Transforming IT Contract Management Through Technology

According to a market research report, the global contract lifecycle management software market is expected to see significant growth over the next 10 years. As of 2024, the estimated market value is US$ 1.07 billion, and the demand is forecasted to increase at a CAGR of 12.4% and reach a market value of US$ 3.46 billion.

In another study by the International Association for Contract & Commercial Management (IACCM), the amount of revenue lost annually due to poor contract lifecycle management (CLM) is around 9.2%.

Organizations that adopted Contract Lifecycle Management software have seen a notable increase in revenue. The information technology sector has recognized the immense value of optimizing their contract lifecycle management processes and the competitive edge they get in the digital age.

IT contract data serves as a gold mine for businesses, providing them with powerful and strategically valuable insights to make informed decisions. In this blog post, we will delve into the benefits, key technologies, and implementation strategies IT leaders can adopt for improving contract compliance and ensuring alignment with business goals and expectations.

Understanding IT Contract Lifecycle Management

Managing IT contracts through the entirety of their lifecycle can be a complex and time-consuming task. Needless to say, managing contract processes manually and keeping track of your contracts is no small feat.

Having effective contract management in place requires organizational and analytical skills and a strong understanding of IT law and procurement processes. Much like any industry, the IT contract lifecycle often involves the following stages: initiation, drafting, negotiation, approval, execution, performance monitoring, and renewal or termination covering intricate terms and strict compliance requirements. 

Throughout all these stages, effective collaboration is crucial among key stakeholders such as contract managers, project managers, and clients to ensure contract compliance. Each stage presents unique challenges and opportunities, requiring the contract management team to identify potential issues in the contracts and make informed decisions.

With the rise in third-party vendors, software licenses, and service agreements, robust monitoring mechanisms are essential for IT managers to track contract performance and identify any potential breaches. Embracing technology, implementing advanced strategies, and adhering to ethical practices in contract management help them foster stronger and more reliable partnerships.

The Role of Technology in IT Contract Lifecycle Management

We have seen firsthand how technology has provided solutions for managing the tedious processes of contract management that were previously carried out manually. Paving the way for sophisticated digital solutions resulted in the streamlining of the contract management process, which is today known as contract lifecycle management.

The impact of automating the entire process of contract management and electronic contract signing is significant. However, there are other aspects of contract management that are often overlooked. 

One such aspect is contract analytics, which is important for giving contract managers the confidence that they don't run the risk of compliance failures. Contract analytics involves insights from contract data to identify key clauses, obligations, and risks that help IT organizations prevent revenue leakage, costly disputes, and reputational damage.

Implementing a Tech-Driven IT CLM Strategy

Technology undoubtedly presents opportunities. But how can you ensure that it is used to its full potential for better results and to solve operational issues? Implementing a successful tech-driven IT CLM strategy is the answer to empowering teams to harness the power of technology in contract management.

Assessing Current CLM Processes and Identifying Gaps

Taking an in-depth look at your business's current contract management capabilities is the first step before laying down processes or investing in technologies. It includes assessing current CLM processes and identifying gaps, pain points, and opportunities for improvement. IT teams should evaluate what steps should be taken to achieve optimal workflow efficiency and data accuracy, which is important for decision-making, and gather feedback from all relevant stakeholders.

Automating Workflow Processes

Throughout the contract lifecycle, automation can be enabled at various stages. The team must evaluate the contract management procedures and metrics that you are trying to enhance before identifying the steps that need to be automated. Workflow automation is probably necessary for low-complexity tasks, strategically distributing tasks to team members, visibility into legal requests, and improving communication amongst stakeholders and departments.

Enhancing Collaboration and Communication

 A contract provides a framework that helps parties define their own rules, outlining the obligations, rights, and duties. So, when teams collaborate, they bring collective and diverse perspectives and skills helping minimize the influence of personal biases and significantly improve customer satisfaction.

