Contract Management software solutions exist to solve contract management headaches. Yet the negotiation process, typically the most difficult and high-stakes stage of the contract lifecycle, is often left outside of contract management solution implementations. This is a huge mistake.
Yes, putting the negotiation process online requires both additional planning and more robust software. In fact, an online negotiation environment is a key capability that differentiates a robust Contract Lifecycle Management system from more basic "sign and store" solutions.
What then, are the benefits that make this worthwhile?
The Negotiation Process Within Contract Management
The negotiation process is all about helping multiple parties find a middle ground that they can both live with. Unfortunately, because all parties naturally look out for their own interests, business negotiation, and therefore the contract negotiation process, can be innately difficult.
This natural difficulty is only exacerbated by the unnatural difficulty of offline negotiation. The offline negotiation process is ensnared in a disorganized web of redlined Word documents, convoluted email chains, and even verbal agreements that may or may not be correctly captured into the contract document. But it does not have to be this way!
The mechanics of the negotiation process can be significantly eased by taking the actual negotiation into an online environment. Online contract negotiation is faster and more efficient, as well as more transparent for all stakeholders. This creates a win-win situation for all parties, even in the toughest negotiations.
The Benefits Of Moving The Negotiation Process Online
While signing and storing contracts electronically was a leap forward 10 years ago, it's just one part of a fully digitized contracting process. Getting the steps prior to signature online, particularly your negotiation process, offers very substantial additional benefits. In fact, providing an online environment for the negotiation process is a a key distinction between a robust Contract Lifecycle Management platform and more basic “sign and store” solutions. Here is a look at the improvements that this digital transformation can create.
1. A Faster Negotiation Process
Speed is the most obvious benefit of taking your negotiation process online. While it’s intuitively obvious that online negotiation is faster than offline, it’s worth drilling into the several different “boosters” that provide that acceleration.
The first booster actually fires before the negotiation process even starts, by helping the negotiation start sooner. Strong Contract Lifecycle Management platforms provide automated document assembly. This function turns a request into an initial contract document, based on a repository of templates and clauses that embody standard terms and conditions. Besides greatly reducing human labor, such automation let’s the parties jump straight into the negotiation process. This fast start means the negotiation process starts and therefore ends sooner.
The second booster is the online negotiation environment itself. A robust online negotiation environment brings a near-consumer level of ease of use to an enterprise process. Changes proposed by one party trigger immediate alerts to other parties -- who can agree, disagree, or counter with simple clicks and swipes. Dependencies are clearly marked and can be dealt with more quickly. Where higher-level approval is required, alerts to these approvers and simple mechanisms for approving keep the negotiation process transparent and in constant motion.
Over time, contract analysis and machine learning provide additional boosters. For example, a company might discover that certain clauses are re-negotiated most of the time. Refreshing these clauses in templates could further expeditethe negotiation process by removing unnecessary speed bumps.
2. A Safer Negotiation Process
As previously mentioned, the negotiation process can get messy. In offline negotiation, proposals and counter-proposals take place in emails, through redlining in Word documents, and through verbal conversation. There is no single source of truth as to the state the negotiation. Pity then the poor approvers, who are responsible for oversight of this mess.
With a strong CLM platform, approvers can clearly see what they are being asked to sign off on, and have a much simpler mechanism for doing so. Beyond speeding up negotiation, online approvals create much stronger guardrails for the negotiation process. An automated approvals workflow can route each approval to the appropriate person, and even enable certain approvals to be done in parallel, and issue alerts when approval stalls. Perhaps most importantly though, the CLM platform ensures that the contract literally cannot be finalized and signed without the correct approvals in place.
The right CLM platform also improves control by making the negotiation process more transparent. Everyone who plays a role in the the negotiation process can much more easily make their contribution and understand the state of play. The right platform will offer training and guidance as well as built-in enforcement to ensure that the negotiation process adheres to best practices and company compliance standards.
3. Enhanced Insights From The Negotiation Process
Data is quickly becoming one of the most valuable resources in the world and contract data can be particularly powerful for making future negotiations better. A smart Contract Lifecycle Management platform captures as many data points as possible about both contract content and process. Which clauses are almost always re-negotiated? Where in the process do negotiations tend to break down? Which contracts get stuck in the approval flow, and who is slowing them down? With an intelligent repository fed by online negotiation, these questions can be answered from data rather than opinions.
This insight allows professionals to avoid modify practices that have proven unproductive in the past and streamline the future. Companies can use fact-based evaluations of contracts and their outcomes to make their online negotiation process even better.
Predictive Agreement extends this idea into the future. This AI technology can make predictions about future contracts (i.e. how long they will take, which areas will likely require renegotiation) based on data from similar past contracts.
Bottom Line: Get Your Negotiation Process Online!
No part of the contracting process causes as much pain and frustration as negotiation. While some of this pain is the inevitable result of parties looking out for their interests, much of it is not. Getting your negotiation process online through a robust contract lifecycle management solution can be transformational for your contracting process and your organization.