Every contract lifecycle management (CLM) investment is a major decision for any enterprise. It’s not some live-grenade that you can just throw on to another hand and walk easy. It’s always going to come back in the form of eventual accountability, impact and financial consequences to the organization. So no matter how much contract lifecycle management (CLM) you can outsource, and no matter how great a solution you pick- the ultimate administrative weight, arising out of it, cannot be dusted off.

In fact, according to a study by World Commerce & Contracting and Deloitte, almost two-thirds of procurement organizations are taking action to improve contracting, compared to half on the sell-side. New, streamlined processes are the leading priority, but these are frequently accompanied by potential changes to organizational models and structure. Only a third of survey participants are currently able to measure and report a financial impact related to their contract and commercial management investment.

Marry strategy with technology

What a company needs, then, is a two-pronged approach to address this reality. First, acceptance- start to acknowledge that you will have to stay involved, informed and proactively-cognizant of what’s happening with contract lifecycle management (CLM). Second, try to ease this weight by adding smart technology and smart expertise from the market.

For this, you can consider:

1. Intelligence-powered contract lifecycle management (CLM) that comes packed with new precision and prediction technologies like artificial intelligence, machine learning and vertically-designed algorithms
2. Self-service contract lifecycle management (CLM) that allows you to dilute the time-burden and friction of the whole process by allowing the right people and areas to leverage the solution as per their needs
3. Use of transaction-ready contracts from pre-approved template
4. The power of real-time collaboration and other mechanisms for a faster contract turnaround
5. Technology-based contract lifecycle management (CLM) tracking and decision-making
6. Self-service tools for contract creation, versions control, tracking and comparison tool
7. Ways to ease and track contract negotiations
8. Mechanisms to bolster security and back-up of key data
9. Tools and systems that help to fight the rigidity of templates. Like how AI can help to remove the non-negotiation time spent by admin for ensuring compliance with the template
10. Technology that supports fallbacks, automated playbooks and dynamic clause libraries

Clarity, involvement and alertness – all these factors, when supported with the right technological dexterity, can really help in reducing the ‘admin’ burden – while ensuring positive contract lifecycle management (CLM) impact. As the Deloitte study also noted, with customer and supplier data scattered across multiple applications, the absence of reliable contract lifecycle management systems exposed the fragmentation of critical business information. Gone are the days when simply awarding a contract was enough as an admin’s responsibility. Now enterprises are realizing that even the smallest negligence in the post-award areas of contracts management can bring the organization back to square one.

CLM gets serious

Unsurprisingly, 30 per cent organizations are now focused on improving post-award processes, 34 per cent are working to introduce more robust approaches to obligation management, 25 per cent are increasing the role of commercial professionals in post-award risk management, and 20 per cent are taking steps to automate and increase data exchange with trading partners. A lot of operational costs associated with contract management are dispersed across the organization and may remain invisible. The resources responsible for some areas, in particular, get underlined with heightened admin responsibility. Like those involved in interpreting and implementing the signed contract, those responsible for monitoring its performance, evaluating changes or adjustments and managing and reconciling invoices. Also the ones for resolving shortfalls or disagreements and conducting acceptance tests or delivery confirmation – all of these have an admin role which translates into actual CLM value or loss – depending on how well these resources handle their parts.

A lot of shifts are happening that show that organizations have woken up to this truth. For instance, on the buy-side, 93 per cent of those making changes are shifting to a center-led or matrixed model for contract and commercial management. Organizations are also dusting the cabinets for hard-core process improvement. As much as 65 per cent of the improvement initiatives are tackling the standardization issue, and are bringing discipline to the way that contracts are coded and metadata is extracted and entered into systems. And for 68 per cent organizations, increasing digitization of the contract management lifecycle is a medium-high priority. Interestingly, bringing in technology does not displace, but elevates, the ‘human intelligence’ factor in the overall contracting lifecycle. While technology can add speed, precision and visibility- the human factor is crucial for judgment, challenge and empathy.

And that human factor also means improving relationships with your internal clients as well as external customers, vendors, suppliers and partners. Something that will happen naturally when a smart CLM model is in place. Turn this investment into actual business value and a relationship-booster. Turn the grenade into a bouquet of flowers.

For more information on how to harness the true power of contract lifecycle management (CLM) , talk to our experts.