GLOBAL-WIDE: An Introduction to Contract Lifecycle Management

Driving a Successful CLM Implementation 

In the next 10 years, the global contract life cycle management (CLM) market is expected to more than triple in valuation. This statistic alone makes clear how industries of all types are increasingly relying on these systems because of the many benefits they provide. From greater efficiency and speed to improved time to revenue, contract visibility, risk mitigation and compliance, CLM solutions not only save time; they save money too—ultimately benefiting the entire enterprise, not just the legal department.

At any given time, a company may have hundreds of active contracts with different end dates, terms and reporting requirements. The documents may be saved on multiple shared drives and in various formats or languages, making it nearly impossible to search across them all or attain a holistic view of the company’s rights and obligations to third parties. A CLM solution streamlines the creation, management and storage of contracts. This results in greater transparency for the data hidden in those contracts, which is often necessary for making sound business decisions and improving the bottom line.

Steps for a Successful CLM Implementation 

Once you’ve decided to invest in a CLM solution and identified the one that suits your requirements, what is the best way to implement it? The chosen CLM partner will help you identify and plan out a strategy, but the implementation pathway is challenging. The place to start is identifying the internal champions and key stakeholders who need to be involved in various phases of the process. Stakeholders may include legal teams, procurement departments, contract managers, finance officers and IT and compliance staff whose requirements may or may not have been considered during the selection process. It is essential that the detailed requirements are collected and included in the implementation plan checklist to ensure all the relevant needs and risks are considered and evaluated. The selected team members should meet and align on the design and the implementation strategy. This team should also set the KPIs against which the success of the CLM solution needs to be measured on an ongoing basis.

Another benefit to involving stakeholders early and often in the process is the increased buy-in they will have, which will ultimately lead to improved adoption. Never underestimate the importance of change management when implementing new technologies. Any change to normal business operations, no matter how large or small, will bring about skepticism, reluctance or outright resistance. Having an effective approach to managing through change and clearly articulating what will be better on the other side will be the key to success. Stakeholders and internal influencers can be particularly helpful in this regard. As spokespeople for the change, they can build a persuasive business case to explain why they consider it to be necessary and how it will benefit multiple parts of the organisation.

When implementing any new technology, a common pitfall is focusing only on how it will fix the problems you are experiencing today. It is important, however, to also think about your future goals and how your business might change. Is your company considering the launch of a new product line or business area? What if your company merges with or is acquired by another? There are countless factors that could bring about a change in how a business approaches contracting. Ensuring the system you implement today has the flexibility to adapt to changes that may come about tomorrow is as crucial as adequately preparing the people, business processes and IT infrastructure for the upcoming shift.

If your company does business globally, you have likely already encountered regional differences that affect contracting. Varying legal systems, cultural norms and languages all come into play. Some cultures may perceive contracts as merely guidelines, rather than legally binding obligations, for instance. Given these complexities, a key to success is devising a phased rollout and selecting the right business division and country for the initial stage of CLM implementation. Creating success stories in the early phases boosts the success of the overall implementation. Identify the appropriate agreement type, build and refine contracting infrastructure (ie, workflows, templates, clauses and playbooks) and assess readiness for change before any phase of CLM implementation. Do account for testing and validating to ensure the system functions as designed.

Another material consideration is allocating sufficient resources to the implementation. Many companies do not appreciate how much time and resources it takes to set up a CLM system, not just for the IT and other system integration but also for legal teams and other departments to migrate existing data and processes into it. Functions such as a help desk, ongoing communications, access management, core data accessibility and metrics/reporting need to be considered, among many others. Along with choosing the right CLM software partner, it is vital to identify a qualified CLM implementation partner to assist. The right partner will help put in place the most effective people, processes and technology to ensure the contract system works well and accommodates all of the necessary types of contracts.

At last, it is salient to note that CLM implementation is not a one-time plan and setup. After the integration and rollout are complete, the real task begins. Ensuring that the CLM system is being used as designed, that feedback from users is continually collected and actively employed to refine the workflows and that consistent and quality data is being tracked on the system is pivotal for realising returns on your CLM investment.

Leveraging AI in CLM 

Artificial intelligence can significantly enhance CLM processes by automating manual tasks, enhancing decision-making, reducing risks and improving efficiency and compliance across the contract life cycle.

AI is often used in CLM solutions to automate contract intake, assist with redlining and negotiation and streamline workflows for routing contracts through predefined approval processes based on criteria such as contract value, type or risk level. Intelligent workflow automation ensures that contracts move through the approval chain efficiently, reducing bottlenecks and delays.

AI-powered contract analysis tools can automatically extract key information from contracts, such as key terms, obligations, deadlines and clauses. This information can then be aggregated into reports and dashboards that enable data-driven business decisions. In addition, AI can analyse contracts to identify potential risks and discrepancies, such as noncompliance with regulatory requirements, unfavorable terms or missing clauses. By flagging these issues early on, AI enables organizations to mitigate risks proactively and negotiate better contract terms.

Identifying the right human intelligence team to work with AI to achieve the best results is critical. It will still take time for AI tools to evolve and offer the required results, and the right HI team will help to assess and improve their accuracy and efficiency.

CLM implementations can be challenging—perhaps the most challenging business process changes your company will have faced in recent years. Laying a solid foundation with thorough planning, clear objectives and a stakeholder group that is representative of all affected business areas will go a long way toward ensuring your success.