Buying the right software for your contract management system (CMS) is not like buying other office software. You need to find the right match for your existing contract management practices and that is compatible with your current software systems.
The right CMS for your organization will solve your current contract management pain points without creating new problems. So read our guide for selecting the right contract management system for your company. Each step will make your contract team stronger and make sure you’re making the right investment for your company.
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How to Select Your New Contract Management Software: The Process Overview
If you want to make the best investment for your company, you need a thorough purchasing process. The process needs to strike the right balance between cursory and exhaustive. If you rush the process, you increase the chances of making a mistake. But, if you take too long, you increase the chances of your overworked contract management team making a critical mistake. If you’re noticing daily challenges with your contract management system or it’s been years since you last considered updating to a new CMS, now is the time.
Follow this six-step process to find the optimal legal contract management software for your business:
- Identify if it’s time to move to new software.
- Perform internal research to capture the strengths and weaknesses of your current contract management system.
- Research your CMS options and recent software developments on the market.
- Evaluate different legal contract management tools in-depth.
- Discuss your final contract management system choices.
- Purchase your final selection.
Skipping any step will mean making a mission-critical purchasing decision without all of the right information. Each step in this process is broken down into smaller milestones to help you efficiently make the right choice. So let’s get started.
1. Identify if it’s time to move to new software.
You have contract management software, and it seems to be working just fine for your business — or does it? Often, you may find that your contract management software isn’t working as well for your business as you had hoped. If you observe these signs, it may be time to choose new, more effective contract management software for your business:
You’re managing more contracts than your existing system can handle.
If you only move a handful of contracts through your entire business over the course of the year, you may not have needed software explicitly dedicated to contract management. However, as the number of contracts handled by your business grows, you will need more effective contract management solutions. You will need one dedicated specifically to contracts, rather than a one-size-fits-all program that handles a wide range of different needs.
First, take a look at your existing system for contract management. Ask yourself these questions:
- Is it easy to find the contracts you need?
- Are your contracts sorted in a way that makes sense to every member of your business? Even if they aren’t the ones who organized those systems?
- Can you easily find the information you need on your systems? This should include past versions of the contracts, contract templates, and the points your negotiation team needs to see?
If the answer to any of those questions is no, you have outgrown your current contract storage solution. That it’s time for a new contract management system. The more contracts you handle each year, the more important an effective solution becomes. When you’re doing your cost-benefit analysis, don’t forget about these invisible — but critical — costs.
Your current contract management solution isn’t doing the right work for you.
If all your current contract management solution is doing is storing your contracts, it’s already failing to deliver the services you need. Contract management software isn’t just about keeping track of all of your contracts.
It should also:
Ensure that your contracts are in compliance with industry standards.
You do not want to create contracts that fail to meet regulatory and safety standards. In fact, your contract management software should be able to identify and flag potential hazards. This allows you to fix them before they become a more serious issue.
Track contracts as they move through the process.
Do you know where each contract in your system is at any given moment? Do you know who is currently approving the contract or where the contract is during the negotiation stage?
If your contract management solution can’t provide that information, it’s past time for a new solution. Your CMS should also notify you when the contract takes too long to move through a particular stage of the process.
Automate your contract scoring system.
Contract scores can let you know when your contracts pose more danger than anticipated for your business. Ideally, you want your contract management system to score your contracts for you. This way, you can notice problems before they become more serious.
If you’re struggling with either of these problems, you may need to choose a new contract management solution that better fits your needs. So don’t make do with a system that fails to properly organize your contracts. Smart contract tracking software will automate your workflow and take care of many of the pieces of the contract management puzzle for you. If your company’s executives don’t think upgrading your contract management software is a priority, make your stance more persuasive with these key points.
2. Perform internal research to capture the strengths and weaknesses of your current contract management system.
Before spending time evaluating all of the different CMS products on the market, you need to understand what your needs are. During this step, you will develop the standards you will use to evaluate the different features of the various CMS products you will come across.
The internal research phase can be broken down into these steps:
- Document your current processes and identify areas of improvement.
