based solutions. Cloud-based contract management software offers a range of benefits, including increased accessibility, improved collaboration and enhanced security. As the future of contract management continues to evolve, cloud-based solutions are likely to become the norm, rather than the exception.

Benefits of Cloud-Based Contract Management Solutions

Using a SaaS platform like Plexus to manage contracts can bring multiple benefits not just to the contract owner but the wider business as a whole.

Improved Accessibility and Collaboration

With cloud-based contract management software, professionals no longer need to be tied down to their desks or office. They can access contracts and related documents from any location, on any device, at any time. Increased accessibility and mobile access allows for faster decision-making and smoother contract negotiations. Plus, cloud-based solutions offer better collaboration options, allowing multiple parties to access and edit documents simultaneously, which can enhance teamwork and productivity.

Enhanced Security and Data Protection

Cloud-based contract management software offers enhanced security features, including data encryption and secure backups. This ensures that contracts and sensitive information remain confidential and protected from potential cyber threats or ransom attacks. With cloud-based solutions, organisations can also easily monitor who has access to contracts and limit access as needed, providing an extra layer of security.

Streamlined Contract Creation and Negotiation

Cloud-based contract management software can streamline contract creation and negotiation by centralising all contract-related information in a single digital platform. It enables real-time collaboration and document sharing among stakeholders, allowing for faster and more efficient drafting, editing, and review processes. Additionally, automated workflows and customisable templates within the software help standardise contract creation, reducing errors and saving valuable time during negotiations.

Centralised Contract Storage and Organisation

By centralising all contracts and related documents in a cloud-based platform, contract professionals can save time and reduce the risk of errors. With an organised and easy-to-use platform, finding and sharing contracts becomes a breeze. Plus, cloud-based solutions offer features like automated notifications and reminders to help users stay on top of critical deadlines and obligations.

Automated Contract Approval and Signing Processes

Cloud-based contract management software automates contract approval and signing processes by providing a digital platform where contracts can be reviewed, approved, and signed electronically. It eliminates the need for physical documents, manual tracking, and back-and-forth emails. With features like automated notifications and reminders, it ensures timely reviews and signatures, improving efficiency and reducing delays in the contract lifecycle.

Improved Contract Performance Monitoring and Analysis

The majority of contract management platforms that are based on cloud technology offer assistance to legal teams in keeping track of contract performance by recognising possible problems before they escalate. Employing this technology also enables organisations to assess their effectiveness in managing contracts over the entire cycle as they can obtain data directly from the platform.

Strengthened Contract Compliance and Risk Management

By using cloud-based solutions for contract management, organisations can strengthen their compliance and risk management. With features like automated alerts and real-time tracking, contract professionals can identify potential issues and take proactive measures to mitigate risks. Cloud-based solutions also offer the ability to easily track and report on contract performance, allowing for continuous improvement and optimisation.

Key Features of Cloud-Based Contract Management Platforms

Contract professionals manage an increasing number of contracts across multiple departments, locations, and countries. With this complexity comes the risk of errors, missed deadlines, and legal disputes.

Cloud-based contract management platforms offer seamless integration with third-party tools and applications, such as electronic signature software, CRM systems, and project management tools. This integration enables contract professionals to automate the contract approval and signing processes, reducing the time and effort required to manage contracts. With electronic signatures, for example, contracts can be signed and executed in a matter of minutes, compared to days or weeks with traditional paper-based processes. This not only speeds up the contracting process but also improves document security and compliance.

Furthermore, cloud-based contract management platforms offer advanced analytics, data collection and reporting capabilities, providing contract professionals with valuable insights into their contract portfolio. With real-time data on contract performance and compliance, contract professionals can make informed decisions and identify areas for improvement.

Overcoming Security Concerns

Despite the clear advantages, many organisations still harbour concerns about the security of cloud-based solutions. Let's address common misconceptions about cloud-based contract management security and explore the key features of cloud-based contract management platforms that can help to overcome these concerns.

Misconception #1: Cloud-Based Solutions are Less Secure than On-Premises Solutions

One of the most common misconceptions about cloud-based solutions is that they are less secure than on-premises solutions. However, this is far from the truth. In fact, many cloud-based solutions offer higher levels of security than on-premises solutions. Cloud-based contract management platforms invest heavily in security measures, such as data encryption, multi-factor authentication, and continuous monitoring, to protect their customers' data. These measures are often more robust than those implemented by organisations in their on-premises infrastructure, due to the high level of expertise and resources at the disposal of cloud providers.

