A major learning that's come out of the COVID-19 pandemic is that cloud-based access to contract data is immensely valuable when addressing a crisis. But just how valuable that data is may depend on whether it is centralized in a single system or spread across an organization in multiple silos.
Our friends at IACCM surfaced this dynamic in a survey of 507 organizations that gauged the impact COVID has had on their contracting relationships and what value their contract management software provided as they reacted to the crisis. In a recent webinar, IACCM CEO Sally Guyer noted that those who responded to their survey described "the criticality of technology" as contract lifecycle management (CLM) software "delivered greater speed and an ability to better manage the risks resulting from the pandemic." Sally further shared that the "most significant benefits were gained by those who had undertaken a holistic deployment within a consistent process."
In other words, those organizations that used a single contract management system across their company saw the greatest benefit from the software.
Yet making company-wide contract management a reality requires alignment across many disparate interests, divisions and geographies. How can you get all stakeholders to share a single vision of what CLM should look like?
Here are five steps to consider:
- Tie Your CLM Objectives to Your Company's Strategic Goals and Objectives
A common reason many companies have ended up with highly fragmented contract management systems is that they believe that each function's contact management needs are unique. Closing a sales deal is a different motion than onboarding a new supplier, so why wouldn't they use different contract management software to carry those processes out? Yet this is really a band-aid approach that misses the bigger picture. Contract management has a direct impact on a company's ability to carry out core objectives—be they digital transformation efforts, ESG (Environmental, Social, Governance) goals or ensuring business continuity during an unforeseen crisis.
Therefore, the first step in building momentum behind adopting a unified CLM is to identify which of the company's overall goals are tied to contract performance. Do you have goals related to increasing revenue, reducing cost, and accelerating cash flow? Does your company have goals around improving compliance and minimizing risk? When Vertiv articulated a corporate mission of "One Vertiv," Colin Flannery, the company's General Counsel, took the leadership opportunity to align this mandate with CLM and create a single source of truth for their worldwide agreements.
- Map These Company Objectives to Individual Stakeholder Needs
Once you've tied your company's contract management objectives to company-wide goals, engage individual stakeholders to understand their unique requirements. You will need to step into each of their roles and truly begin that dialog about what is important to them and what takes priority.
With the company's global objectives in mind, you can start mapping individual requirements with the universal goals and make a strong case for why everyone's needs will be better served through a single contract management solution. When you get down to it, procurement, sales and legal all want the same outcomes—faster cycles, automated processes, reduced risk—and can greatly benefit by pooling their resources on a single, powerful contract management system.
- Create a Financial Case that Aligns to Company Objectives
Once you have your team of champions, the next obvious challenge will be from those in the organization who are leery of deploying new technology at a time when many companies are trying to hold on to cash.
You need to create a financial case that aligns with the company's overall business objectives. For example, your CFO may be hyper-focused on cost savings now, while your sales team is looking for ways to accelerate revenue. Be ready to demonstrate how, with the right contract management software, you can remove barriers to closing deals and therefore become a powerful tool in realizing revenue faster.
- Provide Evidence to Support Your Case
Of course, you'll need to back that up with evidence. Thankfully, the data is there.
As discussed on the webinar, research by IACCM demonstrates that companies lose, on average, 9.3% of their annual revenue due to contract value leakage linked to poor contracting processes. Some organizations can capture millions of dollars by improving their processes through technology and minimizing contract leakage.
IACCM data also shows that, following the COVID outbreak, a full 81% of respondents are planning to implement, replace or add contract automation to their business processes.
Analyst firms like Gartner and Forrester also provide strong guidance on how companies should approach CLM and how to evaluate vendors.
- Be Ready to Go When They Say ‘Yes'!
With the pandemic, there is no longer a lot of patience for digital solutions to prove their value. If you sell your company on a company-wide CLM system, it will need to start paying off quickly.
If you've succeeded in creating a core team of stakeholders, you are already at an advantage as you have champions across the organization who each have a deep understanding of their department's current processes and technologies. With this information, you can create smart plans to deploy CLM quickly to start delivering value now and then scale fast once the solution is deployed.
It's also critical to identify what your contracting KPIs are and to start measuring them before deployment so you can prove out the case for CLM and build momentum for more ambitious CLM projects down the road (blockchain, anyone?).
According to IACCM's recent survey, a solid majority of respondents say they now see greater importance and value in contract management software, with more than 25 percent saying it is now business-critical. Now is the time for CLM champions to seize the momentum and set a course for business excellence for years to come.
Want to learn more? Download our eBook, "CLM 101: A quick-start guide to contract lifecycle management and its high-impact value"