What is Contract Lifecycle Management (CLM)?

Contract Lifecycle Management (CLM) is the process of overseeing and managing an organization’s contracts from start to finish. This includes drafting, negotiating, executing, tracking, and eventually renewing or closing them.

CLM affects every department in a company, from HR and Legal to Finance and Procurement. But in this article, we’re focusing specifically on IT Contract Lifecycle Management, the practice of managing contracts related to IT assets. 

These contracts can cover a wide range of assets and services, including software licenses, hardware purchases, cloud subscriptions, maintenance agreements, and vendor Service Level Agreements (SLAs). They apply to everything from laptops and servers to network equipment and cybersecurity tools. 

Why is CLM important?

Contract Lifecycle Management helps organizations stay organized, compliant, and prepared. In IT, where contracts govern everything from software licenses to vendor SLAs, having clear visibility into obligations and timelines is essential to keep operations running smoothly. 

And the financial impact is real. According to a 2023 study by World Commerce & Contracting and Deloitte, organizations lose an average of 8.6% of contract value due to mismanagement. That’s not just inefficiency: it’s money left on the table. 

Key benefits of CLM in IT environments

When contracts are managed properly, they stop being a source of risk and start becoming a strategic advantage. Here’s what organizations can gain:

1. Better visibility: Centralized access to contract terms, renewal dates, and obligations helps teams stay aligned and proactive.
2. Increased efficiency: Automated workflows reduce manual tracking, speed up approvals, and free up time for higher-value work.
3. Improved compliance: Clear documentation and alerts help ensure you meet legal and vendor requirements — especially during software audits.
4. Stronger Vendor Management: Tied to assets and SLAs, contracts become a source of truth for evaluating performance and enforcing terms.
5. Reduced value loss: Top-performing organizations lose less than 3% of contract value by avoiding delays, confusion, and missed opportunities. Worst performers lose more than 20% due to poor Contract Management.  

Why should IT manage the contract lifecycle?

While Contract Management is often handled by Legal or Procurement, IT teams play a key role when those contracts are tied to technology. Software, hardware, cloud services, support agreements — all of these impact daily IT operations. That’s why visibility into contract terms isn’t optional. It’s strategic.

When IT is involved in the contract lifecycle, they can:

• Ensure license terms match actual usage
• Stay ahead of renewals and avoid service interruptions
• Align contract terms with infrastructure and support needs
• Prepare for audits with accurate, accessible documentation
• Track vendor obligations and hold providers accountable

Without that visibility, IT risks working with outdated agreements, exceeding usage limits, or missing critical renewal windows. Managing the lifecycle of IT contracts helps prevent those issues and strengthens overall operational control.

The Contract Lifecycle Management process

The Contract Lifecycle Management process can vary a lot from one company to another. Some organizations rely heavily on legal and procurement teams. Others involve IT from the beginning. And depending on the tools in place, some steps might be fully automated while others are completely manual.

In this section, we’re outlining a standardized version of the CLM process, a simplified model that covers the key stages most companies go through. Not every business will follow these steps exactly, and that's okay. The goal is to provide a clear starting point for understanding how contracts are typically managed from start to finish.

Step 1: Contract creation

The process begins with a contract request and the creation of a draft. This can be done from scratch or using a standard template. 

The document outlines the agreement’s purpose, scope, responsibilities, and key dates. Depending on the organization, this task may fall under Legal, Procurement, or operational teams.

Step 2: Review and negotiation

Once the draft is ready, it goes through internal reviews and, in many cases, external negotiations. Legal teams typically lead this phase, ensuring terms align with company policies and mitigate risk. Edits, feedback, and discussions flow between parties until both sides reach a preliminary agreement.

Step 3: Approval

After review, the contract must be approved by the appropriate stakeholders. This might involve department heads, finance, legal, or even upper management. The approval process can vary in complexity depending on the contract’s value or strategic importance.

Step 4: Execution

When all parties agree to the terms, the contract is signed and becomes legally binding. Execution can be done through physical signatures or digitally using e-signature platforms. At this point, the contract is finalized and ready to be stored and monitored.

Step 5: Storage and tracking

Once signed, the contract should be stored in a centralized location that’s easy to access and search. Key data such as expiration dates, renewal terms, and financial commitments should be recorded and made visible to relevant teams to support daily operations.

Step 6: Performance monitoring

This step involves ongoing tracking of whether the contract’s terms are being met. That includes monitoring Service Level Agreements, delivery milestones, or license usage, depending on the nature of the agreement. If anything falls short, action can be taken before small issues become big problems.

Step 7: Renewal or termination

As the contract nears its end, organizations need to decide whether to renew, renegotiate, or end the agreement. Having advance visibility into renewal dates and vendor performance makes it easier to plan and avoid unwanted renewals or service gaps.

How InvGate supports Contract Lifecycle Management

While InvGate is not a dedicated CLM platform, it offers the essential capabilities IT teams need to manage and stay on top of their contracts, especially those tied to assets and services.

InvGate Asset Management

Once a contract is signed, InvGate Asset Management helps centralize and track it. You can create assets or software contracts, link those contracts to specific IT assets, monitor expiration dates, track associated costs, and set alerts for renewals, among other things. This ensures that nothing gets missed and that contract data is always connected to the assets it covers.

InvGate Service Management

For earlier steps in the process, InvGate Service Management can help orchestrate internal workflows. You can create service requests for contract creation, reviews, or approvals, route them to the right teams, and track progress. This adds structure and visibility to the pre-signature stages, even if they happen outside a dedicated CLM system.

Together, both tools help IT teams keep contract-related processes organized, collaborative, and aligned with asset and service management activities. 

3 best practices for managing the contract lifecycle

Managing contracts effectively takes more than just good intentions. These best practices can help you streamline your process, reduce risks, and stay in control of your IT agreements.

1. Centralize your contracts

Keep all your contracts in one place. Whether it’s a dedicated platform or an Asset Management tool, make sure everyone who needs access can find the latest version quickly. A central repository improves visibility, avoids duplication, and ensures important dates or obligations don’t get lost.

2. Align contract terms with asset tracking

Make sure contracts are linked to the IT assets they cover. This allows you to track warranties, support agreements, and license terms right alongside the equipment or software they apply to. It also makes audits, renewals, and vendor evaluations much easier to handle.

3. Use software to automate and stay proactive

Trying to manage contracts manually is a fast track to missed renewals and compliance issues. Using a dedicated CLM software or an IT Asset Management software to automate alerts, assign responsibilities, and track key dates helps your team stay ahead of deadlines and reduces human error. It also gives you a clearer picture of your IT environment — both financially and operationally.