One question that we run into time and time again is people asking what is the difference between a document management system and a contract management system. While the two perform similar functions, they each have a different purpose and have specifics to their functions that make them distinct. While you might think that you can get by with using a document management system to manage contracts, it won't ever be as effective as using a dedicated contract management system. Likewise, storing normal documents in a contract management system would have you losing out on a lot of the power and versatility of a DMS. Thankfully, we know the difference and we want to make sure you do to. Read on to learn the differences between a DMS and a CMS.
What is a Contract Management System
A contract management system is software that allows you to manage the complete life cycle of a contract from creation to ongoing management post implementation. A CMS is a central repository where all of your contracts, drafts, and templates are stored in a way that easily allows you to sort through and find what you are looking for. Its use is primarily concerned with the creation, negotiation, amendment, signature, and analysis of all of your company's legal contracts. The ultimate goal of a contract management system is to automate much of the contract management process and make your contracts more efficient.
In most contract management systems, users in your legal department can build and store templates that can be referenced for later contracts. This prevents your team from having to build new, unique contracts for every occasion. Other legal team members with the right credentials are able to log in and access these templates or other active contracts for easy collaboration. This makes it so users don't have to send contracts over email and risk them getting lost. In addition to all of that, many CMS solutions have integrated E-signature technology that saves paper and time. Every party of a contract can log in and provide their signature easily, saving a lot of time on contract turnaround.
Once a contract is signed, a quality CMS will provide you the ability to track the analytics and life cycles of your contracts. It will automatically compile the data for you and provide you with a dashboard that you can view important data. This allows you to track in real time any issues that come up and what changes need to be made. The same goes for life cycle tracking. You can tell if anything needs to happen with a contract - review, renewal, etc - and make sure that it happens in a timely manner. Again, all of this would be tracked automatically for you by the contract management system.
What is a Document Management System
Whereas a contract management system is focused specifically on contracts, a document management system is a broader piece of software that involves the creation, storage, retrieval, and management of documents. A DMS is a central repository that allows the secure collaboration on content which includes editing, ownership, version tracking, and audit trails. The ultimate goal of a document management system is to allow users in an organization to create and collaborate on projects easily and effectively without having to rely on email or other offline forms of communication too heavily.
In most document management systems, users have the ability to track everything about a document. This includes its creation date, who worked on it, what it's related to, how many people have worked on it, what tags it has, and how large it is. A DMS will categorize this information and allow users to access it and sort through all of the documents stored within. This helps users find exactly what they're looking for without having to search through potentially hundreds upon thousands of documents in an organization.
A DMS is a great tool as it allows you and certified users full control over a document. This includes who can see it, who can edit it, and whether or not someone can roll it back to a previous version. You don't have to store anything else on paper. In addition, you can easily send and share documents within an organization without having to go through intermediaries like email or IM. This can also extend to users outside of your organization, easily allowing you to collaborate with business partners and your clients.
What are the Differences?
While a contract management system shares a lot of functionality with a document management system, it is a distinct piece of software. Where a DMS is focused on your company's broader body of documents, a CMS is focused purely on your contracts. However, a CMS will track far more about your contract documents than a DMS. A CMS will pull the analytics and life cycle data of your contracts so you can track your important data. You're also not just sorting your contracts out by name, you're also sorting them by important milestones and what stage of the contract management life cycle they are on. A CMS will also provide you with the ability to set notification and automatically renew important contracts as necessary.
Which Should I Use?
Which piece of software you should use depends on what you need it for. If your company or legal department works with a high volume of diverse contracts, then you need to adopt a contract management system. A DMS will now provide you with the in-depth control and organization that a CMS offers. However, if you just need a more generalized document storage system, then a document management system is the piece of software that you want to use.
Ultimately, like with most of our advice, you need to make decisions based on what your company needs. In order to make an informed decision about adopting either a contract or document management system, you need to know enough about both to see if either can fit you.
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Written by Quentin Russell
Quentin Russell is a Content Specialist with knowledge of Content Marketing and Social Media Marketing.