Commerce is foundational to our modern lifestyle – delivering the many goods and services we need to survive and thrive. Contracts, in turn, are the cornerstone that makes commerce possible. They provide a clear framework for relationships, commitments, and expectations.
As companies scale, contract management systems take on an increasingly important role, providing an opportunity to improve performance, increase agility, reduce risk, and drive more profit to the bottom line. Contract intelligence takes CLM to a new level, going far beyond mere workflows and data storage to apply advanced technologies to produce strategic advantage.
The right CLM solution delivers enterprise-wide value. That’s not simple conjecture – hard data back it up. In this article, we’ll explore how CLM can create business value for companies willing to invest – and why it’s essential to choose a contract management solution that can serve your future needs as your organization grows.
Key Benefits to Investing in Improved Contract Management Solutions
Over the past decade, companies have invested in digital transformation to develop agility, scale their operations, and build competitive advantage. As a result, today's digital transformation initiatives are producing powerful results in the contract management space. These include:
Increased Speed: By reducing the friction associated with end-to-end contracting processes, organizations are reducing cycle times, increasing efficiency, and enabling faster decisions.
Better Value: Contract intelligence helps organizations to optimize the value they derive from their existing business relationships; through improved productivity, vendor performance management, and excellence in negotiation.
Reduced Risk: High-performing teams clearly understand risk's impact on their organizations and take proactive measures to manage it carefully. CLM monitors and measures compliance, proactively alerting the right people to situations that require attention.
Increased Profitability: CLM enables contract teams and others throughout the organization to focus on high-value activities and to derive greater value and higher performance from their business relationships. Efficiency and contract optimization translate directly into bottom-line results.
Achieving Excellence in Contract Management
Excellence in contract management requires more than mere automation. Today, AI and advanced analytics are being applied to many business processes to affect qualitative differences in outcomes. In other words, these technologies are not just making it possible to execute existing business processes more efficiently; rather, they are expanding the range of what is possible.
To achieve contract management excellence, organizations must be prepared to use the complete range of tools at their disposal. That undoubtedly includes the digitization of contracts and workflows, but for standout results, CLM initiatives must extend much further than most vendors offer.
As a category, CLM solutions provide unquestionable value. There are distinct differences between the products and the vendors who provide contract management solutions, though. Contract management, as most vendors define it, entails digital records, e-signatures and approvals, amendments, renewals, and more. Traditional CLM systems rely on a structured approach to storing and managing a limited array of data points. That implies a relatively narrow scope to define the most important elements of a contract, and it often limits organizations to identify those most easily defined elements.
Contract starting dates and ending dates, for example, are generally simple to define and readily lend themselves to operations such as sorting, filtering, and reporting. Vendor performance standards, in contrast, are usually more nuanced. Consequently, they can be difficult to standardize, requiring a substantial up-front effort to identify the range of possibilities, organize them according to a meaningful nomenclature, and flag each contract with the appropriate parameters.
Contract intelligence takes CLM to a new level by automating the discovery and interpretation of contract language to identify meaningful parameters using AI and natural language processing (NLP). Contract intelligence goes beyond merely organizing and processing data, instead applying technology to identify the things that matter most, monitoring for opportunities and risks, and recommending actions that lead to better business results.
This combination of efficiency gains and qualitative enhancements distinguishes contract intelligence from traditional contract management solutions. As a result, contract intelligence is delivering meaningful enterprise value, and there is data to back up that assertion.
In 2021, World Commerce and Contracting (WorldCC) issued its biennial Benchmark Report, studying the impact of contract and commercial management on overall organizational performance. Recognizing that contract lifecycle management is an end-to-end discipline, WorldCC sought to approach the benchmark from a holistic contracting perspective.
Specifically, they acknowledged that contract lifecycle management must extend beyond the simple delivery of a signed contract. To deliver transformational value, a contract management solution must extend into managing the commitments that play out long after the initial document is signed. This is where contract intelligence delivers standout results.