Ensuring Compliance and Security

A robust IT-driven strategy is essential in ensuring compliance security in CLM. This involves implementing security measures such as encryption, access controls, regular risk assessments, security audits, and intrusion detection systems to protect against various threats to systems. Establishing clear roles and responsibilities and ensuring your employees are properly trained demonstrate your commitment to compliance. IT managers should ensure adherence to laws, regulations, and internal standards to ensure system and data integrity and avoid unauthorized contract modifications.

Leveraging Data Analytics for Continuous Improvement

Data analytics plays a major role in analyzing existing contract data to identify bottlenecks in the current contracting processes. Businesses that use data analytics identify patterns and trends that are vital for proactive issue resolution, and IT managers use it as a tool to allocate resources more effectively. Analyzing a vast amount of contract data and tracking key performance indicators (KPIs) helps IT managers evaluate their practices and drive continuous improvement in their IT CLM processes.

Training and Change Management

Preparing your team to adapt to new systems and changes in the existing IT contract lifecycle management processes and equipping them with tools and knowledge can be a challenge. Investing in comprehensive training programs helps IT managers to help set teams up for success. Establishing clear communication ensures that each employee understands how the change will be beneficial to their roles. A structured change management strategy fosters a culture of continuous learning leading to overall performance in IT CLM.

Key Technologies Enhancing IT Contract Management 

The legal landscape continues to be shaped by a wide range of technologies that use advanced contract data processing and analysis techniques. Driven by a wave of innovative technology that ensures efficiency and accuracy, organizations today manage complicated and massive volumes of contracts. Let's look at some of the modern technological advances that are changing the way IT managers and contracting teams manage contracts.

Enhanced Contract Authoring

Contract authoring is the first phase in the contract lifecycle process that involves drafting and creating contracts. Manual contract authoring is fraught with errors and inconsistencies. An automated approach to contract authoring reduces the time the contracting team spends on manual data entry and minimizes errors.

Enhanced contract authoring tools make contract creation easier by using pre-defined templates and clauses. These pre-approved contract templates ensure all contracts reflect industry standards and legal compliance. Redlining is made easy with proposed changes and revisions can be done collaboratively in minutes during the negotiation process thereby saving innumerable hours.

Electronic Signatures 

Electronic signatures use cryptographic techniques to verify the authenticity and ensure document integrity. Electronic signature solutions enable immediate signing and approval of contracts accelerating the lifecycle of contracts from creation to execution. Contract management systems such as Dock 365 CLM seamlessly integrate with electronic signature solutions from Adobe Sign, DocuSign, and Sertifi.

Generative AI

Generative AI technology has advanced remarkably and has immense potential to change how lawyers draft and manage contracts. The adaptive capability of generative AI, such as autonomously generating new content, suggesting and identifying clauses, identifying potential risks, and suggesting optimal negotiation strategies empowers IT managers and decision-makers. AI-driven CLM systems like Dock 365 assist in drafting contracts by generating clauses, reviewing contracts for errors and inconsistencies, and analyzing contract data to identify growth opportunities.

📑 Also read: 11 Signs Your Business Needs AI For Smarter Contracts

📑 Also read: Harnessing Generative AI for Efficient Contract Management

Microsoft 365 Based CLM

Despite the rising investments in CLM software systems, leveraging the power of Microsoft 365-based technologies can be a game changer and it is more than just a technological upgrade. Microsoft 365 products like SharePoint, Teams, and Outlook have a large user base and are familiar platforms to many businesses around the world.  

So, you can make the most out of your Microsoft 365 suite and probably all of your contracts are most likely stored in the SharePoint library. SharePoint offers secure storage and provides version control no matter the number of users who have access to edit your contracts.

Data Analytics

In CLM systems, data analytics is a technological advancement that gives your business a better chance to increase revenue and sales. Today there is more contract data available, but it is largely untapped. This means that businesses are missing out on potential opportunities. By implementing a CLM with data analytics capabilities, IT teams can identify potential savings, and make data-driven decisions.

Today, the legal and compliance leaders in IT organizations are leveraging artificial intelligence (AI), machine learning (ML), and advanced CLM technologies to be better positioned to succeed in the years to come. To find out how Dock 365 CLM embraces technological advancements to help position your organization for sustained growth, contact our team for a demo.