How to Manage Contracts in a Company: Contract Lifecycle Management Step by Step

Effective contract management today determines both the speed of business and the level of risk. CLM brings structure, control, and automation to all stages of working with contracts, from their creation to their termination.

Inspiration

What is Contract Lifecycle Management and why is there so much buzz about it?

Contract Lifecycle Management (CLM), or contract lifecycle management, represents a systematic approach to working with contracts across the entire organization. It is not just about logging or archiving them, but about managing the entire process, from the initial contract request, through its creation, negotiation, and approval, to signing, performance, tracking obligations, and eventual renewal or termination.

The topic of CLM is gaining importance today mainly because contracts are no longer solely the domain of the legal department. They impact procurement, sales, finance, and operations, and directly influence the speed of decision-making, costs, and risks. In practice, however, they are often scattered across emails, shared drives, or various systems without a clear structure and responsibility.
This is exactly where CLM brings a fundamental change, shifting contract work from passive storage to active management. It allows companies to establish unified rules, automate approval workflows, ensure traceability and oversight of commitments and deadlines, and connect contracts with other business systems, such as ERP, procurement, or CRM platforms.

Furthermore, with growing pressure on efficiency, compliance, and digital transformation, artificial intelligence is entering the field of contract management as well. AI makes it possible to quickly analyze contract content, identify risks, or work with their data within the context of the entire enterprise. CLM is thus becoming not just a document management tool, but a crucial element in running a modern business.

What phases does the contract lifecycle include?

The contract lifecycle does not begin with its signing, and it certainly does not end there. CLM covers the entire process from the initial request to the termination of the contractual relationship. It is precisely the connection of individual steps into a single, managed process that holds the key to higher efficiency and lower risks.

Why is a storage repository or a shared drive not enough?

Many organizations today have their contracts stored across various systems, typically in shared folders, on SharePoint, or within corporate repositories. Yet, the most critical element is often missing: the management of the process, responsibilities, and connections to other business operations.
After all, a stored document does not equate to a managed contract. Without a clear structure, workflow, and context, contracts remain passive files that can indeed be found, but are difficult to actively manage.

Storage is not process management

A shared drive or basic storage allows a contract to be saved and shared. However, it does not address who is preparing the contract, who approves it, or what phase it is currently in. A modern approach therefore complements storage with workflows and lifecycle management.

Complex Version and Change Control

When working via email or shared folders, multiple versions of a contract emerge. Without centralized management, it is difficult to determine which version is current and to trace the history of changes. A managed environment provides a single version of the document and a transparent audit trail.

Limited Automation and AI Capabilities

Without structured data and a managed environment, it is impossible to effectively leverage automation or artificial intelligence. Modern CLM solutions therefore integrate AI tools, such as OpenText Aviator, which enable the analysis of contract content, the identification of risks, or work with their context.

Context and Accountability are Missing

Without being linked to processes, it is unclear who is responsible for the contract and what commitments arise from it. Advanced enterprise content management platforms, such as IBM FileNet or OpenText Content Manager, therefore connect documents with processes and responsibilities.

Unmanaged Approval and Higher Risk of Errors

Approvals often take place informally, without a clear workflow. This increases the risk that certain steps will be skipped or that the contract will not be reviewed by all relevant roles. Solutions built on BPM and a low-code approach, such as NewgenONE, allow these processes to be effectively managed and adapted.

Performance and Deadline Tracking are Missing

After signing, contracts usually end up in the archive. Without a system that tracks commitments, deadlines, or expirations, there is a risk of penalties, missed opportunities, or automatic renewals of unfavorable contracts.

"We have long seen among our customers that the biggest problem does not arise during the creation or signing of a contract, but in its daily management and operation after signing. Contracts often end up in repositories without any connection to processes, which leads to a loss of overview regarding commitments, deadlines, and actual performance.

With the arrival of artificial intelligence, contract management is advancing significantly; companies can analyze their content and work with data faster. However, true value is only generated at the moment when contracts become part of a managed lifecycle and are connected to other systems and processes within the company."

Martin Vogel

ECM Delivery Manager

How to get out of it: from repository to managed contract management

The first step is usually the introduction of structured contract management layered on top of platforms that companies already use—for SMBs, typically within the Microsoft 365 environment. Add-ons such as TreeINFO make it possible to add metadata, workflows, and basic contract lifecycle management without requiring a major overhaul of the environment.

