SaaS Contract Lifecycle Management: The Key to Managing Contracts

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The rapid growth of SaaS applications may have boosted your business forward. However, this digital progress comes with a hidden challenge: managing SaaS contracts effectively.

Traditional methods struggle to keep up with the dynamic nature of SaaS agreements. Consequently, renewal dates get lost, crucial terms are overlooked, and buried clauses hinder cost-saving opportunities.

This is where SaaS contract lifecycle management (CLM) comes into play. CLM can benefit your business by automating and optimizing the contract lifecycle.

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What is Contract Lifecycle Management?

Nowadays, your organization may operate in a fast-paced environment, relying on a wide range of contracts. Thus, ensuring effective management can be extremely challenging.

Outdated methods based on paperwork cannot keep up with modern, fast-changing contracts. That’s when Contract Lifecycle Management comes into the game. CLM is an approach to managing a contract lifecycle, from conception to expiration or renewal.

Firstly, it can enhance your contracts’ visibility and control. A CLM database lets stakeholders access shared documents and clarify their major clauses, responsibilities, and deadlines.

Secondly, CLM can dramatically improve the efficiency of multiple processes. These include:

• Drafting and revising contracts
• Sending contracts for approvals
• Tracking deadlines and expiration dates
• Searching through physical files and finding a specific contract
• Managing paper trails

You can release your teams from administrative work to focus on more responsibility-heavy jobs.

CLM can help manage risks and compliances. It can remind or notify contract managers about the deadlines, ensuring no penalties or legal consequences arise.

Additionally, CLM applications can adjust to various industries and companies’ internal rules to actively assist in compliance goal achievement.

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Key Stages in CLM and Pitfalls

Contract Initiation and Creation

When dealing with a vendor-created contract, you, as a buyer, need to review and approve the contract. Here’s why you need to review the contract meticulously:

Less Dispute Risks: Well-reviewed contracts mean everything is in order. From the contract terms to other relevant details, you have reviewed everything. This leads to fewer misunderstandings and disputes down the road.

More Robust Negotiation Position: A clear contract always has transparent terms and conditions. You need to review the contract details and identify areas for negotiation. This ensures you get the best deal possible.

Boosted Predictability: When you review a contract properly, you can know performance, delivery schedules, and payment terms. This enhances predictability and minimizes the potential for unexpected issues or delays.

Challenges

Incomplete Information: The vendor's contract might lack crucial details. If that’s the case, you must request clarification or request revisions to ensure clarity

Limited Collaboration: Internal communication breakdowns can affect your ability to review the contract. Ensure all departments can access the contract and provide input during the review process.

Negotiation and Approval

The second stage is negotiation and approval. This stage will secure the best deals for your business. The ultimate goal of this stage is to save you a significant amount of money.

Pricing and Payment Terms: You must negotiate the pricing structure and payment schedules with the SaaS vendors. You must understand the value proposition and explore different pricing models. This process will lead to cost savings.

Service Level Agreements: SLAs are one of the most important details. It defines the service level you expect from the vendors. Negotiate the performance metrics within the SLAs to receive the agreed-upon quality of service.

Termination Clauses: Don’t overlook the termination clauses. As developing exit strategies is crucial, so are the termination clauses. This will protect both parties during unforeseen circumstances. Strong negotiation ensures a smooth and controlled exit process if necessary.

We, the experts at CloudEagle, can help you negotiate with your vendors properly. With our assisted buying feature, we can help you save time and maximize savings on SaaS spends. Here’s what Elaine Guan has to say about our services.

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We have also helped numerous other businesses save significant money regarding vendor negotiation.

Challenges

Overlooked Errors or Inconsistencies: A hasty review process can cause errors or inconsistencies. Don’t forget to take the necessary time for a thorough review.

Delayed Execution Due to Missing Approvals: A disorganized or unclear approval workflow can delay securing necessary sign-offs.

Execution and Implementation

The next stage of contract lifecycle management is the Execution & Implementation, where you will focus on a signed agreement to a working relationship. The reasons why a smooth onboarding process and fulfillment of contractual obligations are essential are:

Streamlined Vendor Onboarding: Pay close attention to the vendor onboarding process. This might involve setting up user accounts, providing training materials, and establishing clear communication channels. A smooth onboarding experience is the first step for a successful ongoing partnership.

Considering Contractual Obligations: The SaaS agreement outlines specific obligations and clauses for both parties. They must fulfill these obligations for a mutually beneficial relationship. This includes on-time service delivery, adherence to quality standards, and timely completion of milestones.

Change Management: There might come a time when you need to change the original agreement. A change management process creates clear communication and transparent approvals.

Challenges

Delayed Onboarding: Missing key information or improper training can delay vendor onboarding. To mitigate such problems, ensure a well-defined onboarding process.

Disruptions in Service: Performance issues can affect the delivery of the services. Don’t forget to define communication protocols clearly to resolve any service disruptions.

Monitoring and Compliance

The monitoring and compliance stage protects your business’s interests throughout the contract lifecycle. Here are the reasons for its importance:

Effective contract management isn't all about signing agreements. You must implement strategies to protect your interests throughout the contract lifecycle. This involves ensuring vendors deliver promised services and comply with changing regulations.

