January 31, 2011
Guest Post By Jason Lemkin, CEO at EchoSign
Human nature, not technology, is primarily responsible for the rapid rise of e-commerce. Certainly, technology is a necessary enabler, but the average e-shopper is online for three basic reasons: convenience, choice and speed. Many technologies have been born to meet these consumer and business demands. Perhaps none is changing the e-commerce game more dramatically right now than the ability to close contracts in the cloud.
With e-signing not only an easy-to-use, cost-effective technology but also a legally binding process confirmed by the ESIGN Act of 2000, sales and marketing teams are realizing faster business cycles. Small businesses are closing more deals. Contract managers are tracking larger numbers of daily deals. Consumers are winning, too, since e-signatures deliver the ability to complete a deal online without having to wait for contracts delivered by mail or find fax machines to return signed documents.
Contracts might have been the last bastion of old business on the Web, but today, closing a deal is as real-time a process as any other e-commerce activity.
The cloud-based contract
The modern Web contract eschews static applications. In 2011, there is room for more than just a Microsoft Word-based contract in e-commerce. Today’s contracts are collaborative, integrated entities that enable all the parties involved to make edits without opening an application. The cloud-based contract feeds on Web services like Box.net, DropBox, Evernote and Google Apps, all integral parts of the elimination of paper contracts.
However, cloud-based contracts are about more than ridding e-business of paper dependency. E-signing killed ink-and-paper processes, but the Web-based contract takes that a step further with a virtual document that plays a more active role in the organization than its physical ancestor. Rather than a static receptacle for a signature, the cloud-based contract is a 100 percent-based forum for collaboration, negotiation and redlining.
Setting the stage for successful contract management in the cloud
Today, there’s enough awareness about the E-SIGN Act and related laws that almost every user and potential user of e-signature technology knows that negotiating and completing a contract with an e-signature creates the same level of obligation as taking the parallel action with paper and ink.
Now, more complex issues arise. Many of them have to do with etiquette and education. More and more companies complete contracts via the Web than ever before, but e-signature processes are still new enough in many industries that initiating parties should give their partners and customers adequate education up front.
Document owners should let recipients know beforehand that expected documents will arrive electronically and can be managed, negotiated and signed electronically, as well. By initiating these discussions, the user educates another who will likely pass that knowledge on to others. In this way, e-businesses and their customers will draft the etiquette rules for online contract completion.
For new or reluctant e-signers, the most important point to reiterate is that electronic signatures are enforceable. This has been long proven and further underscored by recent legislation. The second concern often involves fraud, and here too, the document initiator can educate other parties about common safety checks. The latest technology, for example, enables document owners to authenticatee-signatures via the signer’s social networks, such as Facebook and LinkedIn.
Once legality and safety concerns are answered, novices might want to know the benefits e-signatures offer over their paper counterparts. Modern etiquette enables a company to tout the cost benefits of this technology. By using an electronic solution, one can ensure that the signing party completes every signature, date and other field, drastically reducing the opportunities for costly delays in the signing process.
Furthermore, businesses should let partners and customers know that e-solutions increase the overall efficiency of executing almost any document, with turnaround times 10 times higher than those of paper. Consider how much easier it is to receive, complete and send an item via the cloud rather than working through the multiple steps of printing, signing, packaging and delivering.
With adequate communication, a salesperson can smooth the way for a customer to welcome the change from paper to electronic signing. During online chat, for example, the company representative has the chance to not only inform the prospect of e-signing procedures, but also to introduce its benefits. Namely, that the customer will be required to take fewer steps to complete the sale, thereby receiving products or services more quickly.
A new standard for e-contracts
E-signing, which needed the backing of Congress 10 years ago to illustrate its validity, is today a mature technology and a mission-critical part of the migration of business processes to the Web. Cloud-based contracts fulfill the consumer and enterprise demand for convenience, choice and speed in business, while simultaneously transforming the contract’s role. With collaborative contracts that are fully integrated into the Web’s most popular services, e-businesses can use what was once a static document to collaborate and negotiate with customers and partners. The result is faster, easier, better e-business.
Jason Lemkin is CEO and co-founder of EchoSign. Lemkin previously was an executive in residence at Storm Ventures and served as president, chief business officer and co-founder of NanoGram Devices, now a subsidiary of Greatbatch, Inc.
He previously served as vice president, corporate development at NeoPhotonics Corporation and as senior director of corporate development at BabyCenter.com, now a subsidiary of Johnson & Johnson.
Lemkin also served as corporate counsel to leading technology companies at Venture Law Group and as a management consultant at Pathway Ventures. He holds a Bachelor of Arts degree with Magna Cum Laude designation from Harvard University; a JD and Order of the Coif from University of California Berkeley, and he completed the Stanford Graduate School of Business’ Executive Management Program.