We're dating ourselves here, but do you remember when the SAT Verbal section had analogy questions? If so, we have a good one for you (and, if you don't, well, then lucky you). Here goes:
Basic contract management practices are to Contract Lifecycle Management (CLM) Software, as weathervanes are to:
A: Satellite Imagery
B: Doppler Radar
C: Big Data Analysis
D: All of the Above
Here's a hint: the answer is D. And, the point is that although a weathervane served for centuries as a rough predictor of when and how the weather was about to change, and can still reliably provide that information today, its fundamental utility pales in comparison to the predictive tools now the hands of 21st century meteorologists.
Without hyperbole, in our view, the analogy above reflects the magnitude of the distinction between the legacy contract management practices of many businesses and what is now possible using new-age CLM software and Contract Analytics . To illustrate, below we list some of the most fundamental differences between the two.
As Wordsearch is to Substantive Analysis
In the typical legacy contract management system, when someone wants to know what a contract says, they search for it in a file drawer or on a shared server. Those using a reasonably functional document management system can type a keyword or phrase to help them find the agreement they're looking for. If they want to compare one contact to another, they repeat the search process for the second one and review the two contracts side-by-side. Technology might make the documents marginally more accessible and searchable than they'd be if they were stored only in hard copy format, but a human brain still does the heavy lifting of selecting, digesting, and comparing the documents.
CLM software does things differently. Some CLM software doesn't just search for documents, it analyzes them by leveraging AI natural language processing technology. In this way, this type of solution doesn't just locate a keyword, it recognizes substantive concepts no matter how they are phrased. Moreover, it doesn't just find the two documents you think you might want to compare, it suggests which documents are most relevant for the sake of comparison. In other words, this capability can strengthen and sharpen the ability to understand contractual obligations and to perceive how they fit into the broader scope of the business.
As E-Signature is to E-Everything
An increasing number of businesses have embraced the utility of using e-signatures in their contracting, as well they should. E-signing makes it simple and efficient to execute and return a document from anywhere, no printer, pen, or scanner needed.
But, e-signature is just a feature. It is not a standalone solution to entrenched inefficiencies in contract management, such as the perennial confusion of red-lines and draft versions being emailed back-and-forth, the time wasted "reinventing" a provision that could be borrowed from a legacy contract if only you could find it, and so on. For a comprehensive solution to those problems, CLM software is the tool you need.
CLM software incorporates e-signature capability, to be sure, but that's just the tip of the iceberg. Today's CLM software transforms the entire process of contract assembly, negotiation, and execution into a single, seamless workflow. CLM software is an e-everything solution, not simply an e-signature one. Among other efficiencies::
CLM software makes it easy to draft contracts and/or assemble them from templates or exemplars from past contracts already stored in the system;
CLM software gives all relevant stakeholders access to a single working version, with easy-to-track editing and comment features;
CLM software automates and backstops the tedious process of reviewing for errors, inconsistencies, and ambiguities; and
CLM software integrates distribution, execution, and archiving, ensuring no signature gets forgotten and no contract gets misplaced.
As Best-Guessing is to All-Knowing
Tell us if this sounds familiar: "Q: Hey, didn't we do something like this in that contract with Vendor X, like three or four years ago? A: Yeah, that sounds familiar, I'll see if I can find it." Or how about this: "Q: That's a big order. Are we going to be able to source the raw materials from our vendors in time? A: I don't know. I need to check their delivery schedules." Or this: "Q: Uh oh, were we supposed to deliver notice of exercise of that option last week? A: I think we were. Let's hope they don't notice it's late."
Humans are fallible. So are machines, but in a different way. Too much information can overwhelm the human brain. Under stressful conditions, in particular, we humans analyze and respond to what is in front of us more naturally than seeing the "big picture." In contrast, machines are only as good as the information we put into them (hence the old saying about garbage-in, garbage out). But, machines also get better at their tasks the more information they're given, and they don't feel stress.
That's why CLM software delivers some of its greatest value by monitoring the performance of a compliance with a business's entire body of contracts simultaneously. In parsing and tracking large volumes of contracting information (such as deadlines, schedules, and costs), CLM software helps its human operators choose which issues merit their attention. Among other attention-grabbing items, users can configure CLM software to spot conflicting contractual obligations before they cause problems, to red-flag deviations from expected benchmarks, and to protect against employees forgetting important dates and tasks.
ContractRoom CLM Software Aces Every Test
By implementing ContractRoom's configurable CLM software solution, businesses gain a powerful tool that gives them broad and deep understanding of their body of past and current contracts, and that streamlines new contracting in a manner that leads to more consistent, predictable contracting outcomes.Let the team at ContractRoom show you how our CLM software sets the industry standard for smart contract management. Contact our team today to schedule a demo.