A Pramata Article
Contract Management Dashboard & Metrics: What to Track & How
Tracking contract lifecycle management metrics can help you identify bottlenecks, accelerate deals, stay compliant. But what KPIs should you track? Learn more in this guide.
Contract management is a challenging process. Many legal teams find themselves managing hundreds to thousands of contracts at any given time. This huge amount of work keeps legal teams in a cycle of trying to focus on “business as usual” while costly bottlenecks and inefficiencies lurk within the contract lifecycle.
Contract management can affect everything from business revenue to compliance. That’s why it’s critical to have a window into each step of your contracting process so you can identify areas needing improvement and boost productivity.
To do so, you’ll need to measure and analyze contract lifecycle management metrics. Measuring and analyzing the right key performance indicators (KPIs) can help your legal team uncover inefficiencies, manage workloads, accelerate deals, and track obligations.
In this guide, we explain the importance of KPIs and give you a checklist of metrics to start tracking today. Plus, we’ll discuss how to track these metrics using a contract management dashboard.
Contract management KPIs explained
A key performance indicator (KPI) is simply a quantifiable measure of performance for a specific task or objective. A contract management KPI is used to measure the performance of your contract lifecycle and the processes found within it.
By identifying contracting benchmarks for your organization, you can then use KPIs to track your progress toward those goals. As a result, you can easily see which contracting processes are working as they should and which ones require support.
An example KPI: Contract renewal
One KPI is contract renewal, which monitors the percentage of contracts being renewed in a certain period of time.
By understanding the rate of contract renewals (and when they are renewing), you could pinpoint potential breakdowns in your renewal cycle. With those insights, you can make changes to enhance the cycle, which improves compliance and ensures the continuation of partnerships
The benefits of tracking contract lifecycle management (CLM) metrics
On the surface, tracking CLM metrics may seem like just another task on your never-ending to-do list. However, tracking these KPIs and acting on them when necessary has many benefits for your organization.
Helps identify bottlenecks
There are many potential bottlenecks throughout the contract lifecycle. For example, you may spend days waiting on a signature from a stakeholder or months making contract revisions.
It’s easy to see bottlenecks like these as just par for the course. However, your contracting processes may share some of the blame. The only way to know for sure is by tracking KPIs.
Digging into your process metrics can help you uncover parts of the workflow where contracts stall. And if you find an inefficiency on your end, you can do what it takes to fix it.
Consider this benefit bonus number one: By uncovering and removing the obstacles or bottlenecks in your processes, you can close more deals faster. After all, faster contracts equal faster revenue.
The most recent data shows that poor contract management costs companies 9% of their bottom line. What does poor contract management look like? Subpar contract repository, long drafting processes, a lack of visibility—the list goes on.
What does poor contract management look like for your company?
That’s where your KPIs come in. By measuring your metrics, you can easily identify areas of your contract lifecycle that are in need of change.
With these insights, you can work to improve those processes that are currently resulting in a loss of cash or requiring serious human power to complete.
Contractual non-compliance can lead to many consequences for your organization, from serious fines to legal action. And subpar contract management processes are often the cause of non-compliance.
Tracking and analyzing contract lifecycle data can help you find any potential areas of risk. For example, is inefficient visibility resulting in your team missing contract deadlines or obligations?
Tracking KPIs can help you quickly fix those inefficiencies, ensuring that you’re able to meet your contractual obligations.
7 Contract management KPIs to track
The benefits of tracking KPIs are clear. However, there are an endless number of metrics you could choose to track. Here, we’ve compiled a list of seven KPIs that should be non-negotiable as you move forward.
1. Length of contract cycle
The goal of an efficient contract lifecycle is to obtain a final signature in the most efficient and fastest way possible. The “length of contract cycle” KPI measures just how long it takes for a contract to move from request to approval.
Tracking this metric over time enables you to pinpoint specific patterns that may uncover issues in your contract cycle.
For example, if the cycle starts to drastically lengthen in a short amount of time, there may be a serious bottleneck. In contrast, if your cycle is shortening over time, you’re moving in the right direction.
2. Contract value
The “contract value” KPI simply measures the value of a specific contract over a period of time. Contract value is often measured in two different ways: Annual Contract Value (ACV) or Total Contract Value (TCV).
ACV refers to how much revenue a contract will result in per year, while TCV refers to the total of the contract’s value. There are many reasons to track contract value. For example, contract value supports financial planning and highlights potential risks.
3. Contract acceptance rate
How many of the contracts that you generate are accepted? This is exactly what the “contract acceptance rate” KPI will measure. By tracking how many deals you’re able to close, you’ll get a clearer picture of the health of your contract lifecycle.
For example, if your acceptance rate is decreasing over time, that’s a sign to check your contracting processes to understand where things are going wrong.
4. Missed milestones
Contract milestones are specific tasks or obligations that must be completed by a certain date. Missing them can result in many consequences, from non-compliance and unhappy customers to increased costs.
