Contract management software (CMS) is a centralized system to house all contract-related activities. User training is needed to efficiently operate a CMS solution. If not trained well, or if a CMS user does some silly mistakes in the process of entering contracts into CMS, costly errors can occur.
10 Myths about CMS
AI is a programming code, or a series of codes, within an enormous program (code base). Imagine how your town is part of your country. AI is not artificial. It is not futuristic or from outer space. AI is a programmed “to do” list, based on circumstances predicted during the programming process. For example, if the user visits a car dealership website to buy a car, like www.honda.com, the user’s IP address is recorded in a database. If the user revisits the same car site x-number of times in the next y-number of days or weeks, then the IP address triggers advertisements from Honda-related car dealerships on the left and right margins of the internet browser, until the same IP address visits a different search topic or site x-number of times in the next y-number of days or weeks. This is how AI works.
AI in a CMS is similar to the Honda car search algorithm. CMS programmers code certain actions to occur when specific triggers occur. As a simple example, 30 days before the expiry date of a contract, an alert email notification is sent from the CMS to all parties in the contract. No human action is necessary for the alert email to be sent, other than entering the expiry date of the contract into the CMS.
A more complex example of AI use in a CMS contains multiple steps. First, a document is scanned and saved in the CMS document repository. Then, the AI code base dissects the data in the document to pull data from the contract or document to insert into a report or the CMS dashboard. Such data may include the dollar value of the contract, whether the contract is part of the vendor or customer supply chains, effective date, expiry date, names of parties, and more. The types of data extracted from a scanned document and saved in a CMS report can be customized. According to Cobblestone software, AI performs data extraction in CMS.
AI triggers the eSignature process, but AI and eSignature are two different features of a CMS. To initiate the eSignature process, a CMS trigger can be setup in advance to occur at a specific progress point in the contract life cycle, at the end of the last approval workflow stage, or another customized time. eSignature requires human action, as the person is a representative of a company, and it is the person’s validity that determines whether their eSignature can legally enter a contract with another party.
Contract templates are usually created by a law firm, and then duplicated for many uses. The purpose of using contract templates is to save money. Writersdigest.com points out that the range of expense to hire a lawyer to review a contract is $300-1,000.
Contract templates provide the structure of a contract and about 95% of the contents of a contract. Then, only about 5% of a contract is completed with subjective data that pertains only to the contract parties and terms. Anyone, lawyer or not, can enter the 5% of the subjective content. Furthermore, usually each party enters this data to ensure accuracy.
Anyone that is a valid representative to an organization can enter into a contract, complete the subjective data of a contract template, perform tasks in the workflow process of contract, and sign a contract on behalf of their organization.
The more that a lawyer charges for their time, and the more legal counsel used, and the more complex the breach of contract lawsuit, the higher the cost of a breach of contract. Then, of course, there are court fees per day spent in the courtroom.
Arbitration is a lower cost solution. Find the win-win common ground outside of the courtroom, and save your organizations a lot of money…could be millions of dollars!
Many CMS brands offer a free trial, or a limited number of users or data. This is more of a marketing strategy than an enterprise-level CMS. To get the full experience of a CMS, not only should you expect to pay for the service, but the experience will be a better one.
CMS pricing can vary from the free trial version to a permanent CMS solution with annual costs of $15,000 (some brands offer a monthly billing cycle) to $35,000 per year. Other brands offer a single-payment price of $5,000 to up to $35,000. See a list of several CMS options here.
CMS brands will state nearly identical language in their demos and sales pitches and marketing materials for the features they offer being better than the competition. There are hundreds of CMS brands.
Before researching which CMS brand to purchase, write down the list of features that are important to your organization. Prioritize these features. For example, data encryption should be at the top of the list if your contracts contain sensitive or proprietary data. AI scanning, usually in the form of OCR (optical character recognition), is a huge time-saver. With OCR, a CMS can import archived or aged contracts, pull data from those contracts, and use that pulled data for the creation of new contracts or added to relevant/updated contract templates. Read about OCR in CMS here.
The more employees given access to the CMS in your organization, the less time that the CMS content manager will spend hunting down a contract, or worse, a portion of a contract to read the details of the obligations of the organization. Best practices of CMS use include to delegate managers and leadership staff with the tasks of admin of the CMS. CMS admins have full control of all settings of the CMS. Settings controls include which features non-admin CMS users can view, data fields to be included in each contract template, and working with the CMS brand provider to setup contract templates that are pertinent to your organization.
A separate category of CMS user is the group of contract approvers in the daily operations of the organization. Typically, these are the managers or leaders. Examples are the sales manager, territory manager, department manager, assistant managers.
Next is the CMS user that requests contracts to be created. Sometimes these personnel will create a contract from a template (choose which template to use). Usually, these CMS users have the authority to request a contract, but do not have the authority to be a party to a contract. Part of this hierarchy of CMS users is the checks and balances designed by one person requesting a contract and choosing a contract template, while a separate person approves the contract and assigns workflow tasks to specific actors in the contract life cycle.
Encryption can occur at the software level or at the tenant level. Tenant level refers to the platform in which the software operates. For example, Microsoft SharePoint is a tenant that offers off-the-shelf (OTS) software with an API (application programming interface) offered to separate software brands. Dock 365 offers a CMS that is built on the SharePoint tenant. Dock 365 is a gold certified Microsoft partner. Customers of Dock 365 experience encryption protection at the Microsoft level. Microsoft states that brands that attain gold competency demonstrate best-in-class capability within a Microsoft solution area.
The main reason to use an OTS is money savings. OTS software is generally an expert in the field. Microsoft offers both encryption of data in transit and data at rest.
Debunk the myths about CMS. Study the facts and statistics, not the opinions and wishes. The right CMS for your organization will match your list of priorities. Do your research to learn which features are offered by which CMS. Purchase the CMS that fits your priorities first. Be trained by the CMS provider to use the software efficiently.
Schedule a live demo of Dock 365's Contract Management Software instantly.