Performance Management: A CLM system can help you track the KPIs within the contract. When you monitor these metrics, you can identify potential issues early on. As a result, you can take corrective actions.

Maintaining Compliance: Contract lifecycle management systems centralize all agreements. They help you locate relevant clauses, verify adherence to industry regulations or internal policies, mitigate non-compliance risk, and avoid potential penalties.

Challenges

Improper KPI Definition: Unclear KPIs can hinder evaluating contract performance. Well-defined and measurable KPIs are crucial for effective monitoring.

Manual Tracking: Depending on manual methods for tracking performance metrics, it can take up time. Automating data collection and reporting through the CLM system makes this smoother and more accurate.

Renewal and Termination

The final stage of the contract lifecycle management is renewal and termination. Here’s why you need to manage both renewals and terminations effectively:

Renewal Management: Proper renewal management will make service delivery less vulnerable to interruption. Automated alerts in the CLM system inform relevant staff about upcoming renewal dates. This will provide them with enough time to negotiate or extend contracts.

Renegotiation Opportunities: Contract renewals are the best time to renegotiate with your current vendors. Perhaps you need something more or less based on their performance and deliverability. Renegotiate thoroughly to secure a better deal than the previous one.

Termination for Cause: Clearly defined termination clauses outline the circumstances under which termination may be necessary. Following a documented termination process ensures a smooth and legally compliant exit from the agreement.

Challenges

Missed Renewal Dates: If you forget the renewal deadlines, you will incur late fees. This is why you must leverage the best benefits of automated reminders and alerts.

Unfair Termination Clauses: Sometimes, the SaaS vendor can implement unfair termination clauses in the contract terms. For instance, they may impose penalties for early termination. Moreover, they can also ask for huge payments for data migration.

These unfair termination clauses will have a massive impact on your business. This is why you must review termination clauses during the contract drafting stage. If the penalties are unavoidable, try negotiating the penalty terms.

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Strategies for Effective SaaS Contract Lifecycle Management

Effective SaaS contract lifecycle management can maximize value while minimizing risks. Let’s take a look at the strategies for effective SaaS CLM.

1. Utilizing Contract Management Software

Manual managing your SaaS contracts can be time-consuming. It’s possible to automate numerous daily tasks. The list includes:

• Contract initiation
• Routine approvals
• Renewal reminders

Contract management platforms stores all your SaaS contract data in one place. Such systems ensure everyone can access the latest contracts with robust search capabilities.

2. Developing Contract Governance Policies and Procedures

A robust SaaS CLM discipline relies on standardized policies and procedures. Clear written agreements ensure consistency throughout the contract lifecycle. From creation to acceptance, you can effectively manage everything across your organization.

This lowers the risk of errors and penalties for not following internal rules or industry standards. Pre-defined governance rules prevent skipping steps or missing deadlines, reducing the risk associated with mishandled contracts.

3. Plan to Utilize Regular Templates and Workflows

Creating initial drafts of SaaS contracts can be time-consuming. Using pre-approved contract templates with adaptable agreements simplifies this process.

Your team can review the contract at different negotiation stages and route it to support staff when necessary. But what's the benefit? Well, you can avoid critical errors. Automated workflows can help your business focus more on the agreement approval process.

These templates with pre-filled clauses reduce the chances of errors or omissions in the initial contract draft, saving time and ensuring accuracy and consistency in SaaS agreements.

4. Training and Educating your Stakeholders on Contract Management:

Educating your stakeholders can guarantee a successful SaaS CLM. When all parties involved in a contract (legal, procurement, and business teams) have a shared understanding, they can collaborate more effectively. Better communication will help you detect potential issues early on.

Well-educated stakeholders will be able to spot risks connected to SaaS more easily. You can implement a more up-to-date approach to mitigate risk more effectively.

5. Regularly Review and Update your Contract Management Processes

Business and SaaS offerings evolve often, requiring regular reviews and updates.

Regularly reviewing and adjusting your software-based CLM tools adds flexibility to your terms. Moreover, it will keep you updated with the latest SaaS trends or market changes.

You must review your processes and add new changes that make your organization more efficient. Contract reviews also help you identify current trends and respond accordingly.

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Why is SaaS CLM Your Secret Weapon?

SaaS Contract Lifecycle Management (CLM) is your secret weapon in today's business world. It helps you manage SaaS contracts effectively. Let's explore why SaaS CLM is your ultimate advantage.

1. Efficiency Unleashed

SaaS contract lifecycle management can automate numerous tasks. Thus, it streamlines the overall vendor contract management process.

CLM automates repetitive tasks like contract generation and approval workflows, reducing manual effort and errors. Centralizing all contract-related information in one place ensures easy access for stakeholders.

Additionally, CLM improves communication between departments. Moreover, it provides real-time updates on contract status.

2. Visibility and Control

SaaS CLM gives you exceptional visibility and control over your entire SaaS contract portfolio. Let’s imagine you have a centralized dashboard that offers a real-time view of all your SaaS agreements.