Misconception #2: Cloud-Based Solutions are Vulnerable to Cyber Attacks

Another common concern about cloud-based solutions is that they are vulnerable to cyber attacks. Again, this is a misconception. While no system is completely immune to cyber attacks, cloud-based solutions are often more secure than on-premises solutions. This is because cloud providers employ dedicated security teams to identify and mitigate risks, and they have access to advanced security tools and technologies.

Despite initial concerns about security, cloud-based solutions are often more secure than on-premises solutions, thanks to investments in data encryption, multi-factor authentication, and continuous monitoring. As the future of contract management moves towards the cloud, it's time for organisations to embrace the benefits of these solutions and stay ahead of the curve.

Implementing Cloud-Based Contract Management

When selecting a cloud-based contract management platform, there are a few key factors to consider:

1. Security

Look for a platform that offers strong security features, such as data encryption, multi-factor authentication, and continuous monitoring. Ask the provider about their security protocols and look for certifications such as ISO 27001.

2. User-Friendliness

The platform should be easy to use and intuitive for both experienced and non-experienced users. Look for a platform with a user-friendly interface that requires minimal training.

3. Integration

Look for a platform that can integrate with your existing systems, such as your CRM or ERP. This will ensure a seamless workflow and reduce the risk of data duplication and errors.

4. Customisation

Choose a platform that has the flexibility to meet your specific contract management needs, such as the ability to create custom templates or workflows.

5. Scalability

Choose a platform that is scalable and can grow with your organisation. The platform should be able to handle an increasing number of contracts and users without sacrificing performance.

6. Customer Support

Finally, customer support is critical when choosing a cloud-based platform. The provider should offer comprehensive support, including onboarding, training, and ongoing support. Look for a provider with a dedicated support team.

Future Trends in Cloud-Based Contract Management

Cloud-based contract management is the future of contract management. Embracing this technology can provide organisations with a competitive advantage, improved security, and increased efficiency. There are some emerging trends that have the power to transform the way we manage contracts.

AI and Machine Learning

AI and machine learning are transforming the way we manage contracts by automating repetitive tasks, improving data accuracy, and reducing the risk of errors. With AI and machine learning, contract professionals can easily search, categorise, and analyse contracts in real-time, helping them to identify patterns and trends.

One of the most significant benefits of AI and machine learning is the ability to automate contract review and analysis. This can save time and improve accuracy by identifying any issues or potential risks before they become a problem. With AI and machine learning, contract professionals can quickly and accurately review large volumes of contracts, reducing the time and resources required.

AI is also being used to help businesses brief legal support requests and lawyers respond to these requests faster than ever before. Plexus has recently introduced Draft Advice AI which asks the business user submitting the request for additional context, and auto-populates a draft version of the advice for the Legal team to review.

Blockchain

Blockchain technology has the potential to revolutionise contract management by providing a secure and transparent way to store and manage contracts. Blockchain technology creates a digital ledger that is transparent, tamper-proof, and secure. This means that all parties involved in a contract can access and verify the information in real-time, reducing the risk of fraud and disputes.

Challenges and Solutions in Adopting Cloud-Based Solutions

Any in-house legal team will understand the importance of adapting to technological advancements to stay ahead of the competition. However it's not always plain sailing when it comes to implementation.

Resistance to Change

Implementing a new system can be daunting, and some employees may resist the change. To mitigate this, it's essential to communicate the benefits of cloud-based contract management effectively. Highlighting the efficiency gains and increased security that come with this new system can help build excitement and buy-in from employees. Additionally, providing adequate training and support can help employees feel more comfortable and confident with the new system.

Data Migration

Migrating data from an existing system to a new cloud-based solution can be challenging. It's essential to have a clear plan in place to ensure data is accurately transferred, and no important information is lost. Additionally, testing the new system with a small subset of data before migrating everything can help identify any potential issues and prevent data loss during the migration process.

Integration With Existing Systems

Integrating a new system with existing software can be complicated, but it's crucial for seamless operations. Compatibility issues can arise, so it's important to ensure that the new system can integrate with existing systems before implementation.

Success Factors for Cloud-Based Contract Management

The success of implementing cloud-based contract management relies on a combination of key factors.

User Training and Adoption Programs

A crucial element of change management is user training and adoption programs. A cloud-based contract management platform is only effective if users are fully trained on how to use it and are encouraged to adopt it. It's essential to provide training in a variety of formats, including online tutorials, webinars, and in-person training sessions. Additionally, it's important to create a culture of adoption within the organisation, where users are encouraged to use the platform consistently.

Regular Performance Monitoring and Optimisation

Once the platform is implemented, it's vital to monitor its performance regularly and optimise it for maximum efficiency. This involves regularly reviewing processes and workflows, looking for areas to streamline, automate, and improve. It's also important to collect feedback from users and use it to make ongoing improvements to the platform.