The “missed milestones” metric is perhaps one of the most telling KPIs of the health of your contract management processes. Missing milestones is often caused by poor contract visibility, manual obligation tracking and inadequate communication within contracting processes.
5. Contract requests
The “contract requests” KPI tracks how many contract requests your team is receiving. This metric can be broken down by day, month, or year, depending on your needs.
You can take this KPI further by drilling down into the type of contracts received, the number of contracts accepted or rejected, the reasoning behind rejections, etc.
6. Contract risk
Contract risks come in many shapes and sizes, from missing regulatory requirements to the presence of certain legal clauses. The “contract risk” metric refers to a group of KPIs that can be used to track risk within your contracts.
For example, you may choose to track the number of contracts that have been in your workflow for a lengthy period of time.
7. Contract renewals
Contract renewals are critical for increasing revenue. The “contract renewals” metric helps you track the number of contract renewals occurring or failing to occur within a certain time period.
Tracking renewals has a ton of benefits. For example, you can measure just how many contract renewals are being completed and how many are failing. These insights are invaluable for finding potential pitfalls within your contracting processes.
The challenges of tracking contract lifecycle management metrics
Tracking the above contract management KPIs is critical to the success of your organization. However, capturing, tracking and analyzing data isn’t without its challenges.
For example, contracts are often spread out across various locations, from your email inbox to your CRM software. Unfortunately, this makes capturing data about your contracts difficult, as there isn’t a single source of information.
In addition, pulling data about your contracts is only the first piece of the puzzle. You must then be able to analyze that data and generate actionable insights that you and your legal team can use. This is often difficult for people who don’t possess data analytics know-how.
Tracking your metrics using a contract management dashboard
We know that you’re probably not a data scientist. Instead, you’re a valued legal professional who’s tasked with obtaining only the best outcomes for your organization. For this, you need access to data about your contracts to ensure your contract lifecycle is everything it can be.
Luckily, all of the above challenges can be solved with a contract management dashboard. Using a dashboard, you can easily track, measure, and visualize the key metrics you need to improve your processes—no data analysis skills required.
What is a contract management dashboard?
A dashboard that is used as a single source of information for all things contract management. It’s a visual tool that displays everything from contract progress and workloads to key metrics about your contract lifecycle.
Using a dashboard, all of your raw contract data can be easily visualized using easy-to-understand charts and graphs. This makes gathering insights about your contracts simple. Plus, you can manipulate the charts and graphs in real time, allowing you to present your data in the way you see fit.
How does a contract management dashboard work?
These dashboards are often the visual interfaces of larger software platforms, such as contract lifecycle management (CLM) systems.
These systems work to track all of your contracts and their relevant data points. Your data is then displayed within the contract management dashboard for you to use.
Inside the dashboard, you can use filters to drill deeper into your KPIs, run detailed reports to share with stakeholders, and more.
The benefits of a contract management dashboard
Dashboards are incredible tools for improving your contracting performance. Through these dashboards, you can:
- Increase visibility: All members of your legal team with access can view the dashboard and its accompanying data at any time. Whether they’re looking for the status of a certain contract or checking up on the number of contract requests in the past week, everything they need is in one place.
- Boost efficiency: Contract dashboards enable you to quickly see current workload data and reallocate projects as needed. As a result, you can boost the efficiency of your team without all the manual work.
- Stay updated on milestones and renewals: With all of your contract data in one place, you can easily visualize contracts with upcoming milestones or renewal dates. This ensures you don’t miss a single step in the contract lifecycle.
- Spend more time on higher-value tasks: Dashboards reduce the time you spend looking for contracts or other data. Instead, sales teams and other parties can find the information they’re looking for on their own. This allows you and your team to spend more time on high-value legal work.
Never miss a renewal again.
Pramata is the only solution that calculates contract renewal dates for you, putting contract terms right at your fingertips.
Pramata dashboards: Tracking and improving your contracting process
Pramata is an end-to-end contract management platform for legal teams, built with simplicity in mind. Using Pramata, all of your contracts and KPIs are stored in one centralized searchable place.
The Pramata dashboard is your single source of information, displaying everything you need to know about your contracts. The dashboard is easily configurable, so you can monitor the metrics that matter to your team at a glance.
Plus, the Pramata dashboard covers 100% of your contracts, including third-party paper contracts and non-standard contracts. This ensures that your data and the resulting insights are accurate.
From tracking content requests by owner to drilling down deep into turnaround times, Pramata helps you uncover the insights you need for success.
Boost contracting performance easily with Pramata
Tracking contract management KPIs can help you pinpoint bottlenecks, boost efficiency, and obtain critical visibility into your processes. However, you must have easy access to the right metrics.
With Pramata’s configurable dashboards, it’s easy to monitor each contract and uncover critical insights with just a click. As a result, you can improve your processes and support your organization in reaching its goals.
If you’re ready to improve contracting performance, we’re here to support you.