Gartner has released its latest market report for contract lifecycle management (CLM), reporting that contract management has become a core process for enterprises–similar to ERP and CRM.
In light of this, Gartner reports companies are abandoning piecemeal, department-by-department approaches to contract management in favor of an enterprise-wide solution that unifies their entire body of contracts.
“Organizations no longer view CLM solutions merely as ‘nice to have’ tools for keeping track of contract expiration dates and specific audit requirements. They now consider them core enterprise-level systems for managing business processes, costs, revenue and risks,” writes Gartner in the “Market Guide for Contract Life Cycle Management.”
All Enterprises Should Explore Enterprise CLM
The analyst firm notes that because every company uses contracts, every company is a potential adopter of contract management software.
The report lays out the clear benefits of the technology:
“CLM solutions encompass clause library construction and management, integration with other systems, and the organizational structures required to enable optimal management of all business contracts.
“The benefits of CLM solutions include increased governance and control over what is signed, when and by whom. Additionally, these solutions provide the assurance of knowing that the correct contract terms are live at any given time. They provide deeper insights and better visibility across all contractual agreements by analyzing content and conditions.”
A Lack of CLM Creates Major Issues
Conversely, the report is clear on the problems that poor contract management present:
“Organizations without contract life cycle management (CLM) solutions often manage contracts manually using spreadsheets, file cabinets and shared drives. Several Gartner clients candidly admit they don’t know where all their contracts are or when they expire.”
This leads to adverse business outcomes:
“Procurement, sales and legal teams are always pressured by the business to speed up contract development and execution. Without a CLM solution, contract negotiators struggle to execute contracts within the expectations of the business.”
Not All CLM Deployments Are Created Equal
Gartner reports that the question isn’t just if a company should adopt CLM. There is also a question of how.
When contract management software first emerged, many companies took a piecemeal approach to adoption. Perhaps its procurement department adopted a CLM tied into its ERP system. Or its sales team adopted a CLM add-on to its CPQ.
Gartner reports that this approach for an enterprise-wide solution carries a significant downside.
“Many organizations that have implemented a CLM solution have done so for just a portion of their business or a specific business function. This piecemeal approach frequently results in inefficient process workflows and deployment of multiple CLM tools.”
This insight comes in tandem with Gartner’s analysis showing an evolution of the product toward a system that truly can sit at the center of the enterprise:
“CLM solutions are evolving from operational record-keeping systems used for legal auditing purposes into enterprise-level core systems for addressing business risks, costs and the pursuit of revenue maximization.”
AI Will Drive the Future
Lastly, Gartner reports that AI will drive the future of CLM.
With contracts becoming digitized and bleeding-edge AI technology coming online, the value of contract management software will see significant growth in the coming years.
“By 2023, artificial intelligence will bring 30% more efficiency to the contract negotiation and document completion process in organizations that deploy leading contract life cycle management solutions.”
Icertis Is a Recognized Leader in Enterprise Contract Management
The Icertis Contract Management (ICM) platform is a born-in-the-cloud solution built for enterprise-wide implementation.
Icertis’ easy-to-integrate, AI-infused contract management software can handle any type of contract.
In our view, this makes it ideal for the very type of enterprise-wide contract management approach Gartner recommends.
The benefits of Icertis’ enterprise contract management platform are clear: The platform that spans all departments and divisions and geography giving full visibility across every contract for every user provides a holistic view of dependencies, risks, and obligations not only contracts but all associated documents. A robust clause, template library and rules engine leverages approved language from all your contracts, easing contract creation and driving the right approval flow and ensuring compliance across the enterprise.
To read the full Gartner report and learn more about Icertis, download a complimentary copy now.