Legal Process Outsourcing

Document vs contract management systems: Choosing the right fit for your business

Effective management of organisational data is vital for businesses today. With an ever-growing need to handle legal documents and contracts efficiently, many companies are facing a challenge when it comes to the choice of a contract management vs document management system. Both share some similarities, but there are distinct challenges between the two as well. So, which one suits your legal contract management needs the best and is the right choice for your business?

Document management systems

A Document Management System (DMS) stores, organises, and retrieves documents in a digital format. These systems offer a centralised repository for all types of documents, ensuring enhanced transparency and collaboration. With features like version control, search functionality, audit trails, and advanced security protocols, a DMS can help streamline document organisation and accessibility.

Contract management systems

A Contract Management System (CMS), on the other hand, focuses specifically on managing contracts throughout their lifecycle. From contract creation to execution and renewal, a CMS can help automate and simplify this complex process with the help of contract management best practices. These systems also have tools to manage contract negotiations, compliance tracking, and reporting to ensure the legal contract management processes are both efficient and transparent.

Contract management vs document management systems: Key similarities

While DMS and CMS often serve different purposes, they share several common features that help enhance business operations, making the choice of contract management vs document management systems difficult for many. The key similarities between the two include:

• Centralised storage: Both systems provide a centralised repository for storing documents or contracts, reducing redundancy and improving accessibility.
• Encryption and security: Both systems offer robust encryption and security protocols to protect sensitive data.
• Audit trails: Both systems maintain comprehensive records of access and change activities for enhanced accountability.
• Collaboration: Both systems allow team members to collaborate and work on shared documents in real time.
• Version control: Both systems help track document versions to prevent confusion and ensure access to the latest information.
• Search functionality: Both systems offer advanced search options to make finding specific documents or information effortless.
• Organisation and indexing: Both systems adopt structured indexing to help categorise and retrieve documents efficiently.

Contract management vs document management systems: Key differences

While the similarities are notable, CMS offer distinct advanced features and functionalities to address legal contract management needs. Some of the notable differences include:

Tailored templates for contracts

Contract lifecycle management services often have pre-built contract templates that businesses can customise to suit specific legal requirements. This significantly reduces drafting errors and ensures compliance with organisational standards.

Negotiation and compliance tools

Unlike DMS, a CMS includes tools for facilitating contract negotiations, risk management, and compliance tracking. These features help companies adopt contract management best practices to streamline complex processes, save time, and mitigate risks.

Electronic signature integration

CMS platforms enable seamless integration with e-signature solutions, making contract execution faster and paperless.

Automated approval workflows

Contract lifecycle management services can also help automate contract approvals, ensuring prompt execution every step of the legal contract management process. This eliminates manual follow-ups and reduces delays.

Obligation tracking and alerts

A CMS offers automatic alerts to notify relevant stakeholders about key dates, such as contract renewals or payment deadlines, minimising the risk of missed obligations and associated penalties.

Advanced analytics and reporting

Detailed analytics and reporting capabilities of a CMS provide insights into contract performance, compliance, and risks, helping improve contract management effectiveness.

Comprehensive lifecycle management

Unlike the static single-plane structure of a DMS, a CMS adopts a dynamic relationship-based structure, helping manage the dynamic lifecycle of a contract. From drafting to renewals, a CMS ensures seamless integration of legal contract management best practices with day-to-day business practices.

Choosing the right fit for your business

The choice of contract management vs document management system depends on your business objectives, workflows, and compliance needs. If your needs focus primarily on general document organisation and storage, a DMS may be the right fit for you. However, for businesses that rely heavily on contracts, a CMS is essential for navigating the complexities of legal contract management.

Infosys BPM offers next-gen contract lifecycle management services to help simplify and enhance legal contract management processes. With services like contract lifecycle management services, contract creation and negotiations, and contract execution and approvals, Infosys BPM can help businesses optimise contract management. By leveraging technologies like big data, machine learning, NLP, automation, and AI-based analytics, it enables compliance enforcement, obligation management, risk reduction, and improved overall efficiency.

Conclusion

Understanding the difference between contract management vs document management systems is key to making the right choice for your business. While both systems offer similar features, like a secure centralised repository, version control, and collaboration, a CMS offers advanced features like negotiation and risk management tools, analytics and reporting, and obligation tracking for legal contract management. Evaluating your needs carefully and aligning your choice with your business goals will ensure you maximise efficiency and get the most value for your organisation.