A version of this article originally appeared on The Official ContractWorks Blog
Understanding the potential ROI of contract management software is an important precursor to your decision to purchase it. Equally important is knowing how to implement a plan to use the new software effectively. Your legal department doesn’t have time to waste floundering through tutorials. You’ll want to see ROI fast.
This guide will cover key areas to focus on to get results as quickly as possible, and help you calculate how much your organization could save by utilizing contract management software.
Before reading the complimentary guide take a few minutes to review the considerations below. They will help you frame your current processes so that you will have a better idea of how to effectively approach measuring the return-on-investment of contract management software for your company.
Identify Which Problem to Target First
Two of the most common, costly problems are misuse of time and poor contract organization. In some companies, contracts are more or less organized, but complicated spreadsheets or cluttered file cabinets eat up company time. Other departments struggle to implement any system at all. They waste time and money on damage control, missed negotiation opportunities, and duplicate services.
If wasted hours is the most pressing concern, investing in effective contract management software can be almost like hiring a virtual “employee” to monitor deadlines and updates. Concentrate on establishing an organizational structure that makes contracts easier to find. If catching opportunities or avoiding risk is the biggest challenge, use tags to track critical parameters.
You may want to predict your potential ROI before discussing a new contract management solution with key stakeholders. The second calculator in the guide is one way you can estimate ROI in terms of saving billable hours and catching mistakes (like redundant vendor accounts) before they happen.
Clear the Bottleneck
The dreaded bottleneck is one of the biggest obstacles companies face. Most legal teams understand that their contract management system needs improvement. The challenge is finding the time to transition to a new system.
An effective software system makes it easy to save time from day one. The first step is onboarding other members of your legal team, contract managers, paralegals, and others who need regular access to contracts. Software with user-friendly features help users get up and running in minutes. Reducing billable hours spent chasing paperwork is one of the fastest ways to increase ROI.
Optimize Document Availability
Manual contract management systems often fail because they can’t keep up with contract volume. One spreadsheet turns into a virtual junk drawer of files and folders. A software system can’t be effective if it becomes an additional piece in a haphazard jumble. The benefit of an intuitive system is that it’s quick and easy to upload documents. There’s minimal transition time spent straddling systems.
Another mistake to watch is dumping contracts into a new system without organizing them. Have admins set up a simple folder and tagging structure before onboarding other users so everyone knows where to save files.
Customizable tags are an outstanding feature to increase ROI. The system becomes more flexible and responsive when users can refine searches for specific criteria. Admins can make certain tags required fields to ensure compliance.
Use Contract Reports Effectively
In an efficient contract management process, legal teams don’t waste time scrambling to collect pertinent contracts before a meeting. Adding relevant tags to each new contract (or saving templates with all important tags) can make regular reviews easy.
For instance, a company focusing on improving vendor relationships may set up a brief meeting to review the status of various contracts. Gathering a report on all vendors makes it easy to compare accounts at a glance. Refining the search by contract end date helps managers plan a negotiation strategy ahead of time or take any necessary actions to close an unsatisfactory vendor account. Organizations can see clear ROI in terms of more streamlined accounts, better prepared legal teams, and stronger negotiations at contract renewal.
Now that you’ve taken a few minutes to reflect on potential areas of opportunity in your current contract management process download Measuring the ROI of Contract Management Software, here. You’ll gain complimentary access to the guide, complete with calculators to help your team gain insight into what you would expect to see as a result of properly used contract management software.