In recent blogs, we’ve investigated how and why contract management is becoming a critical tool for the enterprise, and IT’s role in helping guide the business to contract lifecycle management (CLM) solutions that achieve value.
The integral role of CLM
We looked briefly in our last blog at how contract intelligence, a new approach to contract management, drives business outcomes by taking advantage of artificial intelligence and deep integrations.
In this post, we’d like to take an even closer look at how integrations between CLM and other enterprise systems are essential to the success of digital transformation efforts around contracts. We’ll explore the types of integrations to consider pursuing and why, as well as what it takes to maintain those integrations and truly unify your digital ecosystem.
Crucial to digital transformation
As more and more companies pursue enterprise-wide digital transformation, contract lifecycle management is emerging as a critical component of business success.
But how contract management solutions are integrated has a tremendous impact on just how much value the technology will bring the business. As the team ultimately responsible for ensuring the success of those integrations, and the organization’s digital transformation strategy more broadly, it’s essential that IT understand CLM integrations and how to make them as seamless as possible.
Why? Since contracts affect every element of business, they naturally span the entire enterprise.
Unifying contract data across the enterprise
In order for it to drive business outcomes, contract information must be able to flow between contracts and other enterprise systems across its lifecycle — both before and after it is signed. By doing so, organizations can ensure their contracts accurately reflect what was intended in a business relationship, and that what happens “in the real world” reflects what was agreed to in the contract.
For example, the sales team could need data from CPQ (configure, price, quote) software to flow into the document pre-signature to make sure it reflects what was quoted. Procurement might need insights from the enterprise SCM (supply chain management) to ensure a supplier is in good standing before firing off a purchase order.
Once in place, the need for integrations with other enterprise systems becomes even more crucial. Contract management systems must be connected to critical transactional systems to validate that what’s been contractually agreed on is actually taking place. For instance, is the organization getting paid what was established? Paying what it’s supposed to? Getting appropriate volume discounts? And the list goes on.
An API-first approach is needed
To make enterprise-wide integrations a reality, the organization needs a contract management solution that takes an API-first approach. While it might seem simple and appealing to have contracts — and the technology that manages them — stay within the walls of the legal department, it severely limits the capabilities and value of contact management.
Contract management integrations create value as teams collaborate on contracts, accelerating contract flow as everyone required to create, view, or approve them can do so seamlessly.
Contract management integrations create value as teams collaborate on contracts, accelerating contract flow as everyone required to create, view, or approve them can do so seamlessly.
Think about who touches a contract throughout its lifecycle. It’s certainly not just the legal department. Still, legal teams may be well served by a contract management integration with Microsoft Word, for example, to edit contracts more quickly and easily using a familiar tool.
Finance, on the other hand, could need integrations into ERP to automate finance and compliance. And HR can use CLM integrations to ensure the obligations around the organization’s most valuable assets — its employees — are respected.
The ease of use that such integrations spawn is also an important consideration. Integrating with existing systems and tools encourages CLM adoption. Contract data is presented to users in tools they are already comfortable with, such as Microsoft 365 or Salesforce.
As IT teams know all too well, a digital tool’s worth is determined by the degree to which it is used by the people who need it. Consider how integrations can ensure that your CLM meets users where they are at.
A fifth system of record
All of this points to CLM becoming a new source of unique but vital information — relationship data — being added to the organization’s existing systems of record. At Icertis, we categorize enterprise software into four SORs: customer data (CRM); supplier data (SCM); enterprise resource data (ERP); and employee data (HCM). By using AI to turn otherwise unstructured contract intent into data, structuring it and integrating it with these other systems, contract intelligence can become a “fifth” system of record: the authoritative data source on the business relationship data.
Integrations with SAP, Microsoft, Salesforce systems and more
Of course, to reach this lofty status, the contract management solution must have the partner pedigree necessary. It must have partnerships with other major technology providers, like SAP, Microsoft, Salesforce, or Workday, that support co-development and joint roadmaps to make sure integrations work at peak performance.
Once an organization has deep and seamless integrations with other enterprise systems that come from an API-first contract management solution, it’s on a path to creating a new critical system of record. And with that system of record, teams across the organization to maximize the value of every contract.
Interested in learning more about the CLM market? Access Gartner’s assessment of Contract Lifecycle Management (CLM) vendors in the Gartner Magic Quadrant.