- Know the key differences between open source vs. proprietary software.
- Set a budget.
- Create a checklist of must-have features.
- Create a wishlist of features that you want but which aren’t business-critical.
Document Your Current Processes and Identify Areas of Improvement
A contract management system is a tool to make your contract management process more efficient. Almost every product comes with a basic set of features. But it’s impossible to decide what features you need until you understand your current contract management process.
If you are hoping to radically change your contract management process with the addition of CMS, you need to design the new process before making any purchasing decisions.
CMS is not a contract management department in a box. It is a powerful tool, but it is only as effective as the users wielding it. You will want a CMS that fits into your existing workflows as much as possible.
In order to choose effective contract management software, you need to start with a look at what your current processes look like. How are you handling your contracts? How do they move through the process? Our guide to the contract management process can help you better understand the entire cycle each contract moves through. However, as you’re considering new contract tracking software, take a look at your current processes. These are the steps your business takes for every contract. This review can help you better understand what your contract management software needs to accomplish.
You need as much clarity as possible on what problems you are seeking to solve with software. By identifying your biggest pain points, you will make the external research much easier. You will be able to instantly identify software that claims to solve your issues.
Common pain points include outdated manual filing systems, difficulty finding contracts and supporting documents, inability to perform advanced analytics on your contract data.
Consider:
How do your contract negotiations work?
Who is responsible for those negotiations? How do you document the negotiation process? Ideally, you want to be able to easily refer back to old versions of contracts. This includes the ones that haven’t been approved or that have been changed. You also want to be able to identify the current version of each contract, no matter where it is in your system.
Who needs to view the contract during the approval process?
Which members of your team need to be able to access different parts of your system? Do you need a contract management program that offers specific permissions only to key users? For example, some software only allows specific users to make edits to an in-progress contract. You can also prevent team members from seeing contracts that they don’t have permission to access. Strong software allows you to create different views for better sales, procurement, and vendor management.
How do you ensure compliance?
Many businesses fall a little short in the compliance process, missing the mark in ensuring that they don’t miss any of those important details. Does your existing process fall short, leaving your business at risk? Does it bog things down and slow down the process? Good contract tracking software can help prevent many of those challenges.
Are there places where you can streamline your existing contract management cycle?
Are there places where the cycle bogs down, making it difficult for the contract to move forward? How can you create processes that will allow you to move your contract cycle forward more effectively? In many cases, your contract management software can help.
When do you get notifications that your contracts are up for renewal?
When you have customers nearing renewal, do you receive notifications ahead of time? Make sure you have the means to work with those customers and those contracts to get them renewed. A strong contract management system ensures that service continues uninterrupted. It also gives you time so that both you and your customers get satisfactory resolutions to any challenges you may have faced along the way.
Take a careful look at your current processes and your current management systems. You will often discover exactly what you need from your contract management software. This includes how you need to change your existing processes to help your business function more smoothly.
Know the Key Differences Between Open Source vs. Proprietary Software
The CMS world is divided into two parts. There is open-source software and proprietary software. You will need to decide early on what type of software is best for your company.
Open-source software is usually free to license. It is completely customizable. However, you will have to invest money in hiring programmers to create customization. You will also need to devote IT resources to the security and maintenance of the open-source CMS. There is no customer support for open-source software.
Many companies find that an open-source CMS is more expensive over the lifetime of the product than proprietary CMS.
Proprietary CMS software is sold as a software as a service (SaaS) business model. Every proprietary product has a different set of features. It is usually less flexible than open-source software, so it is important to choose a CMS that fits your needs out of the box.
Most CMS platforms are cloud-based and can be hosted on the provider’s server or on your own server. Proprietary software usually includes regular maintenance, security updates, and customer support.
Another key difference is that proprietary software has an onboarding process to get your company set up and running. You have to run your own onboarding with open-source software.
Set a Budget
As with anything else in your business, price matters! Effective contract management software is an investment for your business. It’s well worth investing in good software, but you also cannot afford to exceed your budget. Organize your department’s budget ahead of time. Then determine your budget for purchasing new contract management software so that you don’t discover the ideal solution only to find that you cannot afford it.
