Most companies are unaware of the data that the contract management software is generating for them. Within the dashboard is hidden a goldmine for the individuals who know how to read and interpret data.
The use of contractual data in the proper manner can make future processes quicker and smoother. Also, the contract data can reduce your overall cost and build stronger relationships with all the stakeholders.
What is Contract Data?
The contract data covers everything that is included within the contracts. Clauses, dates, milestones, owners, values, and types are the particulars that can be collected and used further to improve the process. In its original form, this data is rigid, but when aggregated, such information can provide the means for analyzing the existing scenario and deciding for the future.
What Is Contract Data Management (CDM)?
It is a digital process of managing the data of different contracts across different departments, organizations, and systems. By collecting the data, you can automate the various stages of the contract. Also, it can provide you with an opportunity to analyze and interpret it to make better decisions within the organization.
Contract Data Tracking – Why is It Important?
Contract data tracking can help collect vital information used at multiple levels of organizational contracts. From execution to strategizing for the future, the data from the contracts can allow you to streamline your processes and automate the functions. It can also improve the time and resources an organization spends on contracts.
Negative Consequences of Underutilization of Contract Data
Some companies might be missing utilizing the proper contract data management system in their favor. The improper data usage can elongate the contract cycles and reduce the chances of building better relationships with the contracting parties.
Information that could have made decisions like contract renewals easier will not be there, thus putting your organization at a greater risk of losing money.
In the short run, the contracts that are active and already in the execution stage might have to suffer delays in the execution or penalties for non-compliance with the law.
Similarly, in the long term, the processes you could have identified to be automated would not be done. It means you’ll still be spending more time in closing the contracts or their execution as compared to the competitors. Thus, contract data processing will bring a reduction in revenues and an increase in costs.
Important Data Metrics to Make Contract Process Better
To manage the contracts better, you need the existing data. Here are the primary data metrics that can prove to be helpful:
- Number of contracts – You can divide the total number of contracts that your business gets segment-wise to get a clear picture of the scenario
- Time to close the contracts – It is the period from engaging the party to signing the contract, and all the stages within are covered.
- Annual Contract Value (ACV) – The value of the ongoing customer contract tells you the revenue that a particular party is offering you.
- Negotiation time – It covers one of the stages of getting into the contract. You can use this data to manage your time and arguments better.
- Review time – Taken by parties to review the contract terms before the contract signing stage. You can utilize this metric to make the reviewing process easier for different parties.
- Average time for legal review (based on contract type) – This data metric can help you dedicate more resources to particular contracts at your organization.
How To Use, Manage, and Analyze Contract Data?
The below step-by-step process can help you get the most relevant data from the contract management process:
- Collect the relevant data – You can utilize the key performance indicators mentioned above to be the starting point
- Evaluate the information – The data collected can provide you with the current situation at your organization, highlighting the processes that are taking too long.
- Set the benchmarks – Based on the data collected and evaluated, you can set realistic standards to be achieved.
- Create a centralized data repository – Different types of data and their collection at other points in time must be stored in a centralized repository so that a regular analysis can be conducted.
- Identify bottlenecks – Once you have set the benchmarks, you’ll find the bottlenecks in your processes that are distorting the set standards.
- Remove the blockage – Use the data to understand the reasons for the process blockage. You can utilize additional resources to remove the congestion during the process.
- Conduct continuous evaluation of the process – With constant contract data analysis of the process, you’ll identify the things to improve.
- Improvise the processes, benchmarks, and mechanisms – Implement the problems identified in the regular process audit and keep the improvisation cycle running.
How Can Contract Data Empower Your Business?
The data collected from contracts can empower your business in the following ways:
- Manages obligations and rights – You know exactly what to do, when, and who should be responsible for it.
- Integrate contract data points into the enterprise – Individual executory clauses from the contracts are extracted and integrated into the functional processes.
- Conduct more informed negotiations – Data about the current contracts, parties, and deliverables at a single point allows you to gather relevant information helpful in negotiations.
- Complete risk assessment of your contracts – When all the contract processes are automated and a single repository of all the contracts is available, it lets you comply with the terms more efficiently, reducing the risk.
- Save time and money – Automation, lesser risk, and data integration into the organization processes can save time and money.
Role of Dashboard in Simplifying Contract Data Management
Within contract data management, the role of dashboards is vital. The dashboards provide you with the complete data in a glimpse. You don’t have to explore the individual metric or contract to find what’s due or which processes take the most time to complete.
However, the dashboard must be rich with information and cover a holistic picture of the entire Contract Management Software to get these benefits. The dashboard from CounselLink CLM and AvtalShantering are comprehensive and present all the relevant information in the form of graphs and pie charts. It doesn’t only make the data readable but also lets you make better decisions.
Benefits of Effective Contract Data Management
If you’re wondering how effective contract data management can help your business, here are the primary advantages:
- Offers a Unified Information Source – When utilizing CDM, you are more likely to store all the critical data in a single repository, making it easier to find all the required information.
- Provides Real-Time Access to Key Data – Data metrics are identified and sorted regularly, allowing you to make better decisions.
- Reduces Errors – With all information about the particular contract (or combined contracts) available, you can better comply with the contractual terms, make informed decisions and satisfy all parties involved.
- Minimizes Missed Deliverables – You get reminders and notifications for the execution of the task, so the chances of missing the deliverables are considerably reduced.
- Enables Detailed Analysis and Insights – Finding the time spent for contract negotiation, finalization, and execution is possible through CDM. Thus, you can get detailed analysis and insights for performance improvement.
Collecting contract data can help organizations in managing their operations in a better way. The role of the dashboard in data management is even more integral. CounselLink CLM and AvtalShantering present a comprehensive dashboard that helps you get a bird’s eye view of all your contracts. So, it is essential to incorporate this management technique in your business and get the most out of it.
Olga V. Mack is Vice President at LexisNexis® and CEO of CounselLink® CLM, a next-gen contract management company that has pioneered digital negotiation technology.
An award-winning general counsel and operations professional, Olga embraces legal innovation and has dedicated her career to improving and shaping the future of law. She shares her views in her columns at Above the Law, Forbes, Bloomberg Law, Association of Corporate Counsel (ACC) Docket, and more.