For many years, Enterprise Contract Lifecycle Management solutions have helped companies in every industry create the single source of truth for the contract-sourced commercial data needed to effectively manage and optimize commercial relationships and ultimately increase revenue, reduce cost, accelerate cash flow and minimize risk.
As a category, CLM has grown from a rudimentary solution for document storage and basic process automation into an essential system of record for the business.
In Gartner's "Market Guide to Contract Life Cycle Management," Kaitlynn Sommers, Senior Principal Analyst, writes: "CLM solutions are evolving from operational record-keeping systems used for legal auditing purposes into enterprise-level core systems for addressing business risks, costs and the pursuit of revenue maximization."
At the same time, increased availability in cloud-based storage and computing resources and advances in machine learning and AI technologies are powering incredible new and transformative contract management software. The ability to process massive volumes of complex contracts and integrate contract information into business systems and processes is creating significant business value in the enterprise and accelerating demand for CLM solutions.
Sommers writes, "Customers' interest in CLM is stronger than ever and is a leading topic raised by users of Gartner’s client inquiry service."
Forrester, in its 2019 report, "The Forrester Wave: Contract Lifecycle Management for All Contracts," reaches a similar conclusion: "The CLM market is growing because more contract managers and legal and finance professionals use CLM to address the challenges of creating, managing, and getting the best business results from their contracts."
Understanding the Value of CLM
When considering the benefits of CLM, business leaders can find value in three distinct three categories:
- Accelerate Commerce
- Protect Against Risk
- Optimize Business
CLM enables companies to accelerate their company's commercial activity with faster contract velocity, improved cash flow, and streamlined partner and supplier onboarding.
Intelligent contract authoring, approval, execution, and post-execution management enable companies to rapidly improve their bottom line. This includes accelerating contract cycle times with automated processes, accelerating cash flow by empowering the sales team to close deals faster, optimizing payment processes by connecting them to vendor terms and conditions, and getting partnerships up and running quicker with advanced onboarding and collaboration tools.
This adds up to faster time-to-value in business transactions. As one CFO put it recently when discussing the benefits of faster contract turnaround, "It's a CFO's dream to see how much revenue is tied up in contract review. If I can get my sales and business desk to close orders even a day earlier, that's an improvement in my business and my bottom line. Speed matters in every business!"
And as we emerge from the worst of the COVID-19 crisis, faster contract turnaround will mean a faster rebound back to business.
Proof point:AbbVie Canada reduced contract turnaround by 92% by deploying a CLM solution.
Protect Against Risk
CLM enables business leaders to confidently steward their companies through the threats posed by the COVID-19 crisis. AI-powered insights allow users to identify and mitigate current risks as well as protect against future risks by proactively monitoring performance against contractual obligations and entitlements. With centralized management of contract clauses and templates and an intelligent rules engine, businesses can quickly respond to market changes and adhere to regulations around the globe.
These technologies offer unprecedented risk-management capabilities. Proactive contract monitoring helps avoid compliance issues that hurt the bottom line and allows for real-time rule updates to stay ahead of changing market and regulatory conditions.
Proof point: Auto giant Daimler has driven down risk across its supplier operations. "CLM has made us safer," says Ulrich Ochmann, Product Owner, Contracting, Daimler's New Procurement System. "We have our risks transparent; we have our processes transparent."
Lastly, CLM enables companies to optimize their top- and bottom-line performance.
Insights from a single source of contract data, accessible anywhere and at any time, help increase revenue and reduce operational costs. Optimizing value in any commercial relationship comes down to executing a high-quality negotiation process that is fast and efficient and results in transactions that can be easily managed. Time matters—getting a deal done quickly means happier customers and faster time-to-revenue. And being able to operationalize your contracts to ensure you are optimizing your entitlements and delivering on your obligations directly impacts your cash flow and operating results. A great contract management system will speed up time-to-contract in sales and ensure that your salespeople deliver without creating risk for the enterprise. And in sourcing and procurement, contract standardization and intelligent monitoring drive down leakage by surfacing inconsistent sourcing terms with common vendors across multiple departments and divisions.
Better contract negotiation is enabled through a continually updated library of templates and clauses. Enterprise data and advanced analytics help you optimize decision-making by creating strategies based on insights from previous negotiation cycles to deliver the best outcomes.
Proof point: Microsoft's Enterprise Volume Licensing department reduced contract administration costs by 50% with CLM.
Icertis wants to be the CLM partner that helps you and your organization navigate the current environment. To learn more, please download our whitepaper, “Driving Faster Recovery With Enterprise Contract Management: A CFO Guide.”
This is Part 1 in our series on how CFOs can leverage enterprise contract management to accelerate their company's recovery. Read Part 1 here.