There are a number of different elements that make up CLM, including contract creation and contract negotiation, contract management and oversight, contract closure, and archiving. By taking a holistic view of the contract lifecycle, organizations can improve compliance, reduce costs, and better manage risk.
One of the biggest benefits of contract lifecycle management is that it enables businesses to automate many of the manual tasks that are traditionally associated with contract management. This can help to improve efficiency and reduce the chance of human error. Automation also helps to ensure that contracts are executed in a consistent manner across different departments and geographies.
There is a lot of buzz around CLM or contract lifecycle management CLM. Use these 8 questions below to better understand the CLM market and where this exciting contract management software technology is moving.
8 Questions About CLM, Answered
1. What Is CLM?
CLM, shorthand for Contract Lifecycle Management, is a fast-growing software category encompassing a wide range of applications that provide contract management functionality either as stand-alone products or as a feature in a wider contract lifecycle management software suite.
2. Why Are Companies Adopting CLM?
According to Gartner Research, which published its first-ever Magic Quadrant for CLM in 2020, companies are adopting contract lifecycle management software because they view CLM as a critical tool to accelerate business and reduce risk.
“As business users seek better regulatory compliance and faster authoring, negotiation, and sign-off cycle times, interest in contract life cycle management is growing rapidly,” the analyst firm reports in its Magic Quadrant for CLM.
3. Which Companies Are Adopting CLM?
Gartner further reports that a wide variety of companies are turning to CLM platforms.
“CLM appeals to companies of all sizes in all industries. Implementing CLM can lead to significant improvements in contract creation, contract negotiation, revenue management, cost savings, and efficiency. Understanding and automating CLM can also limit an organization’s liability and increase its compliance with legal requirements. Organizations without CLM struggle to manage their contracts effectively. The risks associated with poor contract management include overlooked penalties, lost revenue, damaged brands, and lost savings.”
4. What Are the Most Common CLM Benefits?
Companies that adopt contract lifecycle management solutions can expect to see gains in contract turnaround, regulatory and internal compliance, and overall business performance.
Accelerated Contract Turnaround: Contract management software can automate contract management tasks including template management, authoring, approvals, redlining, and execution. By automating these contract workflow tasks, CLM enables companies to accelerate contract turnaround times, which ultimately means doing business faster across the business, from sourcing to sales.
Improved Regulatory and Commercial Compliance: Contract Lifecycle Management (CLM) systems often provide companies with greater control over what language is in their contracts. With a CLM system, legal departments can quickly update contract templates to reflect changing requirements, and business rules can prevent contracts that deviate from the approved language from being executed. More advanced CLM systems can also integrate with systems like spend management to ensure actual payments comply with what was in the contract.
Optimized Business Performance: Contract lifecycle management allows companies to generate a great wealth of contract data, from which they can derive contract intelligence that allows them to react quickly to new challenges and opportunities. CLM software solutions also enable companies to manage contracts from anywhere at any time, harmonizing global teams.
5. Where Does CLM Sit in a Tech Stack?
CLM deployments can come in a wide variety of shapes and sizes. Some very basic CLM systems offer users the ability to build very simple contracts, then store them when they are executed. These systems don’t typically support automated approval workflows, redline management, or post-execution contract monitoring.
Several large software suite vendors offer CLM applications. These applications are typically limited to a single business function. For example, a large sourcing suite may have a contract lifecycle management CLM module that allows users to author and store vendor contracts. This approach to contract lifecycle management software can leave companies with contracts stored in a number of different systems across the organization, preventing companies from enjoying the contract intelligence that centralized contract data provides.
Lastly, there are stand-alone CLM providers who make CLM software that can span the entire organization, creating a single source of truth for contract data. In these deployments, the CLM sits next to the CRM, HRM, ERP, and SCM as a core system of record.
Organization-wide CLM can produce rich data sets that allow for more holistic visibility and actionable business intelligence. These CLM systems can integrate into the business supply chain as well as other systems to provide seamless data exchanges and user interfaces.
6. Which Approach Is Best?
That will ultimately come down to your business needs, but the market is trending toward stand-alone, enterprise-wide solutions.
Per the Gartner Magic Quadrant, CLM deployments are trending to this last model: “Historically, the CLM vendor market has been highly fragmented, with vendors narrowly focused on specific groups of stakeholders (e.g., legal, procurement or sales), making it difficult to evaluate them side by side. That has begun to change as vendors evolve into enterprise-level solutions that can be used across all contract types. Customers expect that the capabilities of any leading CLM solution, regardless of its target audience, should excel at all stages of the contract life cycle.”
7. What Is Icertis’ Approach to CLM?
At Icertis, we push the boundaries of what’s possible with CLM.
The AI-powered, analyst-validated Icertis Contract Intelligence (ICI) platform turns contracts from static documents into strategic advantages by structuring and connecting the critical contract information that defines how an organization runs. Today, the world’s most iconic brands and disruptive innovators alike trust Icertis to govern the rights and commitments in 10 million+ contracts worth more than $1 trillion, in 40+ languages and 90+ countries.
Icertis’ enduring commitment to CLM empowers companies to stay out in front, now and into the future.
The Icertis product portfolio consists of four layers:
- Our core CLM platform
- Business and AI applications that address specific business challenges
- Experiences that embed the power of the ICI platform within a common software
- The Icertis Blockchain Framework, which creates networks of internet-enabled contracts
Our solution starts with our core CLM platform, which covers the full lifecycle of contract management capabilities beginning with intelligent contract setup and then continuing with authoring, approvals, negotiations, and all other aspects of ongoing contract operations. The ICI platform continues to deliver value after each contract is executed with not just reporting but also advanced tools for governance, risk, and compliance that mitigate previously hidden risks and help ensure that companies fulfill their contractual obligations.
8. How Can I Learn More About CLM?
To learn more about some of our case studies and the Icertis approach to CLM, please contact Icertis to speak with a CLM platform specialist today.