NEW REPORT: The State of CLM and AI-Powered Contract Intelligence

The Tip of the Iceberg for Contracts: The Rise and Rise of Regulatory Reform

Expanding regulations are making the ROI on contract management software clearer and clearer.

April 3, 2023 By Bevan Brownhill, Deloitte

Contracts impact multiple stakeholders across every organisation in today’s business environment. This requires an effective approach to contract lifecycle management (CLM) practices and enabling technology to improve financial and operational performance.

The opportunities in the end-to-end CLM space have always been clear and well understood to those in the contract and supplier performance management professions. The impact of the pandemic shone a spotlight on supply chain, and the related importance of contracts and supplier relationships. 

However, we are now seeing an emerging trend where the traditional return on investment (ROI) and associated benefits are being given increasing impetus by the rapid and evolving changes across legislative and compliance regimes including data privacy, unfair contract terms, modern slavery, AML and ESG (to name a few), and the associated financial, commercial and reputational risks that these (primarily) sector-agnostic changes convey. 

The Critical Role of Digital Automation for CLM

CLM software as an application, installed on-premises or delivered as a service, proactively manages contracts across the entirety of the contract lifecycle, from the contract initiation stage through to approvals, award, compliance, storage and renewal/closure of the contract.

A platform providing easy searchability and access to contract terms, dynamic updates of terms, and real time risk and compliance monitoring can reduce contract leakage, track compliant clauses and increase efficiency.

While technology in isolation will not guarantee a risk-free contract management outcome, our client experience has clearly shown that digital automation offers an easy way to minimise and mitigate multiple risks, streamline process and procedures, address governance and control gaps and set a baseline for future growth and adaptation.

As new regulations and new technologies arrive, a forward-leaning enterprise CLM will give you the tools you need to survive in a business environment that is quickly evolving. With the right CLM software, you can avoid buying new technology or updating your single-point solution every few years.

Navigating the market to find a suitable CLM solution that is cost-effective, delivers meaningful benefits and can scale with your business

We know that finding the right enterprise CLM solution for your business requires understanding the requirements of your organisation and careful balancing these against the current and future industry-agnostic concerns, such as new regulations/reform, configurability, scalability or technological innovations. 

We believe the following steps will assist any organisation to support a successful CLM enablement project:

  1. Understand your total contract portfolio and the pain points automation must address;
  2. Define the key stakeholders and the roles and responsibilities between functions (Procurement / Legal/Risk/Business);
  3. Define you Key User Requirements (functional and non-functional); and  
  4. Fully understand the change impacts and level of Change Management required to effectively embed across your organisation.

We have found that accelerating technology adoption by organisations is being met with an equally rapid growth of enabling technology platforms and tools. This has created a complex and diverse ecosystem of vendors who provide everything from point solutions to solve specific customer problems, to contract intelligence platforms which can cover the end-to-end needs of an in-house team. 

Below is a snapshot of the key features in this space:

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Understand your Capability Requirements

Deloitte knows that the digital CLM space now boasts a plethora of systems boasting all manner of novel capabilities, so which of these are important and relevant to you and are relevant current, and potentially future, business needs? 

Some forward-looking capabilities to consider when selecting your contract lifecycle management system (reading the ‘small print’) include: 

  • Native AI Capabilities - as your business expands, AI can help identify new risks across your existing contract portfolio or adapt to changes to your business model;
  • Continuous Innovation - a CLM solution that evolves with your industry and continually implements new technology helps future-proof your operations, mitigate the risk of obsolescence and extract the most value; and 
  • A true Off-the-shelf (OTS) but easily configurable product should be ready to implement out of the box. 

About the Author

Bevan is a commercial, legal and procurement advisory expert with over 20 year's global experience leading analysis, advice and negotiation of commercial agreements and framework implementation. He specialises in contract and strategic supplier management across the full contract lifecycle and has delivered CM and SSM plans and strategies, including compliance monitoring, benefits tracking and execution of effective governance structures to manage commercial arrangements; technology implementation system and processes; and continuous improvement initiatives.

Prior to joining Deloitte Bevan was a senior procurement and sourcing legal advisor in UK Government providing subject matter expert advice on managing vendors, including leading legal and commercial negotiations and issue resolution when tendering and managing complex global contracts with both international and overseas governments and industry.  

Bevan has served Public Sector organizations including the UK Ministry of Defence, Cabinet Office, Home Office, NATO and the European Commission as well as other Australian and International Central and Federal Government Departments and Agencies. He has also worked with clients locally and globally across sectors, including Financial Services Industries, Energy and Resources and Consumer businesses.

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