Are you looking to learn about contract management solutions and blockchain? If you do then, you have come to the right place.
In this article, we are going to focus on contract management solutions and learn how blockchain impacts contract management solution. In short, our focus will be the blockchain for CMS. We will also learn about CMS blockchain challenges. So, without any delay, let’s get started.
Blockchain holds the potential to revolutionize every sector out there. One of the biggest impacts that blockchain will have is on business. It will bring the new infrastructure and help businesses to create and streamline their business process.
So, how does blockchain help? Blockchain is a decentralized peer-to-peer network that improves transparency, security, and provides immutability. All these features of blockchain are more than enough to change almost every business process. This also includes contract management solutions.
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What is Contract Management Solutions?
Contract management solutions are software that is equipped with all the tools and techniques to handle Contract Lifecycle. It manages the contracts from customers, employees, partners, and entities that depend on contracts to maintain their workflow.
It is common to see businesses employ paper contracts. They are useful, but limited when it comes to modifying them, verifying them, or store them. What happens when paper contracts get stolen or destroyed due to an accident? This is where the software solution comes in. Now, businesses are more proactive in digitizing their paper contracts.
Blockchain into the array
Blockchain can help change how current contract management solutions work. It will give rise to blockchain contract management — a perfect application that can provide business a way to master the contract management.
How can blockchain change contract management?
Contract processing always has been one of the biggest challenges for business. The biggest challenge is coordination when it comes to managing the different activities related to blockchain, including authoring, negotiations, renewal, enforcement/execution, and renewal. All of these activities took a good time investment.
So, how would blockchain change contract management solutions? Let’s explore.
Use of Smart contracts
One of the foundations of blockchain is smart contracts. Smart contracts give network automation and the ability to convert paper contracts into digital contracts. Smart contracts can be seen as legal codes similar to the legality that paper contracts carry.
Developers can define a smart contract by keeping the two parties into play. Once everyone agrees to the terms of the contract, the contract is set to motion, making everything official.
As everything is in code, automation can be achieved using smart contracts. For instance, if one party has taken a loan from another party, the smart contract can be coded to store the loan amount, the interest rate, and other conditions that the loan carries. The smart contract can also contain functions that can trigger conditional actions. This means that if one party clears their loan, then the contract can self-close or inform all the parties involved in the smart contract. Smart contracts were first introduced in the second generation blockchain solution, Ethereum.
If you want to learn more about the smart contracts, check out our detailed guide on smart contracts here: Smart Contracts: The Ultimate Guide For The Beginners.
No need for intermediaries
With blockchain-powered contract management solutions, there would be no need for mediators. The data can be exchanged among the parties regarding the contract. The data can be related to a transaction or any part of the contract. Also, there is no limitation on how many parties or peers can communicate with each other. This removes a lot of waiting time for contracts to process and inform. In traditional settings, a contract can get stuck due to the unavailability of a party. This simply doesn’t happen in the smart contracts used by contract management solutions.
The lack of intermediaries also means faster transactions and fewer manipulations.
Verifiable and Accurate
Blockchain also offers a verifiable and accurate representation of the transactions that are made on the network. A CMS on the blockchain platform means verifiable and accurate information. It provides a full-proof way of handling all the data and contracts, which can be verified by parties. The immutability of the blockchain also means that the data is accurate. One the contract is crafted, it simply cannot be modified. However, with the right authorization, it can be changed.
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Efficient and Cost-saving
Another most obvious change that blockchain for CMS will make is to make it more efficient and cost-saving. Smart contracts bring automation, which in turn saves both time and cost associated with managing contracts.
Enhanced security and data-backups
Blockchain utilized advanced cryptography to secure the content of contracts, the participation and other key information that need to be kept secure. Smart contracts offer proper security and work well with contract management solutions. It also lets developers focus on the requirements and develop solutions that work for the business.
As we mentioned, cryptography enables the CMS and blockchain to work at their best security. Most of the CMS and blockchain solution depends on calculations made by the peers to verify the transaction.
