Are you an SME (Small Medium Enterprise) owner? If so, do you sign contractual agreements between your business and its suppliers or clients?
Do you use small business contract management software to manage the contract creation lifecycle? Or are you still on a paper-based system?
Contract management efficiencies are an essential part of the successful business model. Consequently, it is reasonable to state that if supplier and customer contracts are not effectively managed, the business runs the risk of losing customers and sales. Therefore, the best way to increase sales and grow your business is to manage your contracts by implementing a contract management system.
What is a legal contract?
Before we consider the union between and intersection of the SaaS model and contract management as a means to identify and solve contraction pain points, let’s look at a definition of a legal contract as well as its elements.
A contract can also be seen as a promise by one signatory to provide products or services to the other parties. If this promise is broken or the contract is breached, then the legal remedies provided for in the agreement come into play.
Therefore, to ensure that the contract is legally enforceable, every contract must include elements such as “mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality.”
Software-as-a-Service: The technology that undergirds contract management efficiencies
Software-as-a-Service or SaaS is cloud-based software that is scalable, flexible, useful, and affordable. 2019 statistics reported by Gartner show that “the worldwide public cloud services market is forecast to grow 17% in 2020 to total $266.4 billion, up from $227.8 billion in 2019.”
Sid Nag, research vice president at Gartner, also noted at the same time that the SaaS model had been adopted as a mainstream technology. The fundamental reason for mainstream adoption is its scalability and subscription-based model that makes it affordable.
In other words, you do not need to pay for the software development; you pay a monthly or annual amount per user or number of contracts created and managed in this context. And, when your business grows, all you do is increase the number of users or contracts.
SaaS features and benefits include the following:
Affordability and scalability
As highlighted above, one of the foundational features and benefits is the affordability and scalability of the SaaS model. A monthly or annual subscription to a SaaS-based software application is more affordable than paying for custom software development.
In summary, custom software development can cost between $50 000 and $250 000 (USD), depending on the scale, complexity, and features required. This costing does not include upgrade costs and monthly maintenance costs.
Because technology is fluid, with new technologies being developed, existing software must be upgraded and maintained to ensure that it runs on the latest technologies. Otherwise, it becomes obsolete, and the development costs are lost.
SaaS pricing, on the other hand, can start at $99 for between one to five user licenses per month. Let’s assume that the average cost to develop a complex software application is $150 000. By comparing the monthly user license with the cost of developing custom software, we can see that the SaaS model is far more affordable. At $99 per month, it will take 1515 months (or 126 years) for the custom software to pay for itself.
The scalability factor comes into play when your business grows, and you need to increase the software’s capacity. Instead of paying for custom software to be upgraded or expanded, you increase the number of monthly user licenses you pay for.
Cloud computing forms the foundation upon which SaaS-based software is built; thereby, providing easy access to users from anywhere in the world via desktop and laptop computers and smartphones and tablets.
Implementing cybersecurity measures also becomes far more straightforward, with all of your business contracts stored in a centralized location. Consequently, the contracts are not downloaded onto different devices, nor are they printed out or emailed between the relevant parties.
Part of the SaaS contract management process is the ability to trigger an automated workflow process that sends emails to all reviewers and signatories in the order that they need to review and sign the document. The document signatory route is set up, including email addresses, when the initial contract is drawn up. This reduces the need for human intervention that, in turn, saves time and money.
Contract management: The union between, and intersection of, the legal contract and its ideation and creation lifecycle
Wikipedia.org defines contract management software as the “range of computer programs, libraries, and data used to support contract management… [and] …contract lifecycle management.”
This article goes onto state that most projects “involving contractors now use contract management software instead of relying on the manual management of paper contracts.”
Contract management software is now an indispensable tool for keeping track of multiple contracts that have financial implications. It is also useful for automating contract “administration, ensuring compliance, monitoring risk, running reports, and triggering alerts.”
Succinctly stated, all you need to do as the contract owner is to use the contract management software tools to draw up the contract, create the document signatory route, and let the software manage the rest of the contract lifecycle. Should any revisions be required, you will get an email stating which sections must be changed. And you can set the system to send you a notification as the contract passes along its signatory route. Finally, the software will notify you when the contract process has been completed.
In summary, you can get on with other work while you wait for the software to manage the software lifecycle on your behalf.
Therefore, the union between, and the intersection of, the legal contract and its ideation and creation lifecycle is the SaaS-based contract software application method and practice. Without this union and convergence, the contract lifecycle becomes inefficient, clunky, time-consuming, and error prone.
This is an article provided by our partners’ network. It does not reflect the views or opinions of our editorial team and management.
Founder Dinis Guarda
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