Summary of Key Benefits and Considerations

In conclusion, cloud-based contract management platforms offer significant benefits for organisations that are looking to streamline processes, increase efficiency, and improve compliance. Effective change management is essential when implementing these platforms, with a focus on user training and adoption programs, regular performance monitoring and optimisation, and selecting a platform with key features such as automation, integration, scalability, and comprehensive customer support. By following these success factors, organisations can ensure a smooth transition to a cloud-based contract management system that delivers tangible benefits and drives business growth. So, don't hesitate to take the leap and embrace the power of cloud-based contract management today.

FAQs

What is cloud-based contract management, and how does it differ from traditional systems?

Cloud-based contract management is a modern approach to managing contracts using online software. It differs from traditional systems in that it provides users with the flexibility and convenience of accessing contract data from anywhere, anytime. Cloud-based solutions also offer benefits such as automated tracking, streamlined workflows, and compliance management. Traditional systems are often limited to a local network and require manual processes, making them time-consuming and prone to errors. By adopting cloud-based contract management, organisations can improve their productivity and reduce risks associated with contract management.

Is cloud-based contract management secure?

Yes, cloud-based contract management is secure. Most providers use advanced encryption and security measures to protect data from unauthorised access and cyber threats. Additionally, cloud-based solutions offer advantages such as automatic backups, disaster recovery, and role-based access controls, which help to ensure the integrity and confidentiality of sensitive contract data. However, it's essential to choose a reputable provider with a proven track record of security and compliance standards. By doing so, organisations can enjoy the benefits of cloud-based contract management without compromising their data security.

How can cloud-based contract management improve collaboration among teams?

Cloud-based contract management can improve collaboration among teams in several ways. Firstly, it offers real-time access to contract data, allowing team members to work on the same document simultaneously and avoid version control issues. Secondly, it provides a centralised platform for storing and sharing contract information, reducing the reliance on email and other communication channels. Finally, cloud-based solutions offer features such as automated notifications and task assignments, making it easier for team members to stay on top of their responsibilities and deadlines. By leveraging these collaboration tools, organisations can improve efficiency and teamwork, ultimately driving better business outcomes.

Can existing contracts be migrated to a cloud-based system?

Yes, existing contracts can be migrated to a cloud-based system. Most providers offer tools and support for migrating data from traditional systems to the cloud, ensuring a smooth transition without disruption to business operations. Cloud-based solutions also offer features such as optical character recognition (OCR), which can extract data from scanned images of paper documents, making it easier to digitise and migrate old contracts. By migrating to a cloud-based contract management system, organisations can modernise their processes, increase accessibility, and take advantage of the benefits of automated tracking and compliance management.

What role does artificial intelligence play in cloud-based contract management?

Artificial intelligence (AI) plays an increasingly important role in cloud-based contract management. AI-powered solutions can automate tasks such as contract review, analysis, and classification, saving time and reducing errors. AI can also be used to extract key contract terms and clauses, providing valuable insights and analytics. Moreover, AI can help identify potential risks and compliance issues, alerting contract professionals to take corrective action. With AI, contract management can become faster, more efficient, and more accurate, ultimately leading to better business outcomes. As the field of AI continues to develop, cloud-based contract management solutions will become even more powerful and transformative.

How do I get started using cloud contract management?

Cloud contract management is becoming increasingly popular as businesses continue to move their operations to the cloud. Not only does it offer a more streamlined and efficient way of managing your contracts, but it also provides greater flexibility and security. If you're a contract professional and you're ready to make the move to cloud contract management, here are some steps to get started:

1. Evaluate your needs: Before you start looking for a cloud contract management solution, take the time to evaluate your needs. What are your current pain points? What features are most important to you? What is your budget? Knowing the answers to these questions will help you narrow down your choices and find the solution that's right for you.

2. Choose a cloud contract management provider: There are many cloud contract management providers to choose from, each with their own set of features and pricing. We recommend researching each provider thoroughly and comparing their offerings to find the best fit for your business.

3. Upload and organise your contracts: Once you've chosen a provider, it's time to upload your contracts to the cloud. Make sure to organise them in a way that makes sense for your business, whether that's by contract type, client, or some other method.

4. Set up alerts and reminders: One of the great things about cloud contract management is the ability to set up alerts and reminders. Make use of this functionality to ensure that you never miss an important deadline or renewal date.

5. Train your team: Finally, make sure to train your team on using the new software to ensure that it can reach its true potential within the organisation.