CMS comes in a variety of different price points. Many CMS vendors also have several different plans that they offer.
Your budget will help you screen out products that are too expensive.
Create a Checklist of Must-Have Features
You want to be sure that you get enterprise contract management software that genuinely works for your business. You may have a wish list of items that you would like to have, but that doesn’t mean all of those items are critical. Sit down with a team comprised of members of each department that will work with the contract management software. Then, create a checklist of the features that the software must have in order to meet your goals. These are non-negotiable.
1. Consider what type of storage solution you need.
The storage solution you need for your contracts may depend on the amount of data you deal with on a regular basis. For most businesses, however, a centralized data solution that breaks down the contracts into an easy-to-follow storage system. Many businesses also benefit from a contract management solution that offers cloud storage and regular backups. Then, in the event of a data emergency, they can easily access the files they need most without a gap in the services they can offer.
2. Think through what permissions different team members need.
The team members responsible for the negotiation process, for example, may need very different permissions from the individuals who need to approve the contracts. These will be an entirely different set of permissions from the team responsible for ensuring compliance. Look for contract tracking software that allows you to set your permissions the way you want them. This protects your company by limiting access for team members who do not necessarily need to rewrite files but who may need to be able to view them.
3. Discuss what you want to automate.
Automation can help make everyone’s jobs easier. It will also free your team up to focus on many of the more important tasks they handle on a daily basis. Sit down with your team and discuss what processes you want to be able to automate. If the contract management software you’re considering doesn’t offer options for automation, it’s not the right fit. Strong automation features include everything from contract scoring to reminders and notifications,
4. Detail the processes your contract management software needs to control.
Effective contract management software can make every stage of the contract cycle easier, from the negotiation phase to the renewal. Find answers to these questions:
- What processes does your enterprise contract management software need to cover?
- Does your software need to offer templates so that users can simply select from drop-down menus?
- Do you want your contract management software to automatically notify you and start the process for renewals?
- How complicated are your compliance risks, and how can your contract management software help you handle them?
Talk to each team that handles your contracts and uses your contract management software at every stage of the cycle. Then you will get a better idea of exactly what solutions your business needs and how they will integrate into the whole process. As a team, decide what features are must-haves and which ones you’re simply hoping for. In many cases, you’ll find contract management software that will supply those wants along with the needs. But you do need to know which features your team can live without.
Create a Wish List of Features That You Want But Which Aren’t Business-Critical
Make a secondary list of features that you, your team members, or other departments would like to have. This will include features you would like in your CMS but which are not required in the core workflows. Your budget, your checklist, and your wishlist will help you make the right CMS choice for your organization’s unique situation.
3. Research your CMS options and recent software developments on the market.
Once you have completed your internal research, it’s time to go out into the marketplace and perform your external research. One mistake many companies make at this stage is to collect as much information as they can about as many different products as possible. This leads to analysis paralysis.
There is too much information available to sift through it all. Instead, you want to use your lists and budget to guide you so that only research CMS that meets your minimum requirements.
During the external research phase, you want to examine:
- Vendor content and resources
- Key features
- Pricing options
- Onboarding
- Support & Maintenance
- Security
While many vendors will want to encourage you to demo their products, your time is better spent in this phase evaluating the products based on their online marketing materials. Once you have a smaller set of possibilities, you will want to demo the products before selecting your finalists.
Vendor Content and Resources
CMS vendors want to make the purchasing process as easy as possible. This is great news for you. Your first step as you research different products and providers should be to review the content the companies produce.
This content may include blog posts, webinars, white papers, and free reports. This content will help you learn about the different focuses and philosophies of the different vendors.
You will find that the content from some vendors turns you off, so you can eliminate these vendors from consideration right away. Also, you will find that some content “speaks” to you. This is an indication that this vendor is more closely aligned to your needs and business style than others in the marketplace.
You don’t need to review all of the content every company produces. You should spend your time reviewing the content that seems the most interesting and relevant to your business.
