This is Part 2 in our series on how CFOs can leverage enterprise contract management to accelerate their company’s recovery. Read Part 1 here.
Because contracts touch every facet of the business, digitizing contract management on an enterprise platform can benefit every department in an organization.
As CFO offices look to contract management solutions that can help their companies accelerate recovery from the COVID crisis, it’s important that they understand the nuances of Contract Lifecycle Management (CLM) deployments and how decisions early in the process can impact value realization downstream. The CFO often has the widest and most value-creation-oriented role in the organization, and consequently plays a critical role in establishing a broad vision for CLM.
Different Priorities, Same Need
Every function in a company has its own contract management priorities, but ultimately has the same need: contract management software that accelerates business, reduces risk and optimizes outcomes. As CFOs work to be great partners to the rest of the leadership team, it is valuable to understand what each role needs to get out of CLM:
- Sales: break down barriers to get to “closed won”; accelerate cycle times via self-service contracting, automated approvals and eSignature.
- Procurement and Supply Chain: enable rapid supplier onboarding and leverage collaboration to shorten cycle times while not exposing the supply chain to risk.
- Legal: easy-to-manage templates that save staff time by streamlining review and approval workflows, and automated contract authoring to ensure the right clauses get into every contract to thoroughly mitigate risk.
- Risk Management: proactive obligation fulfillment, regulatory compliance and other potential sources of reputational and financial damage.
Siloed Solutions or an Enterprise-Wide Platform?
Given an enterprise’s diverse contract management needs, companies must decide whether these needs should be served with many solutions geared toward each functional business silo—e.g., sales, procurement, and finance—or a single, enterprise-wide system. This choice is especially critical for CFOs, whose role requires contract visibility across the company.
Many of today’s leading software suite vendors, especially those that support sales and procurement, are beginning to add contract management “modules” to their solutions. This reflects the fact that CLM is emerging as a “must-have” technology in today’s business landscape, and these solutions will emphasize their native integration with the software environments end users are already familiar with—typically either a CRM or Supplier Management system.
However, clear shortcomings in a suite approach have emerged. First, the functionality offered by these solutions is typically not robust enough to handle the complexity of contracts and contracting processes. As Gartner put it in their April 2019 report, “Don’t Assume You Have to Use an S2S Suite to Digitalize Procurement and Sourcing,” “There are… few suite vendors that started in supplier management or contract life cycle management and, in these areas, functionality is often very limited.”
Secondly, companies are seeing distinct advantages to deploying a single contract management system enterprise-wide—which suite solutions do not support as they are inherently geared to department-specific business processes (e.g., sales or sourcing). Gartner, in its recent Magic Quadrant for Contract Life Cycle Management, reports: “Importantly, it’s not just the vendors leading the charge to enterprise CLM. Our research shows that end-user companies are in fact looking for a single, complete CLM solution.”
From a CFO perspective, the advantages of an enterprise solution are clear: Suite solutions scatter contract data across the company; by bringing all contracts into one system, enterprise contract management provides a single source of truth, one that identifies cost and revenue optimization opportunities and protects the enterprise from risks.
Interested in learning more? Download our whitepaper, “Driving Faster Recovery with Enterprise Contract Management: A CFO Guide.”