Signing Better Contracts: How Contract Lifecycle Management Strengthens Businesses
How can your security systems integration company use contracts to tell if your sales team is excelling or putting the company at risk? Exari President of the Americas Terence Lee explains.
Contracts are vital to every business, but are rarely considered a strategic resource outside of sales negotiations. However the contracts that underlie business-to-business relationships – which involve complex bargaining and changing variables – are ripe with valuable information.
When properly harnessed, these contracts provide a framework around the business relationship while supplying actionable business knowledge especially pertinent for compliance and risk management. The problems with extracting and using data from thousands of contracts arise from the way most companies create, negotiate and manage their contract portfolios. Despite technological advances across practically every other aspect of the business, many security firms have yet to adopt an automated process for drafting and negotiating contracts.
Security firms seeking to push out deals know that managing contracts manually leads to a myriad of problems that slow or otherwise impede the flow of the sales cycle. Traditional commission-based compensation models incentivize sales representatives to close contracts as quickly as possible, as revenue is recorded only once a deal is done. The rush to close deals can overload the legal department, causing debilitating backlogs, rushed drafting and, in the most extreme case, rogue contracting.
Manual creation of highly customized or negotiated sales agreement is a laborious process. But when individual lawyers create and archive sales contracts by pulling information from their own archives, inefficiency is the least of a company’s worries. Manual contracting means legally binding terms are exposed to human error, unchecked for version control and, most importantly, un-trackable. When nonstandard client demands arise, sales representatives have no way of assuring counterparties that their terms can be met as attorneys are forced to reinvent the wheel. Worse still, in a crisis scenario – such as a default event, lawsuit or new regulation – there is no way to instantly locate all relevant terms or documents, leaving lawyers scrambling and business leaders under-informed.
The Next Generation of the Sales Cycle
The traditional sales cycle is broken. There must be a better way where the legal bottleneck is a thing of the past, where the sales team can view the progress of their agreements for better client communication, where the meaningful data living within existing agreements is put to use to better understand and manage the company.
The better way is achieved by putting technology to work for your team. The rapidly growing contract lifecycle management (CLM) software industry is focused on nurturing and innovating the technologies that build off of document automation and assembly. Rather than focus solely on the legal minutiae, many CLM providers offer enormous benefits to the management, compliance and sales departments in different, overlapping ways.
So what does a world with integrated CLM software look like? Imagine salespeople tracking the status of client agreements, lawyers drafting agreements by pulling from shared clause libraries of preferred language and fallback clauses, versions archived for seamless negotiations, and contracts reaching clients in a fraction of the time. With the latest advances in CLM technology, a faster sales cycle is only the tip of the iceberg. Why not record key contract data points so terms can be searched within or across agreements? Why not apply state-of-the-art analytics models to contract data in order to investigate, assess and improve internal processes? Why not report on enterprise-wide revenue and risk using existing contract data? Why not ensure 100% compliance with client agreements through the use of triggers and milestone trackers that automatically alert users when, for example, deals, discounts or renewal periods will expire.
With the option to measure a company’s success based on the speed with which it can make money, it makes sense to invest in technology that enables a faster, more efficient sales process. In the fast pace of getting products to customers, imagine a world where the contract portfolio is constantly at work helping business leaders better understand their clients, their business, and the ultimate potential for their sales cycle.
Terence Lee is President of the Americas at Exari, an industry leading software company that automates and streamlines the process of creating, negotiating and managing contracts and complex documents.
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