Instant actions guaranteed
With Blockchain for CMS, the parties do not have to wait for intermediaries or any other system to get their contracts to move forward. Smart contract solutions come with fool-proof verification procedures. This is possible because of the fact that blockchain keeps a record of every other transaction that is done. By doing so, the previous actions are used to verify the new ones — making them approve faster and more instantly. A transaction will only execute if the pre-conditions are fulfilled.
A contact can be automatically managed throughout its lifecycle. This is possible because of smart contracts. The only condition is to create the terms and conditions in the best possible way. If they are set properly, then the contact can manage itself. To reach this level of automation, the parties need to sit and set the terms and conditions properly.
Automatic management is very useful when it comes to handling both simple and complex contracts. Without smart contracts or blockchain for CMS, it will take careful executions by the contract officers. It reduces the time, pain, and effort that goes into monitoring or clearing these contracts.
The finance sector can benefit immensely with these as it will ensure timely payments and better customer handling.
Blockchain is known for its immutability and security, but it also offers transparency. The transparency, however, is at the entry-level, which enables parties to learn about the status of the contracts or other vital information, which makes sure that the solution runs efficiently. The entry-level transparency also means that involved parties get to know about the status of the contract — it also makes sure that no ambiguity among the parties.
The trust is also created in the system as the information stored is not malleable. So, it is impossible that someone can change the stored information and do a non-compliance.
Companies that are making excellent Contract Management Solutions with Blockchain
CMS with blockchain is an idea that has already been implemented by many big tech companies. In this section, we will go through those companies and see what they have to offer.
Accenture Blockchain for Contracts
Accenture offers its expertise by using blockchain technology to manage contracts. It will improve the financial institutes to manage their contracts so that they can automate them and be done with them in a matter of minutes rather than waiting for days to handle them.
Accenture utilizes the R3 Corda technology and Microsoft Azure to provide its Accenture Blockchain for contracts. It offers high efficiency and low friction to the whole process. It engages the parties and handles the contracts throughout its life cycle.
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It also works with existing papers as they are transformed into digital contracts and then uploaded to a shared blockchain database. Each party can easily handle their contracts — view them, revise them and accept them. All of these are done on blockchain ledger for the best possible result. Blockchain’s immutability also helps the whole process.
It also offers a high level of security using restricted data sharing and encryption. In the end, they provide the following benefits with their Accenture Blockchain for Contracts
- Improved visibility
- Improved efficiency and speed
- Single source of data
- Reduce environmental waste
- Eliminate disputes and reconciliation efforts.
Icertis Contract Management (ICM)
The next project that we will talk about is Icertis Contract Management(ICM). They offer their Icertis Blockchain Framework, which lets companies deploy contract solutions on standard-based blockchain and as well as permissioned blockchain.
Some of the key features offered by their ICM framework include the following.
- Deploy permissioned or standard-based blockchain with the ICM platform.
- It can be deployed on Microsoft Azure
- Offers record specific transactions
- Define smart clauses
- Exchange information
- Monitor and manage
It also enables companies to do seamless prototyping and production deployments.
If you want to learn more about ICM, check here: Icertis Contract Framework.
Microsoft has also recently partnered with Icertis for blockchain contract management.
MindTree also offers its own Smart Contract Management solution for OTC(over-the-counter) derivative trading. They provide it using Mindtree’s Blockchain solution, which is reliable, secure, and fast processing.
It offers a smart approach for OTC contract management. You can read more about their OTC solution here.
The overall benefits including security, transparency, efficiency and so on
Konfidio, a Berlin’s Blockchain Venture Studio, also offers its decentralized solution, which lets an enterprise manage its contracts efficiently and smartly. Check out more information about their solution here.
The key features include the following
- Real-time management dashboard
- Smart SLA and Contract Performance
- Catalog Services and Products
This leads us to the end of our CMS and blockchain article. We discussed how contract management solutions would benefit from blockchain or the other way around. Blockchain has the potential to improve CMS drastically. So, what do you think about both of these technologies? Comment below and let us know.
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