Earlier this year, Icertis commissioned Forrester Consulting to take the pulse of how businesses are using contract lifecycle management (CLM) and contract intelligence in their operations.
As Forrester prepared to survey hundreds of companies, we had no idea that a global pandemic would upend how every business carries out its work. But as timing would have it, the bulk of Forrester's research took place as business leaders were grappling with the first onset of work-from-home orders, disrupted supply chains, and rapidly shifting customer demands.
Yet for all these pressing—and in some cases, existential—challenges facing companies, CLM did not emerge as an afterthought in the survey data. Rather, survey participants indicated that contracts were front of mind as firms tried to quickly assess global risks and opportunities brought on by COVID-19. In short, effective CLM had emerged as a mission-critical technology.
"Among the firms surveyed, CLM has universally gone from a nice-to-have to a critical-to-have in a post-COVID world," according to the Forrester Consulting study*. "Decision makers at leading firms that are mature in their contracting processes already held this view prior to the pandemic, which enabled them to pivot faster and to more confidently make good decisions during a time of unprecedented disruption."
Unsurprisingly, then, the survey also found that while many companies are reducing spend on technology, investment in CLM continues to be strong.
"CLM initiatives continue as executives become more involved in understanding the opportunities and risks in their contract portfolios," Forrester Consulting reports. "In fact, Forrester has created in-depth guides for where organizations should cut, maintain, and expand technology investments during the pandemic recession. The advice is dependent upon an intimate understanding of existing terms and services across agreements organization-wide, and such an understanding cannot exist without either a robust CLM solution in place or an incredible amount of manual effort."
The immense value CLM is providing companies is not only reflected in IT budgets. It also emerged when Forrester surveyed companies on c-suite involvement and visibility into CLM processes and insights. This involvement is not limited to sourcing leaders, GCs, and sales. CEOs and CFOs are increasingly viewing contract data as a critical gauge on the health of the business and as a source of decision-driving data.
"The involvement of finance only increased with the disruptions accompanying the COVID-19 pandemic," Forrester Consulting reports. "Finance is becoming more involved in everything from selecting a CLM provider to reviewing contracting data from their CLM systems. This is especially true for firms with integrated and intelligent solutions that provide the CFO with more contract visibility."
As one survey respondent told Forrester, "We can trend information to determine if we're on the right path with negotiations with our suppliers. The best part to me is that it's so easy for me to show senior stakeholders the value that the procurement team is delivering every month."
Interestingly, the report shows that CLM doesn't just provide value to the c-suite; the c-suite, through executive champions, provides value to CLM. Survey results highlighted that companies that have executive buy-in for the CLM deployments see higher rates of cross-functional deployments that integrate into core systems and processes. These integrations serve as a value multiplier for CLM.
"More CEO involvement and buy-in across lines of business also correlate to fuller CLM integration organization-wide," Forrester Consulting reports. "…Connecting contracts to the systems and processes they touch is crucial to unearthing the contract intelligence that matters most to the CEO and line-of-business stakeholders. Equally important, integrating contract data into those systems of record and systems of engagement ensures that stakeholders operate with a single source of contract information that is consistent across these systems."
Finally, the survey shows that CLM success is not dictated by internal decisions or CLM technology alone. Companies need the right partner to help craft their CLM vision and make it a reality.
"A strategic CLM partnership enables firms to pivot quickly and confidently in times of uncertainty. Recent radical disruption has shed light on the importance of a solid contracting strategy and the need for an effective CLM solution that allows leaders to make informed, actionable decisions based on trustworthy contract intelligence," Forrester reports.
A senior data security analyst at a global food corporation told Forrester: "We had a huge disruption with a plant shutdown. We were worried about contract management and were pleasantly surprised at how communicative our CLM partner was and how easy it was for stakeholders to work with the tool and to access insights to make changes fast."
Contracts are the beating heart of a company. With the right technology, the right executive support, the right integrations and the right CLM partner, organizations can prepare themselves for whatever 2021 and beyond bring.
Want to learn more about what a mature CLM deployment looks like? Access the full Forrester report here.
*A commissioned study conducted by Forrester Consulting on behalf of Icertis.