Evaluation of contract lifecycle management systems can be a tough task for even the most seasoned of legal teams. Join us, as we explore the essentials of what to look for in terms of CLM software capabilities.
The modern business’ reliance on contracts is at an all-time high. This is clear when we look at recent events like the pandemic-driven turmoil that expose fragilities of businesses. Robust contract management is of prime importance in such times. This is where the evolution of Contract Lifecycle Management (CLM) software can address emerging and unforeseen risks.
Traditional contract lifecycle management platforms often focuses on singular aspects of contract lifecycles. For instance, many of these systems tend to be stronger just on the buy-side or sell-side. Robust management of buy, sell, and internal contract types is an essential evaluation checklist item in this context.
Many CLM vendors prefer to beef up only certain stages. Typically, these contract management systems feature strengths in either the pre-signature or post-signature phases. This translates to operational constraints for users. For example, a contract lifecycle management software with insufficient obligation management is of lesser utility, even if it features strong contract creation capabilities.
During evaluation, it is essential to remember that certain CLM systems are based on mainstream business automation platforms. This dependence on other proprietary platforms can create scalability and integration challenges over the years.
Next-generation enterprise CLM solutions like SimpliContract counter these shortcomings with an end-to-end contract lifecycle management approach. This comprehensive strategy enables legal teams to holistically address contract lifecycle management—right from requests to obligation management and renewals. Built from the ground up as software as a service (SaaS) offering, such cloud-based CLM software focuses on ease of use, security, and seamless integration. This ensures real-time contract access to employees, customers, and external partners.
Artificial intelligence (AI) and natural language processing (NLP) based “intelligent” CLM features which empower stakeholders are essential. Future-proof Intelligent CLM systems like SimpliContract integrate mature AI and NLP capabilities for powerful capabilities like:
• Instant information discovery
• Analytics
• Metadata tags
• Review of deviations
• Third-party contract scrutiny
• Proactive risk detection capabilities
While powerful contract authoring and negotiating features are critical, actual ROI accrues only in the post-signature stage. This calls for the following must-haves:
- AI-based tracking of key obligations
- Mid-term contract amendment capabilities
- Clause-level approvals
- Stringent version control capabilities
- SA monitoring
- Automated reminders for deadlines and expiries
- Features to renegotiate, cancel, or update contracts during renewals
- Escalation in case of lapses
- Invoice validation to prevent frauds and human errors
- Comprehensive audit trail features
Contracts provide stakeholders with significant volumes of untapped business data for decision-making and business model optimization. CLM solutions open new possibilities to utilize this data (often spread over multiple documents) using a digitalized contract repository.
For instance, SimpliContract’s CLM software allows the conversion of contracts into rule books for business operations or financial analysis. Or it can use AI and NLP to facilitate extraction of third-party contract clauses for comparison with your internal contract repository.
A contract lifecycle management software is a game changer when it comes to providing self-service and collaboration capabilities for business users. The ideal CLM platform enables your organization to:
• Rapidly create standardized contract template libraries and self-service wizards for users
• Ensure full compliance across the contracting cycle
• Allow business users and external stakeholders to collaborate without switching across multiple systems
• Use chats to collaborate on tasks like contract negotiations, approvals, or obligation management
Look for AI-based risk scoring features to skip manual reviews and deliver time savings. CLM systems use these to assess contract language, screen sensitive data, and assign risk ratings. Your teams can promptly rectify clause-level risks and suggest alternatives from the internal contract data pool.
Advanced analytics is a strong differentiator of leading CLM platforms. This enables the creation of highly customized dashboards for individual stakeholders. CLM systems can even provide extensive contractual insights into the impact of external events (such as a supply chain disruption or regulatory changes) on operations and finances.
Modern legal teams are accountable for aspects like turnaround times and tracking of legal transactions. CLM platforms have kept pace with advanced dashboards that address these needs. For example, the capabilities to evaluate the quality of departmental work is a common CLM feature. This allows legal teams to distinguish between strategic efforts that add business value and automate time-consuming repetitive tasks.
CLM software can deliver rich insights into turnaround times that also capture reasons for delay and scope for optimization. It can even assess contractual risks like those that arise due to exceptions, payment term negotiations, liabilities, and non-compete clauses.
Other strategic dashboard capabilities to look for include:
• Legal team’s internal workload allocation
• Utilization of resources
• Strategic planning
• Contractual performance and compliance
• Real-time MIS for insights like new MSAs, each team’s value of signed contracts, and looming expiries
Strong reporting features are a must-have. For example, this can be in the form of revenue or purchase reports which provide insights for the maximal utilization of contracted values. Or it can be in the form of vendor performance or customer satisfaction reports based on KPIs.
Opting for the right enterprise CLM system is the beginning of your digital transformation quest on the legal operations front. In addition to benefits like frictionless contracting and better decision-making, CLM software accelerates the transformation of your legal team into an internal service provider.
Zeroing in on the right vendor goes a long way in ensuring right-fit CLM implementations. Always opt for a partner with sufficient experience to undertake end-to-end management of the project.
For instance, the vendor’s capability to perform effective gap analysis during implementation is key to find a good fit. Or it can be vendor’s capabilities to lower hidden costs. The vendor must have a proven track record of keeping implementation timelines in check. Also factor in the costs in terms of time spent by key stakeholders as part of this assessment.
CLM system adoption is the next major milestone post-implementation. Your preferred CLM vendor must also double up as an adoption driving partner. Such capabilities streamline change management within the organization.
Simplify your CLM implementation with SimpliContract's expert team of lawyers, technical specialists, and contract management consultants. Enjoy dependable 24/7 support for your contracting processes.
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