4 Steps for an Effective Contract Plan That Will Drive the Future
Technology is transforming broad aspects of business operations, and the area of contract management is no exception. Artificial intelligence or AI, where computers utilize data to help organizations make more efficient and informed decisions, is one such area. For example, AI has the potential to improve the speed and effectiveness of contract drafting by analyzing past contracts and identifying useful clauses and terms applicable to new contracts.
Cybersecurity and new regulations around the use and protection of personal data are two other areas that will have an impact on contract management strategies and processes. For example, the European Union’s General Data Protection Regulation (GDPR) recently introduced new rules governing the organizational use of personal data for citizens in the EU. The GDPR, which even applies to businesses not located in Europe but who do business with EU-based clients or vendors, exemplifies the types of changes to the storage and management of customer data poised to trigger significant implications for how companies manage contracts. On the security front, ever-evolving cloud security technologies will improve the ease of compliance for contracts related to more closely-regulated industries and sectors such as healthcare and government. New security technologies are also vital to addressing the growing threat of cyberattacks and other types of costly data breaches or leaks.
These are just a few examples of the changes and improvements that will affect companies’ approaches to contract management, both in the near and far term. But in order for businesses to leverage the benefits of these trends (and to minimize new risks), it’s more important than ever for organizations to assess their current contract management workflow and develop a plan that will meet future needs.
Here are 4 steps to develop a contract management plan that will drive the future for your organization.
1. Assess your current contract management processes
These outdated, manual approaches to contract management do not position companies to leverage technological advances, nor do they address new compliance risks or mitigate emerging threats. As you assess your current contract management process, some areas to evaluate include:
Data capture and classification: How much of the data in your contracts is captured by your existing solution, and how easily can it be classified, organized and searched? While spreadsheets may be useful for listing all of the contracts in a company's possession, they do not capture or provide easy visibility into the contents of each agreement. But access to this information is a prerequisite for utilizing technologies such as AI to yield valuable contracting insights. Classification tools also make it easier for organizations to track specific criteria that may be subject to different regulations, such as identifying European customers for GDPR compliance.
Security: Does your current solution address existing and emerging security risks and meet compliance requirements? How much ongoing effort will be required to keep contracts secure as new threats arise? A detailed security analysis of your system is another critical area to look at as you evaluate your current approach to contract management.
2. Find the right automated contract management software solution
There are numerous benefits to utilizing contract lifecycle management software for your organization’s contract portfolio, and future-proofing is among them. Contract management software can improve the accessibility of information both about your contracts (metadata) and within them. The optimal solution also provides robust security features to protect sensitive data. With numerous solutions on the market, it’s important to take some time to find software that will meet your needs, both now and in the future.
3. Develop a migration plan
If you want your contracts to be most useful in the future, your strategy for migrating your contracts to your new repository should involve more than merely uploading them. A well-organized contract repository will make it easier to analyze contract trends and key performance indicators using new technologies. Before you migrate your contracts, think about which tracking criteria and organizational structures will be most useful. It is also worth spending some time to employ features such as metadata and tag documents.
4. Employ security features
Security is a vital consideration for contract management, both in terms of compliance and risk mitigation. An optimal automated contract management solution should have multiple security layers, which both address cyberthreats and user-based risks. Accordingly, your security strategy should address various types of threats. On the cyber-front, the right cloud-based contract management solution should do much of the work for you: your chosen solution should include features such as encryption and other best-in-class offerings to ensure that data is safe, both while it’s in transit and in storage.
But it’s also important to have a plan to address user-based risks, whether malicious or inadvertent. User-based permission levels, which limit access to contracts to only employees who need it (and also define which functions users may perform based on their role), audit trail reporting and multifactor authentication are just a few of the security features that can reduce the risk of accidental or intentional data leaks.
Whether it's changing compliance rules or technologies that will better allow organizations to better leverage their data, contract management is evolving at a rapid pace. In some cases, these changes may introduce new risks, while other shifts and trends have the potential to vastly improve organizational efficiencies and contracting outcomes. Whatever the future brings, it's crucial you follow these steps to ensure your organization is ready.
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