While you cannot make a purchasing decision based solely on content, you can learn a lot about your options and what types of companies are the best fit for your business.
Features
You will want to focus on the differences in features between the different CMS providers. You also want to see what the differences are in the most common features they offer.
A features list will be most helpful in eliminating vendors from contention. Use your checklist and do not waste time on any vendors that do not offer everything on your list.
Some common features you will want to take the time to learn more about include:
Reporting & Analytics
You want to make sure that the reporting and analytics functions are easy to use. Also, verify that the reports you need most are among the reports supported by the software. You may need to send an email to get more details about the reporting and analytics features.
Cloud-Based Platform
Cloud-based contract management software can mean several different things. You will want to know if the software is hosted on the vendor’s server or if it can also be hosted on your own servers. You will want to know about server downtime and the speed of the cloud server.
Organizational Structure
You want to make sure that the CMS you purchase will have the right organizational structure for your company. One of the most valuable features is the ability to assign searchable tags to contracts and documents. This will allow you to find contracts by company name, region, execution date, expiration date, or any criteria that are critical to your business.
Pricing Options
You can’t overlook the price. You will want to understand early on how much the CMS will cost. Verify what is included in the price, how the price is structured, and if there are different pricing plans.
Some pricing questions you will want to ask include:
- Is there a seat license?
- Is there a charge for additional support?
- Can you cancel at any time?
- What is the billing process?
Onboarding
CMS has a learning curve. You want to make sure that any software has a thorough onboarding process. Some onboarding questions you will need to have answered include:
- How does the onboarding process work?
- Do they provide technical help uploading the existing contracts to the CMS?
- Is additional training available?
- How long does onboarding typically take?
Support & Maintenance
If you are dealing with a proprietary CMS, you want to understand what their maintenance and support practices are. If you are looking at an open-source CMS, you will need to design your own maintenance and support system.
Most proprietary CMS vendors do not charge for maintenance, and they automatically update the software.
One of the major differentiators will be support. You will want to know if you will have access to quick solutions when you have a problem.
Security
Every company, regardless of size, is now a potential target for hackers. If you are using open-source software, you face additional security risks. You will need to develop a plan to keep your data safe.
If you are going to purchase a proprietary contract management software system, you need to know how they plan on keeping your data safe. Security should include encryption and a reliable username and password system. Look for robust, cloud-based contract management software that offers these key protections. You will also want to know if you can set different levels of permissions in the software so that users can only access data they have authorization for.
4. Evaluate different legal contract management tools in-depth.
The next step in the process is to evaluate your favorite CMS vendors. Now is the time to collect as much information as possible about a handful of vendors.
When evaluating your options, you will want to:
- Demo the product.
- Request a free trial.
- Review your checklist.
- Review your wishlist.
- Confirm your budget.
Demo The Product
There is no substation for actually seeing the software. When you are evaluating different CMS, you will want to pay attention to how easy the software is to use, how visually appealing it is, and how fast the software is.
You will also want to be evaluating the provider. Is the salesperson knowledgeable? Do they listen to your questions and concerns? Did the demo start on time? Problems with the way the demo is conducted could be red flags. You aren’t just buying the software, after all. You are buying a relationship.
Request a Free Trial
Before you jump into a new contract management system, look for a free trial. Taking the opportunity to try out the system for more than a short session can give you a lot of insight before you implement it.
A contract management system that looks good on paper may not work well when you actually try it out. Conversely, an up-and-comer in the market may turn out to be your perfect solution.
Take the time to try out the system. Ideally, invite several members of your team to work on those systems. Ensure that every member of the team can use it effectively. Once you’ve had a chance to trial the systems that seem to work best for your team, sit down and have another discussion. Find out which one best fits the needs of every member of the team. Investing this time now will pay dividends in the future.
Review Your Checklist
Go back to your checklist of must-have features. Which of the systems you’re considering has those important features? If a system clearly doesn’t have the features on your must-have checklist, it may not be right for you. Even if it has many of the items on your wishlist, it’s not a good fit.
