A Centralized Contract Repository Streamlines Processes and Reduces Risk
Contract management represents one of the largest resource drains for organizations of all sizes.
The American Bar Association tells us that “a typical Fortune 1000 company manages between 20,000 and 40,000 active contracts at any given time, at least 10% of which are misplaced, difficult to find … or otherwise unmanaged or forgotten.”
Drilling down into the details of the contract management challenge, the situation appears even worse. A 2022 DocuSign survey of more than 1,300 contracting professionals worldwide revealed that:
- Contract professionals take 45 minutes on average to find a completed contract
- 46% of respondents have been unable to locate a contract
- It takes an average of 84 minutes to find specific information within a contract
- 68% of respondents need to access completed contracts at least weekly
The challenge is acute, even for moderate-sized teams. On average, it takes 30 hours of staff time to generate, negotiate and locate a contract. For a mid-sized organization that manages around 500 contracts a year, that works out to 7 full-time employees worth of annual labor.
Fortunately, a solution is at hand. A modern, centralized contract repository can have a significant and positive impact on the organization’s contract management processes. Digital contract repositories have proven highly effective at improving efficiency and reducing the number of hours organizations waste searching for contracts.
What is a digital contract repository?
In the simplest terms, a contract repository is a place where contracts are stored.
Historically, this has meant physical storage locations that held thousands of paper files. Today it has evolved to mean a centralized, cloud-based storage system for completed agreements. To be most efficient and productive, a contract repository must be searchable by extracted fields and key terms. It also must be easily updated with contract amendments, renewals and legal/regulatory changes. It is a living, breathing tool rather than a static location.
Some organizations use general-purpose tools like Microsoft SharePoint or a shared drive to electronically store contracts and other critical documents, but this method leaves much to be desired. A modern, digital contract repository is designed to be more than a digital file cabinet. It is a powerful tool that improves departmental efficiency, security, collaboration and accuracy across all stages of the contract lifecycle, including documentation preparation, generation, storage and management. The benefits multiply when access is shared among approved administrators across multiple functions throughout the organization.
Why do you need a digital contract repository?
Today’s office of general counsel is generally encumbered by inefficient document generation, review, management and storage processes. Before a signature, in-house attorneys are shackled to manual workflows and disconnected systems for negotiating, reviewing and approving contracts. After completion, there are new problems that arise related to managing renewals, obligations and risks. Part of the difficulty lies in not knowing where contracts are kept and part of the problem is the lack of searchability for key data.
According to Gartner, contract generation, negotiation, review and approval can take up to half of a law department’s time. In addition, siloed functions and departments make it harder for legal departments to manage and locate the thousands of agreements and contracts held throughout the organization. This challenge has been exacerbated during the pandemic, as the growing remote and hybrid workforce has heightened the need for online collaboration. Moreover, the office of general counsel is charged with ensuring that proper security and confidentiality are maintained with permission-based, need-to-know access.
Traditional contract storage systems represent an unbalanced and inconsistent approach to risk and obligation management. A centralized digital contract repository introduces advanced collaboration features, which quickly improve transparency, efficiency and information security.
A digital contract repository solves many common legal challenges
A modern digital contract repository can address many of these pain points, accelerating the contract lifecycle and reducing the burden on staff by:
- Speeding up contract location: with a single source of truth, finding contracts doesn’t have to take hours.
- Reducing the number of systems used: Eliminate the need for constant “swivel chairing” among multiple systems and applications where contracts may be stored and managed (including Microsoft Word, email, CLM and customer relationship management solutions).
- Simplifying handoffs among multiple parties: Simplify legal review, approval and signature.
- Enhancing monitoring of existing contract provisions: Track obligations and treat contracts as codification of business relationships.
- Identifying current vendor relationships: After signing or during contract creation, easily identify prior contractual relationships with the counterparty or with a competitor.
- Screening for nonstandard terms and clauses: Quickly comply with requests to identify the number of current contracts containing provisions such as nonstandard payment terms, force majeure clauses or nondisclosure language.
- Fostering remote working relationships: Empower employees with centralized, online access to templates, ensuring consistency and providing access to a broader wealth of resources.
- Providing multiple departments with real-time access: Legal departments often don’t have permissions to use Salesforce, which limits their ability to access contracts and other critical documents and communication. With CLM’s built-in Salesforce integration, legal, sales and other key functions gain real-time access to contracts.
- Standardizing common sales agreements and contracts: Reducing variance among common documents (like NDAs) will reduce legal/finance intervention and minimize manual review.
A “crawl-walk-run” approach to implementing CLM
While eSignature has changed the way that many organizations execute a contract, the lifecycle before and after a signature is often managed through manual processes, spreadsheets and emails. That disconnected system usually translates to slower business actions, increased risk and frustration among customers and employees.
Without a CLM solution to tame the growing complexity of contracting, organizations are stuck with manual processes. Yet, early CLM solutions tended to either be expensive to implement and difficult to use or limited in their ability to solve problems outside of a single use case or particular business function. The result has been heavy investment, little return and ongoing frustration from every stakeholder.
Fortunately, organizations now have the option of introducing the time-saving efficiency of a modern CLM into their contract management processes in a modular, step-by-step deployment. DocuSign CLM Essentials is a great first step for growing businesses looking to simplify contracting processes. From there, DocuSign can adapt and grow as the organization’s needs evolve.
CLM Essentials is designed to be easy to implement, beginning with the simplest use cases, and scaling up to handle more complex workflows over time. Many organizations find that tackling the need for a digital contract repository is a great step to start walking with an automated CLM. By taking a “minimum viable product” approach to deployment, organizations can capture quick wins and expand usage of the solution over time.