Contract Lifecycle Management – What to look for in a solution?

Contract Lifecycle Management (CLM) refers to the process of systematically managing the creation, execution, performance, and renewal or termination of contracts between parties. It encompasses all stages of a contract’s existence. The primary goal of CLM is to streamline and optimise the contract management process, ensuring that contracts are effectively administered, risks are minimised, and value is maximised throughout the contract’s lifecycle.

An efficient CLM function requires a robust technology backbone to support the function. The good news is that there is a well defined market that specialises in CLM solutions. Like most Software as a Service (SaaS) or Platform as a Service (PaaS) products, they all come with different levels of functionality, features, licencing models, support levels and customisation for each geography.

Selecting a technology solution is never easy. It involves the initiator, who normally sits within the business or within specific organisation function (e.g. Legal, Procurement, Risk Management). The initiator collects the business requirements such as necessary functions and features, support needs, licence requirements and regulatory obligations. They will also build the justifying business case to support the initiative, including a cost/benefit and risk analysis and are likely to be accountable for funding.

Technical input will come from the IT team who provide input around architectural considerations, hosting requirements, security requirements, disaster recovery requirements and system interface requirements. Depending on the solution there may also be requirements around data formats, mandated reporting tools and support requirements.

While the aforementioned stakeholders play a significant role in CLM solution selection, it’s crucial to acknowledge the broader array of stakeholders involved given the expansive nature of a CLM functions within an organisation.

The legal department, for instance, holds pivotal influence, contributing essential requirements from a legal standpoint, particularly for contract development and negotiations. Imagine having access to a preconfigured contract clause library and a repository of standard contract templates, enabling automatic redlining of supplier contracts against predetermined clauses while pinpointing departures from a risk perspective. During negotiations, envision the ability to track and annotate documents seamlessly between the legal team and suppliers’ legal representatives through a centralised repository, serving as a single source of truth with integrated process workflows. This approach proves markedly more efficient than the traditional method of emailing documents back and forth, which often leads to version control issues and confusion regarding the subsequent steps in the process.

Additional stakeholders contributing to CLM solution requirements and potentially becoming users include finance, who are concerned with not only the business case but also how the solution facilitates financial management of suppliers, including activities like invoice reconciliation against contracted volumes or deliverables and overall supplier spend. The Risk Management team is also integral to the selection process, bringing specific requirements such as ongoing regulatory compliance, alerts for key events like supplier mergers or takeovers, and monitoring supplier viability.

The procurement team is usually involved in running the market engagement process such as a Request For Proposal (RFP) process to solicit responses and ensure the evaluation and selection process is conducted fairly and objectively.

Navigating the diverse interests of these stakeholders to agree on CLM solution requirements is a complex endeavor. Regardless, a comprehensive CLM solution should encompass the following features:

1. Ability to provide a solution across the end-to-end contract lifecycle. That is, pre-contract signature where the legal team are mainly involved and post contract signature which involves management of the contractual obligations and deliverables.
2. Centralised contract repository with well defined security and access requirements to restrict individual contract access to only authorised personnel.
3. The use of Artificial intelligence (AI) or other analytical methods to be able to “ingest” and extract contract data, including clauses, obligations, deliverables, pricing and service level agreement (SLA) details.
4. Advanced search capabilities to be able to search meta-data or clauses by individual supplier or across the entire supplier portfolio.
5. Pre-built and customisable analytical and reporting capabilities to be able to compare legal clauses, commercial terms and pricing models.
6. Automatic alerts and actions arising from contract clauses such as upcoming renewal dates, periodic compliance checks (e.g. insurances up to date) or key deliverable dates. The volume of contracts in most organisations means keeping across key contract events is virtually impossible without support of advanced tools to assist.
7. Built in interfaces (Application Programming Interfaces or APIs) to other key applications that organisations use to enable integration and bi-directional data flows between different systems.
8. Other key requirements that should be considered are training and ongoing support arrangements including hours of coverage, multi language and currency support, location of hosting facilities (most organisations require Australian based facilities to meet regulatory requirements), independent certifications of hosting and security protocols.

Organisations should also understand the product roadmap for the solution including new functionality and upcoming and releases to ensure the solution will continue to meet requirements into the future.

The above features are by no means exhaustive and many solutions will contain much richer functionality. By distinguishing between table-stake requirements and nice-to-have features, organisations can consolidate the needs of diverse stakeholders and evaluate the suitability of solutions in a structured manner.

EvolveCLM suggests having demonstrations of one or two solutions to gain insights into the available functionality, features, and overall end user experience. These demonstrations not only help understand how the solutions work but also uncover additional requirements that may not have been initially considered, thereby enriching the existing set of requirements.

Summary

The expanding market for CLM solutions can be overwhelming. EvolveCLM recommends taking a enterprise wide approach to consolidate the needs of all stakeholder groups across the organisation. Understanding the unique challenges and limitations faced by each group, as well as future requirements, helps build a holistic view of CLM requirements.

To facilitate this process and provide tailored assistance, EvolveCLM offers a confidential discussion to help organisations navigate the complexities of CLM solution selection. Whether you’re seeking to streamline contract management processes or improve supplier management function, EvolveCLM can provide expert guidance and support.

Please don’t hesitate to Email us at: inquiry@evolveclm.com.au.