This transparency helps spot upcoming renewals, track KPIs, and monitor compliance effortlessly. It also allows you to make informed decisions to ensure your organization gets the most from each SaaS investment.

3. Risk Mitigation and Compliance Confidence

SaaS contracts come with intricate details and obligations. This makes manual tracking challenging. SaaS CLM can address this situation effectively.

Do you know how? It’s by automating tracking for all contract obligations. SaaS CLM can also help you meet commitments and avoid penalties. It generates alerts for approaching deadlines, preventing missed renewals or disruptions.

Moreover, CLM aids compliance with regulations and internal policies by providing easy access to relevant clauses.

One key benefit of SaaS CLM is its automated obligation tracking. SaaS CLM makes sure all deadlines, deliverables, and other commitments are clearly identified and consistently tracked. This minimizes the risk of missed obligations that could lead to financial penalties.

SaaS CLM can also manage deadlines properly. Timely alerts for approaching deadlines prevent missed renewals. This ensures your organization benefits from the contracted services and mitigates non-compliance risks and potential legal or financial consequences.

Additionally, SaaS CLM simplifies compliance management. You will have easy access to relevant contract clauses. This allows for quick verification of compliance with specific requirements

4. Cost Savings and Resource Optimization

SaaS CLM offers more than just efficiency and control—it brings significant cost savings to your organization. It also enables you to analyze contract data and identify clever negotiation insights based on the contract terms and usage.

You can use these insights during negotiations to secure better deals from the SaaS vendor.

In short, SaaS CLM saves money and helps your team work smarter. Automating the mundane tasks will help you focus on the more important aspects of your business. This means your organization gets the most out of its SaaS investments.

5. Vendor Relationships and Negotiation Power

SaaS CLM improves internal processes and helps you build better relationships with vendors. Keeping contract data in one place also promotes transparency.

Additionally, CLM gives you the information and insights you need to negotiate contracts confidently. With easy access to past contract data and industry standards, you can negotiate from a position of strength.

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CloudEagle for Contract Lifecycle Management

We have discussed some important details around contract lifecycle management. However, one key question still remains: How can you ensure your business implements the best contract lifecycle management strategy?

Well, surely, you cannot do it on your own. You will need expert help. Introducing CloudEagle - one of the best SaaS management and procurement platforms.

But how does CloudEagle help you with contract lifecycle management?

Ditch spreadsheets! Save time and resources with one dashboard for all contracts. Manage vendor contracts securely, easily tracking them in one place.

Our platform has AI-powered metadata extraction capabilities. It can extract crucial data like contract terms, renewal dates, contract duration, etc, and popularize them in one centralized dashboard for easy contract management.

But why should you trust us? We have helped numerous businesses with their CLM requirements. Let’s see what Troy Otilio, CEO of Aira, has to say about our services.

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We have mentioned earlier that missing renewals will become problematic for your business, right? Well, you don’t need to worry about that when you have assistance from CloudEagle.

We kick off SaaS contract renewal workflows up to 90 days early and assign them to the correct stakeholder using automated workflows. Plus, you receive renewal reminders via Slack and email.

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In minutes, CloudEagle's AI quickly extracts renewal dates, billing frequency, payment terms, and auto-renewals.

We will also help you integrate with contract repositories. CloudEagle integrates with popular contract repositories like DocuSign, Workday, Ironclad, Google Drive, Dropbox, and Box.

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Now, you can effortlessly import contracts from various document repositories. Our AI engine will organize and extract metadata, providing a unified view of all contract data.

Still not convinced? Let us share how we helped Oyster HR eliminate the spreadsheet with centralized contract management.

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Oyster HR encountered difficulties with decentralized contract storage, resulting in lost contracts and missed renewals. Spreadsheets proved inadequate for tracking and managing contract terms, prompting the need for centralized contract management and renewal tracking.

So, how did we help them? We offered Oyster HR a complete solution for SaaS contract management.

Integrating with their internal systems, we organized contracts from invoices and spreadsheets, extracted metadata, and generated renewal calendars. This streamlined contract management, ensuring efficient and timely renewals.

As a result, Oyster HR improved SaaS contract and invoice management. They've boosted efficiency, saved time, and increased productivity thanks to timely renewal alerts. This allows their team to focus strategically while staying on top of renewals.

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Conclusion

SaaS contract lifecycle management boosts efficiency by automating tasks and simplifying workflows. With all contract data in one place, it makes gaining visibility and control easy. You get a real-time view of your SaaS portfolio, which will help you make informed decisions.

Lastly, SaaS CLM enhances vendor relationships by making negotiations more confident. With a solid SaaS CLM strategy, you can turn contract management from a hassle into a strategic advantage.

When you automate the SaaS contract management process, you can save money, reduce risks, and streamline workflows.

With the help of a SaaS contract management software, you can further boost your contract management practices. This will ultimately result in effective management and maximized SaaS benefits.

Following best practices and using automation tools can help your business become financially healthier and enhance its overall growth.

Do you want CloudEagle to take care of your contract management? Book a demo with the experts today.

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