In its most recent Benchmark report, World Commerce & Contracting reports that, on average, 29% of an enterprise’s workforce is involved in some part of the contract lifecycle.
This is hardly surprising. Consider all the tasks necessary to carry out a contract: drafting, negotiation, legal review—and that’s all before it’s signed. Post signature, the real work starts, with obligations to fulfill, entitlements to track, and compliance to monitor.
Add to that the fact that every department needs contracts – whether it’s the sell-side inking deals with customers or the buy-side signing purchase orders from suppliers—and the enormous scope of contracting comes into focus.
The enterprise-wide nature of contracts raises critical questions for large organizations about how they should deploy technology to support the contracting process: Is it better to let each department have its own processes and repositories? Or is it better to take an enterprise-wide approach commensurate with the scope of contracting itself?
The Benchmark report gives us a hint on where most companies have landed on that question:
On average, a company has contracts stored in 24 different repositories across the business!
Put another way, departments are left to their own devices when managing their business agreements.
It’s understandable why companies avoid taking an enterprise-wide approach to contract management. Enterprise-level technology deployment involves many departments and requires extensive stakeholder alignment. For lack of such alignment, leaders opt for the status quo—i.e., 24 repositories.
However, managing contracts this way has serious downsides, including missed savings and revenue leakage, poor compliance, and hidden risk. World Commerce & Contract says companies experience 8.4% value erosion on their contracts due to missed obligations.
Fortunately, contract management technology and deployment methodologies continue to mature to address the enterprise nature of contracts and help companies realize contracts’ full potential. Not only are enterprise deployments of CLM possible, but they are becoming the preferred approach for forward-thinking businesses.
We believe the Gartner® Magic Quadrant™ for CLM 2023 provides the latest evidence of this. In the report, the authors offer this advice to potential CLM buyers:
“Acknowledge that adopting CLM does not demand an all-or-nothing approach. CLM can be adopted at a departmental level (for procurement or sales, for example) as an organization matures its processes. Satisfying an organization’s needs does not even necessarily require a single CLM system, although this is the trend for most organizations as they mature. The most progressive approach to CLM is to adopt it as part of an enterprise-wide strategy that considers the interdependencies among contracts, business processes, operational and financial results, and that indicates a high level of maturity.”
The question, then, becomes: how does a company reach that maturity level?
Here are a few tips based on Icertis’ extensive history of successful enterprise deployments:
1. Think Big, Start Smart
The first thing to remember when considering an enterprise-wide CLM deployment is that it doesn’t have to start as an enterprise-wide deployment.
Many companies have found success by starting projects focused on a few contract types or processes to uncover learnings and gain momentum for CLM transformation.
For example, since 2020, Icertis has been working with a fast-growing technology company on an enterprise deployment of the Icertis Contract Intelligence (ICI) platform. The project, led by the company’s legal operations department, chose to start the project by focusing on NDAs—which are generally low complexity but high volume. The right system could save an enormous amount of legal work by allowing employees to self-service NDAs and skip legal review so long as they didn’t change the standard language.
Within 100 days, the company had deployed an integrated, digital workflow for NDAs, which has led to 96% of NDAs needing no legal review.
Critically, however, the company continued to “think big” even as it “started smart.”
With this quick win under its belt, the company has taken on more complex projects, with 12 enterprise integrations and more than two dozen contract types, including the revenue-generating customer agreements that power its growth.
This is just one of many examples of how companies are addressing the enterprise-wide nature of contracts with an incremental deployment of powerful CLM technology.
2. Engage all stakeholders early and often
One challenge that inevitably comes with enterprise-wide deployments is one of ownership. If several departments will be using the same system, how do you ensure it serves all needs versus those of whatever team stood the solution up? For example, what works for legal might not be a good fit for procurement, and that can severely hurt adoption. The same goes for frequent versus casual users.
The key to overcoming this obstacle is to engage all stakeholders across the organization early and keep them engaged after the platform is deployed.
One Icertis customer recently described what this looked like at his Fortune 500 consulting firm. Before they deployed an enterprise CLM, “legal would look at high-level relationship documents,” then hand it off to a fragmented group of teams to carry the contract out— risking missed obligations and poor customer satisfaction.
In searching for a better approach, stakeholders from legal, finance, and sales came together to discuss what they needed from their contracts – and, therefore, from their contracting platform. This working group became a “ Center of Excellence” that supported the successful launch of a unified contracting platform.
Now, all stakeholders have a single, shared workflow that addresses their needs while keeping in mind the broader company goals: “We as an organization are looking at how the company is working with its contract across the board – sales, legal, delivery, solutions, marketing, client satisfaction.”
The result, he notes, is happier customers and improved financial reporting.
You can watch his full presentation here.
3. Integrate, integrate, integrate!
Contracts don’t just touch a wide array of departments in an organization. They also touch a wide array of systems.
Therefore, integrating your CLM into other enterprise systems is a significant enabler of enterprise-wide adoption and impact.
CRM, ERP, and SCM are common systems for CLM to integrate with, given the role contracts play in customer, supplier, and financial processes.
Integrations also foster adoption since they enable business users to access CLM from the systems they are already familiar with.
One legal operations director from a global medical technology enterprise recently shared with Icertis that a key component of her company’s enterprise-level software rollout was identifying which integrations mattered to these departments.
“No function was feeling as if this solution was being thrust upon them,” she observed. “They were part of the team bringing about this change. And, honestly, I believe they have pride in being part of the team that really transformed how our company does contracting today.”
Conclusion
As the research cited above demonstrates, contracts are too critical to a business to leave in fragmented repositories across an enterprise.
By starting conversations with your company about what an enterprise-wide deployment of CLM can look like, you can set it on a path to better commercial outcomes and less risk.
