May 30, 2022
ROI of Contract Lifecycle Management Tools
Table of Contents
- Can you really determine software ROI?
- Contract lifecycle management tools: Objectives and solutions
- How should you measure the ROI of contract lifecycle management tools?
- Get the highest ROI of contract lifecycle management tools with Contractbook
Improving the way you handle contracts is one of the simplest and most efficient ways to improve the bottom line as well. Of course, before you invest in anything, you probably want to know exactly what it can bring to your business. Here’s how you can easily determine the potential ROI of contract lifecycle management tools.
Can you really determine software ROI?
Gauging return on investment can be a pretty straightforward thing. At least that’s the case with easily quantifiable investments. For example, if you’re looking to expand your product line, you only need a few figures to do the math. But when you try to determine software ROI, suddenly you find yourself scratching your head.
This is because you can’t really put software ROI into concrete figures. It simply doesn’t lend itself to a quantitative approach. Luckily, that doesn’t mean you can’t come to a quantitative estimate.
Of course, first you need to learn what to look out for when trying to determine software ROI.
Contract lifecycle management tools: Objectives and solutions
Before you try to calculate the ROI of contract lifecycle management tools, you should get a better idea of what they’re for.
According to Bain & Co, many companies are bleeding money specifically because of poor contract management. They’re also missing out on opportunities to eliminate risk and generate more revenue. That’s why the three main objectives of contract management are:
- Increasing value
- Reducing costs
- Eliminating risk
To achieve this, contract lifecycle management tools offer five key solutions:
- Centralized repositories
- Auto-generated documents
- Self-executing contracts
- Advanced search filters
But let’s take a look at the objectives first.
3 main objectives of contract management tools
1. Increasing value
The value you get from each of your contracts is far from fixed. For example, you can take too long to seal the deal and, in turn, lengthen your sales cycle. But you can also shorten it by successfully handling each of the contract lifecycle stages.
How you do all that affects your contract value. Ultimately, it also improves or damages your bottom line. It’s what we call contract efficacy.
2. Reducing costs
The more time and resources you spend managing your contracts, the higher your overall business costs.
One of the three main objectives of contract management is to minimize the input needed to produce the desired output. The closer you get to the minimum, the lower your costs. It’s what we call contract efficiency.
3. Eliminating risk
Contracts are legally binding documents. The issue is not just how much value you’ll extract or how little time or resources you’ll spend doing it. You’ll also want to avoid non-compliance at all costs.
After all, you don’t want your business to be at any risk of legal consequences. These are bound to affect your bottom line, either directly or indirectly. It’s what we call contract risk.
5 key solutions of contract management tools
1. Centralized repositories
When you’re running a business, the sheer volume of contracts you have to deal with can be overwhelming.
So if you’re using multiple locations to store them, there’s no doubt you’re wasting a lot of your own time. You’re wasting it trying to locate contracts, keep track of changes, etc.
A single centralized repository eliminates all those issues.
2. Auto-generated documents
Creating each new contract from scratch is never the best use of your time. It also makes it very hard for you to avoid errors and consistency issues.
Contract lifecycle management tools allow you to eliminate the need for this type of manual work.
Instead of generating an entirely new contract, you can use a template. And instead of filling out the information yourself, you can use the integration with your CRM to auto-populate.
3. Self-executing contracts
Chances are you have tons of contracts to deal with, each with its own set of deadlines and other contractual obligations. Your ability to stay on top of these is what directly affects the length of your sales cycle. And when you do it manually, you run the risk of forgetting.
Oversights like that just don’t happen when you use self-executing contracts. These operate on the principle of if-then logic.
For example, if it’s time for renewal and no one requests to terminate it, the contract is automatically renewed.
If you’re running a business, you know how quickly costs can pile up and how easily things can be delayed. Take the print-sign-scan method, for example. Without you even noticing, what seems like an insignificant business cost can really add up.
The process also limits you in completing the task on the go.
5. Advanced search filters
Collecting and analyzing your data helps you find ways to propel your business forward. You can’t do that if your data is scattered across multiple systems. It’s also a lot more difficult when you can’t filter it in any way.
That’s what advanced search filters are for. They let you gain a much higher visibility into your own processes and how well they perform.
How should you measure the ROI of contract lifecycle management tools?
Now that you know all that goes into it, doing a qualitative measurement shouldn’t be hard. To estimate the ROI of contract lifecycle management tools for your business, just ask yourself:
1. How often do you do duplicate work?
Do your employees ever finish a task only to realize it’s been done by someone else as well? It’s actually a pretty common occurrence in business. At least where there’s no transparency and no single source of truth to check before jumping onto the next task.
Try to calculate how much time you’d save if you had a centralized repository to store all your contracts in.
2. How much time do you spend generating contracts?
Can your employees give you an estimate of how much time this takes up in their busy schedules?
Whatever the number, this is the time they’d be able to spend otherwise if they had auto-generated contracts.
3. Do you ever miss a deadline?
Has your company ever failed to renew a contract on time? If the answer is yes, this has cost you money, either directly or indirectly. It’s because it’s lengthened your sales cycle if nothing else.
Try to calculate how much you’d save with self-service contracts. That is, if all your obligations were handled successfully and on time.
4. Could your sales cycle be shorter?
In your company, does contract administration ever take longer than you’d like it to? Are there any stages, such as approval, that often or always get delayed?
If the answer is yes, this is the time you’d be able to save with eSignatures and other contract management tools.
5. How much time do you spend tracking down data?
When you want to analyze your company’s performance, how many sources do you have to consult? And how long does this take?
Try to calculate the increase in revenue you’d be able to achieve if you could strategize more efficiently.
Get the highest ROI of contract lifecycle management tools with Contractbook
If a high return on investment is what you’re aiming at, start by choosing the best tools for your business. When you use Contractbook, you get all the features that help you propel your company forward. They include a centralized repository, auto-generated documents, self-executing contracts, eSignatures, and advanced search filters. We also take care of integrating with your system and collaboration tools. So choose to boost the ROI of contract lifecycle management tools with us and get in touch.
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