The Connected Contract: The future of contract management & esignature
A couple of weeks ago, we unveiled a completely new and unique solution to the world called the Contract Execution Platform. We got an amazing response — we also had great attendance on our webinar focused on providing 3 ways businesses like Mopro, CDW, and SwervePay are sending automated, frictionless contracts, and how you can reimagine the contract experience within your business. That tells me one thing: There’s an appetite for a better way to execute contracts.
But what does a Contract Execution Platform do? My goal is to get you thinking about your roadmap internally to help reduce your people-driven processes and to use the power of technology to simplify. A contract should be a living, breathing, connected cross-section of data that drives action in your business — it shouldn’t weigh you down with overhead or cost like what you typically see in contract management.
Turning documents into data
A big problem with the evolution of contracts starts fundamentally with the the way a contract is considered to be a contract. Most people view contracts as documents — pieces of paper (physical or metaphorical) with page numbers, unstructured content written on the page, and ink or squiggly line signatures.
Why does this matter? The information within these contracts is vital to defining the relationships you share with your customers, employees, partners, and more — and you need to have an easy way to decipher every single contract you sign and what’s inside. The key thing to remember about your contracts, too, is that for almost all of the agreements your business executes, you want to track specific sentences, keywords, provisions, and more.
Tracking these types of things in documents like contracts is a very difficult thing to do. Why? Most contracts that are executed within your business don’t all look the same. There are changes, new versions, redlines, and more that complicate how you centralize these contracts in a way that’s easy to search and analyze.
Usually, this breaks down because your colleagues will feel it’s easiest to just send a document and work with that document to track the changes within it. Then, when the contract needs to be executed, the document will be flattened into a non-editable PDF that’s digitally or physically signed. Where does that leave the contract manager trying to understand the contents of that contract afterwards? Usually, it requires him or her to re-read the finalized, executed contract and put the important provisions or changes into a spreadsheet that looks something like this:
I know, I know. Spreadsheets seem archaic to a lot of people. If you’re tracking contracts this way, though, you’re still ahead of most. Imagine how this spreadsheet would look within your business:
Highlighting key provisions in your contracts so you can differentiate how customer, vendor, or employee relationships are defined.
- Do you have something like this already?
- Do you know what’s inside your contracts?
- Do you track when contracts are valid through?
Many of these data points can be tracked in Excel, a contract lifecycle management platform, and other tools yet most companies don’t have a real record (outside of an executed contract) of what was actually agreed to. Spreadsheets become difficult to manage, contract lifecycle management tools get unwieldy to adopt, and ultimately your important customer relationship definitions could get lost.
The result? Your customer gets angry gets angry when you don’t meet or exceed their expectations. Even worse — you could lose track of an important legal provision that ends up costing you a lot of money down the road.
Service level agreements (SLAs), indemnification, limitation of liability, contract amount, start and end dates — all important pieces of data to various parts of your organization. The information inside your contracts needs to be easy for the right people in your organization to discover and unlock. Beginning to centralize all of this information begins with thinking about the information inside your contracts as data that has both inputs and outputs.
The inputs and outputs of your contracts (read: data)
One thing we’ve discovered and reiterate with our customers is this: The bulk of contracts (80% or more in most B2B or B2C businesses) are a standardized, non-negotiated (or lightly negotiated) agreement and so the opportunity to make these kinds of contracts more data-driven is huge. In B2B, you might have a standard customer contract, SLA, Order Form, Contractor Agreement, Employment Agreement, etc. In B2C, you have online terms, scalable agreements that may be executed as a clickwrap, vendor/supplier agreements, etc. The only ways in which these types of contracts differ are based on the inputs to the agreement: Company name, job title, email address, amount, start date/end date, and a few provisions that might be unique for each contract.
These types of contracts are typically integrated into business processes that help scale and automate the outputs of the agreement which require some action from your business: onboarding, invoicing, setup, kickoff calls, etc. The outputs are what actually happens as a result of the contract being executed. The more analytical you can be about breaking down the bits and bytes of these types of agreements, the more you can leverage the inputs to automate the outputs.
What do I mean? Most companies don’t connect the actual execution of a contract (i.e. the act of the contract being executed) to the actions that immediately follow. Typically, a document is signed, and then the person who owns that document (the only person who knows what the contract says) will reach out internally about next steps. Some organizations leverage CRM to drive workflows that integrate to internal or third party systems to take the next action.
What implications does this have for your business?
The more and more technology takes over our lives in every facet, the more efficient your business will need to be as you race to outpace your competition. Customer experience is one of the main differentiators left in the world — and as your business grows, technology is what helps you scale your customer experience. For contracts, your business can use technology to analyze important manual processes in your contracting experience that can be 1) automated and 2) optimized.
Customer experience is one of the main differentiators left in the world — and as your business grows, technology is what helps you scale your customer experience.
- If you need to get contracts signed for changes in one of your contracts, could you build or integrate into a portal where your employees or customers already go?
- Can you use placeholders in standardized agreements for things that might be unique to each signer, and populate those fields so they’re stored and easy to search?
- Can you post an NDA online (one of the largest use cases for standardizes agreements) to send to people for execution instead of printing out and signing, with execution integrating back to your CRM?
What if the contract could “talk” to your internal systems? The data inside the contract can connect to the core business processes that surround what happens next. As soon as a contract is executed, it knows to create an invoice with the right payment terms sent from Bill.com, Oracle, Xero or QuickBooks Online. It also sends an automated email to the right folks to notify them that the contract is done. It adds a calendar invite for the renewal manager to make sure they check in near the end of the contract’s duration.
This is the power of treating contracts as data. Integrate the inputs, connect in real-time to the outputs.
Getting started: Next steps
Getting started is easy: Take 30–60 minutes thinking about your standardized contracts within your business and think through answers to the following questions:
- How are these typically executed today? Where would be the best place for them to be executed (in an app, in a portal, electronically on a phone, etc)?
- Break down the key data points that are negotiated (if any). How are those inputs populated in a contract? Is there a current technology or process that assists with that?
- How are those data points tracked once the contract is executed? Does the legal team have visibility into that? What about other teams that may need access to the important pieces of a contract relevant to them (Operations? Support? HR?)?
Having a framework for how these agreements flow within your business including goals for the ideal workflow and documentation are a must if you want to really begin streamlining these types of processes inside your business.
Our customers here at PactSafe have seen returns in the hundreds of thousands by having an amazing approach to how these flows can and should work within their business. The best part? It makes your customers’, employees’, and partners’ lives easier when contracts are more native, digital, and mobile-first because they’re populated by data, not documents. We believe this is the future, and it’s why we created the Contract Execution Platform.
Eric Prugh is co-founder and COO at PactSafe and loves talking about software as a service (SaaS), APIs, and entrepreneurship (and “intrapreneurship”). He loves his wife, 2 troublesome dogs, and a good beer or glass of red. Follow him on Twitter or connect with him on LinkedIn. Learn more about PactSafe at PactSafe.com.