However, for organizations with higher process complexity, larger volumes of contracts, or requirements for integration with ERP and procurement systems, it is advisable to approach CLM more systematically. In the enterprise environment, several approaches are available, ranging from specialized CLM applications built on ECM platforms combined with AI-driven automation platforms (e.g., OpenText Content Management + OpenText Process Automation + OpenText Aviator; or IBM FileNet + IBM Business Automation Workflow + IBM watsonx), to modern all-in-one low-code approaches that combine CLM, workflow, and AI (e.g., NewgenONE).

The common denominator of these solutions is the ability to manage the entire contract lifecycle as part of broader business processes, rather than in isolation. Contracts are thus linked to data, responsibilities, and the context of other systems, such as ERP, CRM, or procurement platforms. Such an approach brings not only a higher degree of automation and control, but above all, shifts contracts from the role of a static document to the role of an active element in running the company.

What modern CLM software should be able to do

In order to truly manage contracts, simply registering them is not enough. A modern CLM solution connects work with documents, processes, and data in such a way that contracts actively support business operations, from day-to-day tasks to strategic decision-making.

Centralized Contract Management and Metadata

The foundation is a single location where contracts are stored, structured, and easily searchable. Metadata plays a key role, allowing users to work with contracts based on type, supplier, validity, or accountability.

Standardization and Templates

The use of templates and predefined clauses accelerates contract creation while reducing the risk of deviations from internal regulations. Standardization is especially crucial in larger organizations.

Tracking Commitments and Deadlines

The true value of CLM becomes apparent only after the contract is signed. The system should actively monitor deadlines, fulfillment of commitments, SLAs, or expirations, and alert users to situations that require action.

Workflow and Approval Process Management

CLM must cover the entire approval process across departments. Automated workflow ensures that the contract reaches the right people at the right time and that individual steps follow each other logically.

Workflow and Approval Process Management

Leveraging AI for Contract Management

Artificial intelligence brings new possibilities for working with contracts. From automated extraction of key data and risk identification to content summarization and context-aware information retrieval.

Petr Míka

Senior Sales Manager

FAQ / Frequently Asked Questions

What is the difference between CLM and traditional contract management?

Traditional contract management in an enterprise focuses primarily on the registration and archiving of documents. A CLM (Contract Lifecycle Management) system goes further, covering the entire lifecycle of a contract, including creation, approval, performance, and commitment management. Because of this, it brings greater control, efficiency, and better utilization of data.

What are the signs that a company needs a CLM solution?

Typical signs include lengthy approval processes, unclear contract versions, a lack of overview regarding commitments, or missed deadlines. If contracts are managed via email and shared drives, it is often the first indication of the need for a managed approach.

How demanding is the implementation of Contract Lifecycle Management in a company?

It depends on the scope. Simpler scenarios can be built on top of existing platforms (e.g., M365), while enterprise solutions involve integrations, workflows, and process changes. Gradual adoption and user engagement are key.

What role does AI play in contract management?

AI helps analyze contract content, extract key data, identify risks, or summarize documents. It brings the greatest value when working with a large volume of contracts and when managing their compliance over time.

Who should be responsible for contracts within a company?

Contracts are not just the domain of the legal department. In practice, procurement, sales, finance, and management all play a part. CLM helps connect these roles and clearly define responsibilities throughout individual phases of the process.

What are the most common benefits of CLM?

Contract Lifecycle Management accelerates contract closure, reduces administration, and increases control over commitments. At the same time, it helps mitigate errors and risks and improves collaboration across departments.

Can CLM be integrated with the management of other agendas, ERP, or procurement systems?

Yes, and that is precisely one of the key benefits. Integration with other ECM solution agendas, ERP, procurement, or CRM systems allows you to work with contracts in the context of data—such as prices, suppliers, or purchase orders—and eliminates duplicate work.

How does CLM help with compliance and auditing?

CLM ensures an audit trail, access control, and the traceability of changes. It also makes it possible to monitor compliance with contract terms and respond to regulatory requirements, which is particularly crucial in larger organizations.

Contracts as an Active Component of Business Management

Today, contracts are not just formal documents, but a key element in managing relationships, costs, and risks. If they remain stored without context and connection to processes, their true potential remains untapped.

Contract Lifecycle Management brings a shift, allowing companies to manage contracts as an integrated process, connect them with other business operations, and utilize them as a data source for decision-making. This ranges from accelerating approvals and improving commitment tracking to increasing transparency across the entire organization.

Furthermore, with the growing adoption of artificial intelligence, contract management is advancing even further. Companies can now analyze content faster, identify risks, and utilize contract data in real time. It is precisely this combination of a managed environment and AI that opens up new opportunities for more efficient and secure business operations.

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