Enterprise contract teams often use tools such as e-signature software and contract lifecycle management (CLM) solutions to streamline associated workflows.
The eSign software expedites contract approvals, ensuring legally binding agreements in any use case.
CLM solutions, on the other hand, offer end-to-end contract management capabilities, from drafting documents and getting approvals to tracking obligations.
While both help organizations handle contracts effectively, they do bring different capabilities to the teams. Businesses must understand the distinction between the two and their impacts to make the right choice.
This article will examine e-signature software and CLM solutions, differentiate between them and determine which is ideal for enterprise teams.
What is E-Signature Software?
E-signature tools help businesses authenticate documents and contracts digitally, eliminating the need for slow and tedious physical paperwork. They improve the efficiency of enterprise contract teams by eliminating the need for wet signatures while ensuring legal compliance.
The e-signature software's core functionalities include digital signatures, asynchronous collaboration, audit trails and integrations with other business tools.
Enterprise teams can look forward to the following benefits of leveraging e-signature solutions:
- Improved speed and efficiency: Streamline approvals, decrease contract turnaround time, automate workflows and eliminate manual bottlenecks to unlock faster deal closures
- Enhanced security and compliance: Multi-factor authentication (MFA), end-to-end encryption, tamper-proof audit trails and adherence to global regulations like eIDAS, UETA and ESIGN
- Cost savings: The eSign software solutions are generally more affordable than CLM solutions, making them an attractive option for enterprises with more straightforward contract management needs
- Convenience for signatories: Stakeholders can review and authenticate documents from any device and location, accelerating approvals for distributed teams and boosting agility
However, these solutions do have some limitations, particularly for large businesses with multi-layered contract management needs:
- Primarily focused on the signing process: Activities like contract negotiation, obligation tracking and compliance monitoring will require additional tools. Businesses may have to deal with distributed workflows and data silos.
- Limited drafting and pre-signature capabilities: Enterprise contract teams using e-signature tools must use additional tools to review and edit contract documents during the feedback phase.
- Integration and user training challenges: Although organizations can integrate their e-signature solution with other enterprise tools through APIs, doing so often requires additional IT resources and employee training.
- Costly and bloats the tech stack: While the e-signature software solutions appear cost-effective due to their attractive price tag compared to CLM applications, they quickly raise a hefty bill. The need for additional tools can quickly add up, as teams may have to subscribe to multiple solutions—and juggling between them consumes valuable time.
Simply put, teams with limited document approval needs can choose from the e-signature software solutions available. However, businesses with comprehensive contract management needs are better off with a contract lifecycle management solution.
What is a CLM Solution?
A contract lifecycle management (CLM) solution allows enterprise teams to manage contracts from creation to execution and beyond. These unified tools offer contract authoring, negotiation, approval, post-signature tracking and compliance management capabilities.
Teams can write contracts from scratch and share them directly with signatories for review. After reaching an agreement, the parties can authenticate the documents using e-signatures. Managers and other stakeholders can monitor obligations and track performance on CLM solutions.
Moreover, modern CLM tools have AI-enabled features that further streamline contract management. For example, Aavenir Contractflow, an industry-leading CLM solution, offers AI-powered contract summarization, clause extraction and compliance checking.
These capabilities provide business organizations with the following benefits:
- Streamlined contract creation: CLM platforms offer capabilities like pre-approved templates and clause libraries that speed up contract authoring. This minimizes errors and bolsters compliance.
- Includes e-signature capabilities: Cutting-edge CLM solutions like Contractflow have built-in e-signature functionality. This decreases software expenses and prevents a bloated tech stack.
- Task automation: Various activities within approval processes, negotiation cycles and contract management can be automated with CLM tools. As a result, teams experience reduced administrative workload and can focus more on strategic initiatives.
- Centralized contract database: CLM solutions allow teams to store all contract information in a secure cloud-based repository. This eliminates version control challenges, creates a single source of truth, democratizes data and enhances contract audit readiness.
- Advanced reporting and analytics: Enterprise contract teams can access AI-driven, data-backed insights into contract risks, obligations and performance trends in real-time. This helps organizations quickly identify areas for improvement in their contract workflows.
Just like with the e-signature software solutions, CLM platforms also have some limitations:
- Higher initial investment: Although CLM solutions lead to long-term cost savings, they have a heftier price tag than standalone eSign tools. Smaller teams and growing businesses may find it challenging to find the budget.
- Learning curve for teams: Professionals accustomed to multiple tools and distributed solutions may need time to adjust to unified contract lifecycle management software. Fortunately, leading CLM solution providers like Aavenir offer comprehensive resources, such as live demonstrations and webinars, to speed up user adoption.
Businesses managing a high volume of contracts and handling various associated processes should opt for CLM software. However, if their contracting process is minimalistic and focused on digital approvals, e-signature solutions may be better.
5 Key Differences Between E-Signature Software and CLM Solutions
E-signature applications and CLM software are similar in enhancing teams' efficient management of contract documents. However, they serve unique purposes in the contract lifecycle.