Make sure you touch on every item on your checklist. If the software doesn’t have the items you need most, set it to the side. You don’t want to sacrifice features your team really needs for the ones that they simply want, even if those features look enticing.
Now, you want to evaluate which products do the best job with each item on your checklist. Now that you’re investigating your final CMS options more deeply, you can score how well each must-have item functions. If a tool is difficult to use, is hard to find, or takes too much time, people won’t use it. So look for the contract management software that does the job well, not just the one that does the job. Don’t settle. You want the CMS that is the best fit for your business.
Review Your Wishlist
One way to differentiate the products is by which ones not only meet all the items on your checklist but also meet all the items on your wishlist. You want to choose CMS that thrills you, not one that just barely does the job.
So, evaluate the extra features offered by your top systems.
If you’re looking at a couple of different systems that fill all of your needs, you may want to break it down according to those extra features. List the extra features offered by those solutions. Include details like how often they back up your data, how easy they are to use, and how much support the system offers. Score those extra features. Assign each one a point value from 1-5, then add up the score of each system.
Confirm Your Budget
You will need to make sure you have the budget for the CMS you like the best. If you created a budget at the beginning of your search, make sure those funds are still available. It’s also important to make sure you fully understand all of the different pricing options to choose the best CMS and support tier.
When performing the budget evaluation, you need to consider:
- Initial Costs
- Ongoing Costs
- Cost of Doing Nothing
The initial cost of open source software is often thought of as zero. But, while the license will be free, you will have to pay to have the software customized to your needs. Alternatively, you will need to spend internal IT resources on the project. The initial cost for proprietary software will vary depending on the vendor and your needs.
With open-source software, the ongoing costs are usually significantly more than with proprietary software, once you price in security and maintenance. Proprietary software also has predictable ongoing costs that include support, security, and maintenance.
You also need to understand what the cost of doing nothing is. You may not find the perfect CMS, but every improvement can drastically impact your bottom line for the better. A CMS that is almost perfect will be far superior to your existing system when you factor in the cost of doing nothing.
5. Discuss your final contract management system choices.
After evaluating your options, you need to select a few finalists. The finalists will go through more vetting, and you will then present the finalists to the decision-maker or to the contract management group. The purpose of this part of the process is to get some additional feedback.
The number of finalists you choose is up to you, but most companies get the best results with two or three finalists. This makes it easier to drill down into the minutiae of each product. It also allows you to compare and contrast the products and vendors.
An essential part of the process is presenting your findings. Even if you are the decision-maker for this purchase, you should still present the finalists to a few people who will need to use the software.
Making a presentation has a way of focusing your thinking. Also, getting feedback from other people may reveal problems with your finalists that you missed.
After the presentation you should ask yourself:
- How easy was it for you to make a case for each one?
- Which software vendor made it easiest for you to present?
- How much do you look forward to each option?
Answering these questions will help you make a final decision or recommendation.
6. Purchase your final selection.
The final step in the process is making the actual purchase. However, there is more to this step than just handing over the company credit card. In addition to purchasing your chosen CMS, you will also need to:
- Schedule the on-boarding.
- Ask all of your questions.
- Notify the other business teams and departments.
You want to get the onboarding process started as soon as possible. Make sure you get the first part of the onboarding scheduled as soon after the initial commitment as possible.. Also, prepare your team for the transition with these key steps.
The moment when you are ready to hand over money is also a great time to make sure you have asked all of your questions. You will have the full attention of the sales team. Now is the best time to make sure you have resolved all of your doubts.
During the selection process, you probably were in contact with several salespeople, You may have even subscribed to numerous mailing lists. Let other vendors that you have been in close contact with know you have made a selection.
This keeps them from wasting your time, and the salespeople will also appreciate you respecting their time.
You should also unsubscribe to any CMS mailing lists that are no longer relevant.
Once you have selected the perfect CMS for your business, it’s time to enjoy the fruits of your labor. The right CMS will transform the way you think about what’s possible with contract management.If you’re looking for the right contract management system for your company, schedule a free demo with ContraxAware. Our software offers integrations, custom APIs, and the support you need to check off every must-have item on your list.
