June 19, 2023
By DocuSignPage Reading Time: 3 minutes
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 digital, centralized contract repository has proven highly effective at improving efficiency of an organization’s contract operations and reducing the number of hours organizations waste searching for contracts.
What is a digital contract repository and why do you need one?
In the simplest terms, a contract repository is a place where contracts are stored. 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.
Often the commercial contracts team in the office of general counsel is encumbered by inefficient document generation, review, management and storage processes. Before a signature, in-house attorneys and contract managers 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. 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, such as general-purpose tools like Microsoft Sharepoint or a shared drive, 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 and business 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, SharePoint, shared drives, CLM and CRM solutions).
- Simplifying handoffs among multiple parties: Simplify legal review, negotiations, approval and signature.
- 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 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 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, there is often not a clear path to a CLM solution that can tame the growing complexity before and after signature.
Fortunately, organizations can introduce the time-saving efficiency of a modern CLM in a modular, step-by-step deployment with DocuSign CLM that adapts and grows as your needs evolve. For smaller businesses, DocuSign CLM Essentials is a great first step to simplify contracting processes. As you grow, you can access AI-powered contract analytics and enable real time activity tracking with DocuSign Monitor for CLM.
Our experts can help your team map out plans for an audit, implementation, training integrations, change management and continued support throughout adoption.