Here’s how they differ from one another:
| Criteria | E-signature Software | CLM Solution |
|---|---|---|
| Scope of Functionality | Focused on digital signatures and basic authentication | End-to-end contract management, including digital signatures (drafting, negotiation, execution, post-signature tracking) |
| Integration Capabilities | Integrates with CRMs, ERPs, and some document management tools | Connects with enterprise systems (ERP, CRM, e-signature, tools) |
| Scalability | Scales well for businesses needing fast approvals but lacks full contract oversight | Designed for enterprises managing high contract volumes and compliance risks |
| Best For | Organizations needing quick, secure and legally binding signatures | Businesses requiring comprehensive CLM capabilities from authoring to execution |
| Limitations/Challenges | Limited contract management capabilities, requiring additional tools for full CLM | Higher initial cost and learning curve; may necessitate process changes for full adoption |
Why Enterprise Teams Need CLM Software
The above comparison hints at why experienced contract management teams in large organizations and businesses should use a comprehensive CLM software solution.
There are five advantages in particular:
1. Enhanced Efficiency Across the Contract Lifecycle
CLM software streamlines every aspect of contract management. For example, contract creation is streamlined with pre-approved templates and clause libraries, while AI-enabled document evaluation helps teams quickly identify non-compliant clauses.
Automation at such a granular level ensures company-wide consistency and accelerates deal cycles.
2. Risk Mitigation and Compliance
Enterprises must adhere to strict regulatory frameworks, particularly industries like healthcare and financial services. CLM solutions bring capabilities such as audit trails, version control and automated updates that enable teams to ensure compliance easily.
Teams can quickly identify potential risks prior to contract approval and address them proactively to prevent escalation.
3. Strategic Insights and Decision-Making
Industry requirements, market demand, laws and regulations and stakeholder preferences constantly evolve, requiring enterprise teams to remain agile and informed.
CLM software's real-time contract analytics provide visibility into obligations and opportunities, ensuring informed decision-making.
4. Cost-Effective and Optimized Operations
Although CLM solutions require a higher upfront cost compared to e-signature software, they significantly reduce long-term costs by eliminating the need for multiple tools and streamlining operations on a single platform.
Manage Contract Lifecycle Seamlessly with Aavenir’s Contract Management Software
Aavenir Contractflow is an AI-powered CLM software solution that efficiently streamlines the entire contract process, from creation to execution. Enterprise teams can manage all relevant tasks on a unified platform and ensure end-to-end compliance.
The core capabilities of Contractflow include:
- Contract authoring: Create documents quickly from scratch using pre-approved templates and a clause library. Leverage AI to extract specific clauses or detect deviations to ensure accuracy.
- Contract lifecycle workflows: Automate processes such as generation, renewal, expiry, amendment and termination—thereby reducing the administrative workload on teams.
- E-signature integration: This feature includes pre-built digital signature adapters for DocuSign and Adobe Acrobat, which facilitate efficient and legally binding contract approvals.
- Centralized repository: Store and manage all contracts in one place, creating a single source of truth that enhances company-wide transparency and accountability.
- AI assistant: Avy AI can generate clauses, write contract summaries and simplify clause language immediately. Users can also ask specific questions in natural language and receive nuanced answers.
- Obligation management: Contractflow isolates contract obligations, assigns ownership, and ensures their fulfillment. Stakeholders can track obligations and receive reminders to complete necessary milestones on time.
Interested in seeing how Aavenir Contractflow can elevate your CLM workflow? Contact us today to book a personalized demo.
Frequently Asked Questions
What is the difference between e-signature software and a CLM system?
E-signature software focuses on digitally signing documents and ensuring legal validity. A CLM system, on the other hand, manages the entire contract lifecycle, including drafting, negotiation, approval workflows, execution, post-signature tracking, compliance, and analytics.
How can a CLM solution improve contract management in enterprises?
A CLM solution automates contract workflows, centralizes document storage, ensures compliance and reduces risk. It streamlines contract creation, accelerates approvals and provides real-time insights, helping enterprises manage high-volume contracts more efficiently while maintaining regulatory and legal standards.
Is the e-signature software sufficient to handle high-volume contracts?
No. While e-signature tools speed up approvals, they lack contract drafting, negotiation and post-signature tracking. Enterprises handling high volumes need a CLM solution to ensure compliance, manage obligations and optimize contract performance throughout the entire lifecycle.
What features should I look for in contract management software for my enterprise?
Key features include automated contract creation, AI-powered analytics, compliance tracking, e-signature integration, workflow automation and centralized document storage. Advanced solutions offer vendor portals, obligation management and real-time reporting to enhance efficiency and mitigate risks.
How do e-signature software and CLM software impact contract compliance and security?
E-signature software ensures legally binding signatures with authentication and audit trails. CLM software offers version control, role-based access, automated compliance tracking and risk management tools, reducing legal exposure and ensuring regulatory adherence throughout the contract lifecycle.
